Shares in Lookers (LOOK) have been suspended at a clapped-out 21p since July and will remain so for the next few weeks while the beleaguered automotive retailer and its auditors put the finishing touches to delayed results.
Yet this protracted accounting saga shouldn’t overshadow an otherwise upbeat update from Lookers, which reported better than expected third quarter trading thanks to its ‘significant outperformance’ of the UK retail new car market as well as ‘robust’ like-for-like growth in used car sales and aftersales revenues.
Unsurprisingly, the impact of dealership closures during lockdown means Lookers expects to report a ‘material’ underlying loss for the half year to 30 June, yet this was largely offset by a bumper third quarter in which underlying pre-tax profits motored ahead year-on-year.
THIRD QUARTER BEAT
During the third quarter ended 30 September, Lookers’ dealerships in England, Northern Ireland and Scotland were fully operational following the end of lockdown.
The Manchester-headquartered concern’s like-for-like new car unit sales sped 27.1% higher year-on-year, marking dramatic outperformance of the market.
And in the key registration plate change month of September, Lookers ‘performed particularly well’, albeit against a soft prior year comparative impacted by new vehicle supply restrictions in certain car brands.
Third quarter performance was also supported by a strengthening of used car margins as well as cost savings and other benefits arising from a major restructuring of the business to see it through the pandemic.
On a like-for-like basis, Lookers sold more than 42,000 new retail and used cars in the quarter. That represented 13.6% year-on-year growth and was fuelled by the release of pent up demand and the continuing trend towards private car use instead of public transport at a time of heightened fears over coronavirus.
Lookers also flagged ‘a good customer response to our improved, simplified and more digitised sales process, which has helped boost our performance’, and the property-rich group also highlighted lower retail operating costs and reduced net debt.
Chief executive Mark Raban insisted Lookers’ ‘decisive’ self-help measures, combined with better than expected trading and ‘strong support from our brand partners’ have helped the autos seller to ‘emerge from lockdown in a strong position. Naturally, we remain cautious around the future outlook given the ongoing Covid-19 backdrop but we are well positioned to deal with any emerging challenges’, he assured investors.
DISAPPOINTING RESULTS DELAY
Beset by accounting problems, which Shares outlined in more detail here, Lookers doesn’t anticipate asking the Financial Conduct Authority (FCA) for its shares to be restored to trading ‘until shortly before publication’ of delayed interim results, which need to be published by 31 October 2020.
Lookers, which reportedly spurned a potential merger with Pendragon (PDG) in May, is still poring over the books with its auditors to finalise the accounts for the 2019 calendar year and the half year to June 2020. ‘We currently expect both the 2019 results and the interim results to be published in November 2020,’ confessed Lookers.