Cazoo charts course to profitability as sales slip
There are tentative signs Cazoo is heading for profitability as the online car retailer said it was taking a more targeted approach to buying and selling vehicles amid a drop in revenues.
Gross profit increased from £3 million to £14 million in the first three months of 2023, a jump in its profit margins of just under five percentage points. Revenue fell 11% to £247 million while the number of cars sold was down 7% 17,447. Cazoo shares rose 7% to $2 in pre-market trading in New York.
Cazoo CEO Paul Whitehead said: “We remain laser-focused on improving our unit economics, optimizing our fixed cost base and maximizing our cash runway.
“We are applying a more targeted approach to which vehicles we buy, guided by our proprietary data of their desirability, with a better selection of models available on our website driving better margins.”
Cazoo shares have fallen a staggering 95% over the past year as the car retailer was hit by soaring inflation, rising interest rates and supply chain struggles caused by the Covid pandemic and war in Ukraine.
That has led to a more than £1 billion drop in the wealth of its founder, Alex Chesterman, who controls around a quarter of the shares in the business.
Chesterman is worth £495 million according to the Evening Standard Tech Rich List. In January he stepped down from his role as CEO of Cazoo to become executive chairman, to be replaced by former chief operating officer Whitehead.
The firm had announced a fresh wave of job cuts in a bid to slash costs, on top of the 1500 staff that were let go during 2022 following its withdrawal from the market in Spain and Germany.
One Cazoo employee, who wished to remain anonymous, told the Standard staff appointments with customers were abruptly cancelled, before plans for cutbacks were announced to workers in a 15-minute video call.
Only 7 of Cazoo’s 22 centres were set to remain open under the plans, the employee said.
“It’s a lack of respect to employees from a company that has continually lost millions over the past few years,” they said.