June 12 2019 @ 13:16 by Steven Hugill
A motoring retailer with dealerships across the North East has warned of a financial loss after a difficult market was compounded by internal operational challenges.
Pendragon plc, which runs Evans Halshaw and higher-end Stratstone dealerships across the region, said it expects to make a small pre-tax loss for its 2019 financial year.
The company added its first-half is “expected to be significantly loss making ahead of returning to overall group profitability for the second-half.”
The business said the change has been driven by a number of factors, including the acceleration of losses at its Car Store division, which has bases in Gateshead and Hartlepool.
It also said it had been affected by a significant increase in used car stock at the end of its 2018 financial year, lower-than-anticipated new car margins and increased costs, particularly in aftersales.
Bosses said they have an action plan in place to address its fortunes, which includes making improvements to new vehicle retailing and used car stock management and profiling.
Those moves will complement previously-announced deals to dispose of two US franchise locations in California for £60 million.
Mark Herbert, chief executive, said: “Notwithstanding the challenging market and uncertain macro outlook, the expected loss for the year is still disappointing.
“That said, we see significant addressable opportunities to improve the business and return to profitable growth.
“We are continuing to work on our review of the business ahead of our strategic update in September, but I am confident there are real opportunities for self-help that will improve the performance of the core UK motor and leasing businesses.
“In the short-term, there is a need for a refocus of strategy and execution in Car Store, but I believe this to (offer) significant long-term market opportunities that we should be pursuing with vigour.”
Evans Halshaw, which includes the Citroen, Dacia and Hyundai marques, has branches across the North East, including sites in Newcastle, Cramlington, Sunderland and Gateshead.
Stratstone, which sells luxury brands such as Mercedes-Benz, Jaguar and Land Rover, has branches in Newcastle, Wallsend, Sunderland and Houghton-le-Spring.