04 June 2020

Lookers is aiming to cut 1,500 of its 8,100-strong workforce as it enters a restructuring plan. The move comes as dealer group has experienced a host of difficulties in the past year including an ongoing investigation by the Financial Conduct Authority, the forcing out of its CEO and COO plus an internal fraud investigation.

In a statement to the Stock Exchange, the group said: “The board has considered the future structure of Lookers in light of potential demand, a smaller dealership estate and the structural changes taking place across the industry. As a result, the group has taken the difficult decision to commence redundancy consultations across all areas of the group which could, subject to consultation, result in approximately 1,500 redundancies.

“The board has carefully considered all options and regrettably considers this action as being necessary in the current environment to sustain and protect the Lookers business over the long term. This restructuring could, subject to consultation, deliver annual payroll savings of approximately £50m. The one-off cash restructuring cost will be circa £9m.”

Mark Raban, chief executive officer, added: “We are having to reflect on the outlook for the group and how we must adapt to ensure a positive future in what is likely to remain an uncertain economic and industry environment.

“Against this backdrop we have taken the decision to restructure the size of the group’s dealership estate to position the business for a sustainable future, which regrettably means redundancy consultation with a number of our colleagues. This has been a very difficult decision and we will be supporting our people as much as possible throughout the process.”

Lookers is expected to issue its 2019 full year results later this month.

Summary

• Trading resumed across the Group, although at lower than normal capacity levels

• Significant restructuring actions to position the Group for a sustainable future, including the closure of a further 12 sites and headcount reductions across the business, to deliver annual savings of approximately £50m

• Net debt of £57m at the end of May with a facility of £250m and property portfolio with an adjusted net book value of £325m at 31 December 2019

• Discussions are progressing with banks to agree amendments to covenants under its revolving credit facility

• The Grant Thornton investigation is nearing completion with Grant Thornton having prepared a draft report which is under review and verification by the Board ahead of receiving the final report

• The Group is continuing to invest in and will accelerate the development of more robust financial systems and controls and to further improve culture and behaviours

• The results for 2019 are expected to be published by the end of June subject to the conclusion of banking discussions and audit

Tags: FCA, Lookers, redundancy