(CTN News) _ Cazoo is pulling out of continental Europe and focusing on the UK as it reverses its international expansion drive,
Cutting hundreds of jobs and threatening sponsorship deals with some of Europe’s biggest football clubs.
In order to broaden its business, Alex Chesterman’s company spent close to €200 million in Spain, Germany, and Italy, and signed multiyear sponsorship deals with European football clubs.
After laying off 750 employees in the UK earlier this year, the group announced on Thursday that it would wind down all European operations in order to preserve cash.
It will also try to end deals with Real Sociedad and Valencia in LaLiga,
Lille Olympique and Marseilles in France’s Ligue 1, Bologna FC in Italy’s Serie A, and SC Freiburg in Germany’s Bundesliga.
On Thursday, shares of Cazoo, which have lost more than 90 percent since listing last August, jumped by 20 percent.
German and Spanish operations will be wound down orderly in consultation with French and Italian staff.
Around 3,000 employees will remain, mostly in the UK.
“I would like to thank all our colleagues in the EU impacted by this decision, and we will support them in every way we can,” said Mr Chesterman.
After revealing a loss of £243 million for the first half of 2022 – more than double what it lost a year earlier – the company announced in August that it was reviewing its European operations.
Chesterman, who previously founded Zoopla and cofounded LoveFilm, launched the company with the aim of disrupting used car retailing with this decision.
It used scale and online convenience to break into the second-hand vehicle market, though established dealerships questioned whether it was spending too much on cleaning vehicles.
During the height of the Spac boom, the company raised $1 billion through a reverse merger with a special purpose acquisition company.
Cazoo said its decision was based on the amount of investment it would need to scale operations in Europe.
Winding down would be offset by savings, the group said. It expects the decision to save it £100 million by the end of 2023.
With strong customer demand in the UK and the withdrawal from continental Europe,
Chesterman said the company’s balance sheet would remain strong and external funding would no longer be required.
The Financial Times Limited 2022.
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