Cazoo: ‘aggressive expansion’ a factor in failure
07 August 2024
Cazoo administrators Teneo say Cazoo’s failure was driven by factors including “aggressive expansion strategies, a competitive market, high consumer acquisition costs and unfavourable economic conditions”.
Despite a successful NYSE listing, it lost £329m in 2021, a trebling of its £103m 2020 loss. “This resulted in the share price reducing c. 50% in the first 12 months and c.99% within two years of listing”.
Teneo refereed to Cazoo’s 2024 pivot to a third-party marketplace (the ‘3P Pivot’) which saw a wind-down of non-core assets and activities. This included a sale of all vehicle stock plus several bulk sales, which not only fully repaid all stocking loans, but yielded a surplus of £30m. A M&A process for other assets was accelerated, and a redundancy programme commenced, reducing the business headcount by c.700 during Q1 2024.
Teneo was engaged in February 2024 to offer companies the opportunity to acquire the 3P business. A total of 64 parties were contacted – 16 trade buyers and 48 financial investors. 23 parties submitted an interest and were provided with further details under an NDA.
On 8 May, when it became clear a solvent solution was not viable, the directors filed a Notice of Intention to appoint administrators.
In a lengthy report following a meeting of Cazoo’s creditors, it was revealed there are currently more than 10,000 unsecured creditors with total claims of £259m.
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