There is to be a change of driver and navigator at Lookers PLC (LON:LOOK) after the car dealer issued another profit warning.
Andy Bruce, the chief executive officer and Nigel McMinn, the chief operating officer have stepped down from the board.
Phil White, the chairman, has agreed to take on executive duties until permanent successors for Bruce and McMinn have been appointed. Richard Walker, currently a non-executive director will assume a part-time executive role with effect from today.
READ Lookers stalls on profit warning
The board changes occurred after the company revealed that the downbeat outlook statement in its interim results had not been pessimistic enough and that trading conditions had worsened more than expected.
The board now expects full-year underlying profit before tax will be in the region of £20mln, having previously guided the market to expect a profit of around £32mln, down from £43mln a year ago.
Trading in new vehicles during the third quarter (Q3) was below the board's expectations.
LFL new car sales decline accelerates
In Q3 the group recorded a 3.2% decline in like-for-like (LFL) unit sales of new cars, which represents an acceleration in the rate of decline from the first half of the year when LFL sales were down 1.2%.
Lookers rubbed salt in its own wounds by observing that the market as a whole declined by just 0.6% in the third quarter, after falling by 3.4% in the first half of the year.
The writing was on the wall for the now-departed senior executives as sales lost momentum in the second half of September – normally one of the most profitable trading months of the year.
Like-for-like unit sales to retail customers declined by 11.5% in the third quarter, with the group's volume brands particularly hard hit.
The group also experienced margin pressure leading to total gross profit from the sale of new vehicles during Q3 being around £7mln below last year.
The used car market remained relatively stable during the quarter. Like-for-like unit sales of used cars increased by 2.6%year-on-year, after rising by 2.0% in the first six months of the year (H1).
In H1 used car gross margins were 60 basis points (100 basis points, or bps, equal a full percentage point) below last year and, although remaining below last year, gross margins showed some improvement in the third quarter.
As well as parting company with its chief executive and chief operating officer, Lookers has identified 15 dealerships that it wants to close, leading to one-off charges of around £8mln, of which around £2mln will be non-cash charges. On the plus side, Lookers expects financial efficiency benefits from the retrenchment will be in the region of £3mln a year.
"It is disappointing to report this downturn in trading, but we have taken action to drive the future financial performance of the group. The board is resolute in its determination to restore the group's fortunes with market-leading practices in the sector," said Phil White, the executive chairman of the group.