TIDMLOOK
RNS Number : 6839W
Lookers PLC
20 August 2020
20 August 2020
Lookers plc ("Lookers" or "the Group")
TRADING AND OPERATIONAL UPDATE
Lookers plc, ("Lookers" or "the Group"), one of the leading UK
motor retail and aftersales service groups, provides the following
trading and operational update.
Post Lockdown Trading
Trading in the two-months ended 31 July was encouraging and
reflected a period where all trading locations in England were open
(from 1 June), followed by reopenings in Northern Ireland and
Scotland on 8 June and 29 June respectively.
In June, our like-for-like dealerships in England outperformed
the UK new retail car market and recorded growth in like-for like
used unit sales combined with improved margin retention.
These trends strengthened in July as the Group's dealerships in
Scotland reopened. During July, on a like-for-like basis, the Group
invoiced and delivered over 14,000 new retail and used units
exceeding last year by 17.0%. Like-for-like service revenues also
showed growth versus last year. As a consequence of these factors,
combined with ongoing focus on cost and working capital control,
underlying profit before tax was materially ahead of last year
during July.
The release of pent up demand from over two months of closure,
together with an ongoing consumer trend to avoid public transport
in favour of the private car, has helped to drive activity. Given
the Group's large internal and external retail premises, social
distancing measures are less disruptive than many other forms of
retailing which has helped encourage customers back to the
dealerships.
The business has also benefited from recently introduced
initiatives including a contactless handover process and a range of
enhancements to the Groups online offering, which are helping to
drive increased efficiency and productivity.
Portfolio Review
On 4 June the Group announced it had identified a further 12
dealerships (including 7 freehold sites) for either closure,
consolidation or refranchising. This activity is now substantially
complete and will be finalised during the remainder of 2020. As a
result of this activity, and the 15 closures previously announced
in November 2019, the Group currently holds freehold property for
disposal with a net book value of circa GBP30m. These disposals
will continue during the remainder of 2020 and in 2021.
Restructuring
On 4 June 2020 the Group announced that the Board had considered
the future structure of Lookers in light of long-term demand, a
smaller dealership estate and structural changes taking place
across the industry. During June and July the Board consulted
across all areas of the Group and confirmed over 1,400 roles as
redundant. The Board carefully considered all options and viewed
this action as necessary to sustain and protect Lookers over the
long term.
The Board commenced its restructuring plan in November 2019 and
by the end of September 2020 total headcount is anticipated to be
approximately 6,700 a reduction of circa 22% since the commencement
of the initiative.
H1 Financial Performance
The temporary closure of the Group's dealerships throughout the
lockdown period had a significant impact on the Group's financial
performance during H1. The Group expects to report H1 revenue of
approximately GBP1.6bn (2019: GBP2.6bn) being impacted by the
extended lockdowns in Northern Ireland and Scotland.
In addition to the revenue decline the Group also experienced
margin pressure in both new and used vehicles with the former
impacted by reduced levels of manufacturer volume bonus receipts.
These impacts were partially mitigated by cost savings and benefits
from portfolio consolidation.
The Group expects to report a material underlying PBT loss for
H1, after receiving cGBP29m from the Government's Job Retention
Scheme.
Non-underlying items
The results for H1 are expected to include a number of material
cash and non-cash non-underlying items including costs associated
with the closure and restructuring programme and the recent
investigation conducted by Grant Thornton LLP.
Financial position
The Group remains focused on driving cash flow through enhanced
working capital management, portfolio management, cost reduction /
restructuring and the disposal of surplus property.
As at 30 June 2020 net debt was approximately GBP13.5m (2019:
GBP74.3m) after benefitting from the temporary Government deferral
of tax payments.
The Group's revolving credit facility of GBP250m with five banks
expires in March 2022. The Group will be exploring refinancing
options during Q4 2020.
The Group continues to enjoy the benefits of a property
portfolio in excess of GBP300m.
Outlook
Trading in June and July has been better than expected in both
vehicle sales and aftersales.
Momentum has continued into August and new vehicle order take
for the important September plate change is building well.
Although early indications are encouraging, the Board remains
cautious about the overall pace and sustainability of an economic
recovery and the impact that could have on the consumer, and
therefore the sale, servicing and repair of vehicles.
Notwithstanding this, over recent months the Board has taken
decisive action to improve the Group's sales process, enhance the
use of technology, right size the cost base and control working
capital and net debt. With its strong portfolio and OEM brand
partner relationships the Board continues to believe the Group is
well positioned to capitalise on the many future opportunities that
lie ahead.
Mark Raban, Chief Executive Officer, said:
"This has been a very challenging period for Lookers, but it is
encouraging that we are beginning to see some healthy signs of
recovery in vehicle sales since the easing of lockdowns.
"I would like to thank all my colleagues for their amazing
commitment in difficult circumstances and the efforts they have
made to adapt, innovate and improve our physical and online
proposition to customers, ensuring a safe and smooth retail
environment. I am also extremely grateful to all our other
stakeholders, including our brand partners, for their support
through this period.
"We remain cautious about the future given ongoing uncertainties
in the wider environment, but confident in the opportunities for
the Lookers business moving forward."
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) No 596/2014
For further information:
Mark Raban, Chief Executive Officer Tel: 0161 291 0043
MHP Communications
Tim Rowntree, Simon Hockridge Tel: 07709 496 125 / 07551
170 451
Email: Lookers@mhpc.com
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END
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