Shares in car dealership group Lookers (LOOK:AIM) sped 13% higher to 71p on Thursday after the firm increased its full-year pre-tax profit expectations to 'materially' above the current analyst consensus, following a strong first quarter performance.

Management believes consensus pre-tax profit forecasts for the year to 31 December 2021 to be £22.6 million. A 'material' beat usually indicates an improvement of at least 10%, implying profits of around £25 million.

STRONG FIRST QUARTER

Despite dealerships remaining closed in the first quarter in line with government guidance, the group continued to take orders and fulfil handovers through its call centres and its website.

Chief executive Mark Raban said, ‘The events of the last year have highlighted the inherent strength of our franchised dealership model and the importance of an integrated customer experience which fully embraces both digital and physical channels and we have been able to enhance our online capabilities at pace'.

The company sold 44,000 new and used vehicles which, combined with a ‘resilient’ aftersales performance and strong cost control, led to a better than expected first quarter performance.

This resulted in the group ‘significantly’ outperforming the UK retail new-vehicle segment with flat like-for-like unit sales compared with a 18% fall in the market, impacted by the third national lockdown.

Consequently, the company achieved a market share of around 7%. A focus on margin and working capital efficiency saw unit sales to fleet customers fall 15% on a like-for-like basis, greater than the 6% fall in registrations.

Used-vehicle like-for-like unit sales fell 6% in the first quarter, with vehicle values said to be robust, and the group continued its strong inventory management which helped lift margins.

The group’s dealerships are due to reopen on 12 April 2021 in line with the government’s roadmap.

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Issue Date: 08 Apr 2021