Troubled car dealership looks to steady ship with new leadership team

Troubled car dealership Lookers say profits for next year will be in line with expectations despite a tough year for the trade.

The firm has closed 15 sites and parted company with its chief executive and chief operating officer in November.

The Altrincham business – which issued two profit warnings last year – is also having to deal with an FCA investigation into its sales practices.

The company issued a trading update for the last 12 months this morning and also announced a new leadership team.

Mark Raban has been unveiled as chief executive and Cameron Wade chief operating officer with immediate effect.

Mark joined the Board in July 2019 as chief financial officer. He has nearly 30 years of retailing experience and before joining the group was CFO at Marshall Motor Holdings.

His previous experience includes being finance director of Inchcape Retail and Selfridges Retail.

The search for a new chief financial officer will get  underway shortly.

Lookers said although challenging, trading during the three-month period ended 31 December 2019 was as expected and the group anticipates reporting underlying profit before tax for the year in-line with expectations.

Lookers said the new car market has contracted for the third consecutive year in the UK.

New car registrations fell by -2.4% to 2.3m units during the year. The group’s like-for-like sales of new vehicles over the same period performed marginally ahead of the overall market.

In the fourth quarter Lookers’ like-for-like unit sales of new vehicles fell by -6.6% compared to a UK market decline in new vehicle registrations of -1.6%.

In the fourth quarter the used car market remained stable.

Like-for-like sales of used cars increased by +3.8%. The group remained focused on continuing to reduce and improve the profile of its used vehicle inventory.

Lookers announced in November that it had identified 15 sites for closure as part of an ongoing portfolio review.

The closures are largely complete. Of the 15  sites, nine were owned on a freehold basis.

Four sites have been sold, generating proceeds of £8.3m; the remainder and other properties will be sold during 2020.

The Society of Motor Manufacturers and Traders (“SMMT”) is forecasting a further decline in the new car market during 2020 and the business faces the uncertainty and impact from the practicalities of leaving the EU.

Trading in the first few weeks of 2020 has been broadly in line with expectations and the board says it remains focused on the important March trading period.

Mark Raban, chief executive, said: “2019 was a challenging year for Lookers. The declining new car market, political and economic uncertainty and increased operating costs were all factors in the Group’s decline in profitability.

“Over recent weeks the board has instigated a number of clear and decisive actions to stabilise and improve operational and financial performance.

“The board remains confident about the long-term prospects for the Group, benefitting from excellent OEM relationships, strategic trading locations and a strong freehold property portfolio.”