Cazoo Reports $872 Million Loss After Closing EU Car Operations
Cazoo is enjoying record revenue but feeling the sting of shedding its European auto business.
The struggling U.K. used car company on Thursday (March 30) announced full-year earnings that showed it took a 704 million pound loss ($872 million), a 30% increase from last year and the latest sign of the struggle facing the used car sector.
The loss was partly driven by “discontinued operations,” Cazoo said in a news release. Recent months have seen the company shift its focus to its home country, which meant selling its subscription business in Germany and abandoning plans to expand into Spain and Italy.
“During the year we made a number of important strategic decisions to change gear from fast-paced growth to focus on improving our unit economics in the near term,” founder and CEO Alex Chesterman said in the release.
He added that he was “very encouraged by the pace of the team’s delivery in rightsizing our headcount and operational footprint which we have now completed in order to drive higher margins going forward.”
Cazoo reported revenue of 1.25 billion pounds ($1.5 billion), a 91% increase from last year, with the number of vehicles sold in the U.K. increasing by 88%. The company said it is on track to reach profitability without needing outside funding until the second half of next year.
Last month, Cazoo sold its German subscription business Cluno, a move that came after the company closed down operations in the rest of Europe.
“Given our target of reaching profitability by the end of next year, we have taken the tough decision to focus solely on the huge UK used car market, worth over £100bn+ annually,” Chesterman said last year.
Chesterman is due to step down as chief executive next month, with Paul Whitehead, Cazoo’s chief operating officer, taking his place.
The company’s stock is down 96% over the past year, with a market cap of $223 million, a sharp decline from the $7 billion the company enjoyed when it went public.
Cazoo is far from the only used car company struggling these days, as inflation forces consumers to rethink major purchases such as cars.
Carvana — which saw its unit sales and revenue fall more than 20% in the last quarter of 2022 — announced last month it expects declines to continue in its first quarter, if not beyond then.
“We expect our weekly retail unit sales volume to stabilize relative to the declines we saw in the second half of 2022 as the seasonal headwinds we faced at that time transition to seasonal tailwinds,” founder and CEO Ernie Garcia told analysts in February.
He said Carvana plans to cut another $100 million of expenses over the next two quarters, bringing the total reductions to upwards of $1 billion since the beginning of last year.