Cazoo is to pull out of continental Europe and focus on the UK as the loss-making online car seller reverses its international expansion drive, cutting hundreds of jobs and threatening sponsorship deals with some of the region’s biggest football clubs.
The company, founded by Alex Chesterman, spent close to €200 million across Spain, Germany and Italy to broaden its business, as well as striking multiyear sponsorship deals with European football clubs to promote its brand.
The group said on Thursday it would wind down its entire European operations in an attempt to preserve cash, resulting in the loss of a further 750 staff in Europe, on top of the 750 roles it axed in the UK earlier this year.
It will also try to end a host of European football sponsorships, which includes deals with Real Sociedad and Valencia in Spain’s LaLiga, Lille Olympique and Marseilles in France’s Ligue 1, Bologna FC from Italy’s Serie A and SC Freiburg in Germany’s Bundesliga.
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Investors responded positively to the decision with shares of Cazoo, which have lost more than 90 per cent of their value since the company listed last August, jumping 20 per cent by mid-morning trading in New York on Thursday.
The group said it would start an orderly wind down of its operations in Germany and Spain and was in consultation with staff in France and Italy.
The company will be left with about 3,000 staff, mainly in the UK.
“I would like to thank all our colleagues in the EU who are impacted by this decision and we will of course look to support them in every way possible,” said Mr Chesterman, who is also chief executive.
The company announced in August that it was reviewing its European operations, as it revealed a £243 million loss for the first half of 2022 — more than double what it lost a year earlier.
The decision marks the end of an ambitious international drive by Mr Chesterman, who previously founded Zoopla and cofounded LoveFilm, launching the company with the aim of disrupting used car retailing.
The group aimed to use scale and online convenience to break into the second-hand vehicle market, though established dealerships questioned whether it was spending too much money on cleaning vehicles to make a profit on the cars.
The company floated through a reverse merger with a special purpose acquisition company last summer, raising $1 billion at the height of the Spac boom.
Cazoo said the decision was based on the amount of investment it would need to scale operations in Europe, while trying to achieve profitability. The costs of winding down would be offset by savings, the group said. It expects the decision to save it £100 million by the end of 2023.
Mr Chesterman said strong customer demand in the UK, as well as the decision to withdraw from continental Europe, would ensure that the company’s balance sheet “remains strong and that we have a plan which we believe no longer requires any further external funding”. — Copyright The Financial Times Limited 2022
