It is difficult to lose a job, especially when the cost of living has skyrocketed and some parts of the world are experiencing or anticipating a recession. As companies come to terms with the new reality, tens of thousands of employees are being laid off.
Cazoo, a UK-based online car retailer has become the latest one to join the bandwagon as it starts doing layoffs and closure of customer service centres. It also expects a drop in sales of as much as 50%.
The company, which sold about 65,000 cars in the UK in 2022, has now stated that it anticipates selling only 40,000 to 50,000 cars in 2023 and will be making “further headcount reductions” in order to reduce costs and get closer to profitability. It had previously predicted sales of up to 100,000.
Founder stepping down
Further, the company’s founder, Alex Chesterman, announced that he would transition from CEO to executive chairman, with current chief operating officer Paul Whitehead taking his place.
The layoffs occur amid slowing economic growth, higher interest rates to combat inflation, and concerns about a potential recession.
Chesterman said he was “extremely mindful of the current economic environment and believe[s] the right course of action for 2023 is to focus on further improving our unit economics, reducing our fixed cost base and maximising our cash runway.”
“Our new 2023 plan, which includes more modest top line ambitions, ensures that we continue to improve our unit economics, reduces our fixed costs and conserves cash,” he said.
Shares of Cazoo have decreased by 93% over the past year, and the company reported a loss of £243M in the first half of 2022.
The company had previously disclosed a flurry of cost-cutting measures for 2022, including hundreds of staff layoffs and the termination of operations in the European Union.
The company should still be able to reach profitability by the end of 2023, according to Chesterman, who also founded the real estate website Zoopla and the DVD rental company Lovefilm.
Cazoo, a company founded in 2018 by Alexander Edward Chesterman, reached a $8B (£6.5B) valuation when it went public on the New York Stock Exchange in 2021. It is currently worth a lot less than $1B. Since its founding, the company has spent millions on advertising, including sponsoring the Everton football team’s uniforms, which are thought to be worth up to £10M annually.