Cazoo to cut its workforce by 15%

Other actions it is taking to “lower costs and drive operational efficiencies” include slowing the pace of new hiring and lowering its brand marketing spend to focus more on performance marketing. 

These are just some plans designed to “de-risk” its path to profitability and extend its cash runway beyond the end of 2023. 

In a statement on the news, the company said that - while its growth remained strong and its consumers continued to “embrace the Cazoo proposition” - it’s not immune to the rapid shift in the global economy and the possible recession in the coming months. As such, its management’s expectations for the full year are now more cautious. 

Due to these macroeconomic conditions, it has developed a realignment plan that is designed to “right-size” the business and conserve cash in the short term by focusing on delivering improved and sustainable profit margins. 

As part of this, it aims to have lower selling, general and admin costs per unit while minimising the impact on growth, achieve a UK break even at lower retail unit sales with a stronger focus on gross profit per unit (GPU) and working capital, and manage costs and expenditure to become self-funding in the UK without needing further capital. 

Commenting on the news, Cazoo’s chief executive and founder Alex Chesterman said: “The combination of rising inflation and interest rates with supply chain issues caused by the pandemic and war has driven up the cost of living and hit consumer confidence. This perfect storm has placed cash conservation top of mind for the Company, ahead of growth. 

“We have proven that we can buy and sell cars at scale and deliver a market-leading customer experience, but in the current climate we are focused on improving our unit economics which involves making some tough but necessary decisions around our priorities.”

Its realignment plan will see the firm limit its capital expenditure and delay a number of planned investments, and modify its consumer proposition to drive costs down and improve operating efficiencies. It will also slow its near-term growth aspirations in both the UK and EU to focus on profitable growth.

It expects these initiatives, among others, will result in cash savings to the company’s budget of more than £200m between the start of this month (1 June) and 31 December 2023, with approximately 750 roles being impacted across the business.