Cazoo shares spiral despite narrowed losses
Shares in the struggling used-car retailer Cazoo tumbled on Tuesday, as investors failed to gain confidence in the firm’s restructuring and drive to rebound after last year’s crises.
Losses improved by nearly 37 per cent year-on-year in the six months to June, narrowing from £241m to £151m – but this was not enough to stop shares tumbling over 12 per cent by 5pm GMT (12pm in New York).
The London-headquartered but New York-listed firm had also reported a rise in gross profits of 283 per cent from £6m to £23m.
Cazoo has been hit particularly hard by the challenging backdrop of inflation, high interest rates and supply chain problems since it first floated in the US in 2021.
Its shares fell a staggering 95 per cent in 2022, with the company forced to lay off hundreds of staff and pull out of its EU operations, under the weight of mounting costs and a dry up in consumer spending.
This ultimately prompted the resignation of founder and former CEO Alex Chesterman in January, with new boss Paul Whitehead brought in amid an attempt to restructure the business and cut costs.
Since then, Cazoo has seen signs of progress, with a rise in gross profits in its April results indicating the beginnings of a turnaround under the new chief – who proclaimed that its new strategy had begun to bear fruit.
Whitehead said on Tuesday he was “pleased with the decisive and meaningful progress we have made to improve unit economics, optimise our fixed cost base and maximise our cash runway in the first six months of 2023. The results show tangible progress across all areas of the business.”
He added: “Through the recent UK restructuring and the wind-down of our EU business, we have rightsized the operational footprint and headcount, optimising the business for today, with a view to future growth.”
Revenues, however, were still down 28 per cent to £419m, with vehicle sales also down 29 per cent, indicating demand problems for the online car retailer remain a hurdle.