Brexit pain blamed as Car Store owner cuts 300 jobs
The owner of used car chain Car Store is to close almost two-thirds of the brand’s sites, citing an impact from Brexit.
Pandragon, which had previously issued a series of profit warnings and lost its new chief executive over an apparent strategy dispute, said 300 jobs would go when 22 of its 34 Car Store sites were shut down.
It said the stores, which it did not identify, were loss-making and likely to remain so and it would exit the worst-performing ones by the end of this year.
Pendragon had undertaken a strategic review of the operation after a slowdown in sales which led to the build-up of excess stock at the end of 2018.
It said it had been flogging cars at discounted rates and through trade auctions to offset, what it saw, as weak consumer confidence related to Brexit uncertainty.
The company, which also owns the Evans Halshaw and Stratsone brands, noted a 7% fall in used car values in the second quarter of the year.
It was already in the process of closing nine Jaguar and Land Rover franchise sites as sales for both used and new models in the UK car industry come under pressure.
Pendragon announced a total loss of almost £135m for the six months and said it expected its annual performance to be at the bottom of its range because of the actions it was taking and on the assumption that demand does not get any worse.
But it said it was scrapping its dividend.
Separately, it was announced that chairman Chris Chambers would leave on 1 October to be replaced by non-executive director Bill Berman who was to become executive chairman on an interim basis – pending the appointment of a new chief executive.
Mark Herbert went by “mutual consent” in June, less than three months after his appointment in the wake of Trevor Finn’s retirement.
Shares, down 50% in the year to date, fell 11% at the market open and later settled around 9% lower.
Mr Chambers told investors: “Whilst market conditions have been challenging in the first half of 2019 with headwinds in both the used and new car markets, the group has continued to deliver like-for-like revenue growth.
“However, there has been a material decline in the group’s profitability principally as a result of the actions taken to address excess used car stock.
“We made significant progress reducing this exposure in the latter period of the first-half and we remain committed to the strategy of growth in the group’s used car proposition.
“The business is fully focused on maximising performance, but we expect the market to continue to be challenging during the second half of 2019.”