Motorpoint chief executive Mark Carpenter has said that the car supermarket group’s board “continues to look to the future with confidence” after a June return to profitability.
The ID50’s top independent car retailer by turnover reported in a trading update published today (October 8) that it had successfully recovered combined losses of £3.4m suffered in the COVID-19 lockdown period of April and May to see profits ahead of 2019 at the half-year-stage.
Motorpoint reported that its balance sheet remains robust, with no structural debt and net cash of over £13m at September 30.
The group will publish its interim results for the half year ended September 30, 2020, on November 26.
Commenting on the positive outlook delivered in today’s update, Carpenter said: “I would like to thank all of our people for their hard work and resilience through these unprecedented times.
“The Group has emerged from lockdown in great shape and this is testament to the team and their agility and adaptability in these ever-changing times.
“As a result of the Group’s performance in the three months since our sites reopened, and notwithstanding the potential of future regional or nationwide lockdowns, the board continues to look to the future with confidence.”
Motorpoint said that the suspension of capital projects, reducing discretionary spending, furloughing a large proportion of its workforce and voluntary pay reductions among its senior leaders had all helped reduce costs during the coronavirus crisis’ full UK lockdown period.
Government’s Coronavirus Job Retention Scheme (CJRS) and Business Rates relief measures introduced helped to reduce costs by the Group by over £3.8m in H1, it added.
As previously reported, the group said that demand levels have exceeded management’s expectations with strong year-on-year sales growth since its sites reopened from the UK-wide lockdown in June, with margins above recent levels “reflecting continuing improvements in vehicle preparation speed and our pricing methodology”.
Accelerated investment in its digital offering and the launch of a free home delivery service saw online sales growth outpace that of Motorpoint’s physical sites following the lockdown period, accounting for over 36% of sales in the three months to September 30 – a volume increase of more than 50%.
Free home delivery facilitated over 8% of its used car sales during that period
Motorpoint said: “The increase in demand has meant that we have created around 30 additional preparation and customer service logistics roles since reopening.”
However, the group remained cautious about the ongoing impact of COVID-19 on consumer confidence.
“The increase of COVID-19 cases in recent weeks and resultant Government restrictions will subdue demand in the short-term as consumer confidence is negatively impacted, as we have seen in certain of our sites affected by local lockdown restrictions,” it said.
“Given such uncertainty on future demand levels, the Board believes it prudent to continue to refrain from offering guidance at the current time. This will remain under review and a further update will be provided at the Interim Results.”