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Cazoo plan to reduce costs and improve profits “coming together”

Paul Whitehead Cazoo

Cazoo has said its plan to control costs and improve its margins on used car sales is “coming together” in its latest performance update to the market.

The company is also looking at a potential debt restructuring with a view to ensure a “more robust capital structure going forward”.

The business said it achieved its highest ever level of retail gross profit per unit (GPU) in April and expects this level to exceed an average of £1,200 by the end of Q2.

Cazoo has now completed its exit from EU markets which it said will allow it to focus more closely on its UK business.

The business has closed the majority of its customer centres and made hundreds of staff redundant as part of a raft of actions to restructure the company.

Used car preparations centres were also closed in the restructure of its UK operations, which followed the sale of its operations in Germany, Italy and Spain.

February also brought the sale of its used car valuations business Cazana, just over 17 months after it was acquired for £25m.

Paul Whitehead, Cazoo chief executive, said: “We achieved our highest ever level of retail GPU in April, ahead of the record result delivered in March, giving us confidence in our ability to maintain sustainable margin improvement through the remainder of the year and beyond.

“In Q2 2023, we expect Retail GPU to exceed £1,200, a significant further increase on the record level of £980 achieved in Q1 2023 (up 20+% QoQ) and up from £309 in Q2 2022 (up 280+% YoY).”

Whitehead said Cazoo’s variable and fixed costs are reducing “in line with expectations”. The company’s cash position at the end of April was £215 million  of cash and cash equivalents (March 31, 2023: £215m) and approximately £50m of self-financed inventory.

He added: “We reiterate our guidance for 2023 and remain fully focused on improving our unit economics, optimising our fixed cost base and maximising our cash runway.”

Cazoo founder Alex Chesterman said he was “incredibly proud of everything the team at Cazoo has achieved” in a financial results statement in March this year that revealed the online used car retailer’s £704m losses for 2022.

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