Pendragon is to cut some 1,800 jobs and close 15 of its stores as it changes its operating model and reacts to the coronavirus pandemic, it announced today (Jul 30).
In a statement issued via the London Stock Exchange at 9am, the motor retailer group, which operates brands including Evans Halshaw, Stratstone and Car Store, said the impact of Covid-19 had speeded up a review of its future operating model, which had already begun before the pandemic struck.
It added that most of the sites that would be closed were loss-making and no longer expected to be viable, or were not part of its future network structure involving its OEM partners. Together, the stores made an operating loss before tax of some £2m in the 2019 financial year.
Approximately 400 redundancies are expected from the closures, with estimated one-off cash redundancy costs of £1.2m and closure costs of approximately £1m. There will also be associated lease and asset impairment charges of some £5.5m.
Meanwhile, proposed changes to its operating model are expected to result in some 1,400 redundancies and expected to deliver an annual cut in costs of some £35m, with an estimated one-off cash restructuring cost of about £5m. This means some 1,800 jobs will be lost in total.
Chief executive Bill Berman, who gave a Zoom interview to Car Dealer on May 22, said the proposals reflected its ‘intention to create a resilient, leaner and more profitable business across the entire group’.
He added: ‘These have been difficult decisions for the board to make and our priority now is to manage the transition to our new operating model.
‘The Covid-19 pandemic is a uniquely challenging situation and we want to protect as many jobs as we can sustainably and the proposed redundancies are, of course, extremely regrettable.
‘During the pandemic we have focused on ways to improve workflow, efficiency and our digital capabilities. It is paramount that we embed these behaviours into all areas of the business, as we expect the economic environment to remain challenging.
‘The actions that we are undertaking are for the long-term health and success of the group and ensure that we emerge from the pandemic as a more competitive and stronger business with the ability to thrive in the future.
‘I would like to take this opportunity to thank every one of our employees for the hard work that has been done to reopen our businesses from lockdown. I am proud of the essential work we undertook to assist key workers during lockdown and for the way we have served our customers in store and online during these difficult times.’
Last month, Berman warned that some showrooms would have to close if new car sales didn’t pick up later this year, as reported by Car Dealer.
The image used is for illustrative purposes only
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