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Margins under pressure as Motorpoint shores up its stock turn post-EU referendum

Uncertainty around the result of the EU referendum has led car supermarket group Motorpoint to sacrifice some margin to maintain its good level of stock turn.

In a trading update ahead of its November 29 interim results, the publicly listed company states it has “invested in margin to protect the group’s good level of stock turn, and managed its stock levels carefully”.

Accordingly, it said, the volume and margin performance in H1 is behind original management expectations.

Nevertheless, Motorpoint expects to report around 11% revenue growth, underpinned by a positive H1 like-for-like performance and trade from three new sites opened in the last 12 months.

Although those new sites are yet to make a positive contribution, they are performing broadly to plan, said Motorpoint, and its management is confident that these new sites will deliver a solid performance in the second half and beyond.

It said its “unique and flexible stock sourcing model”, including stock from fleet companies where new car registrations are in growth, provides a strong outlook, it said.

Early indications in H2 are also showing improving margin trends, said the statement.

It continued: “With an improved contribution from the new site openings, good supply and an improving margin outlook, management foresees a stronger H2 weighting with net margins moving back to more normal levels. The pipeline of potential new sites remains encouraging, and positive progress is being made on a number of options.”

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