Cazoo is to pull out of mainland Europe and focus on the UK as the loss-making online car seller reverses its drive for international expansion, cutting hundreds of jobs and threatening sponsorship deals with some of the biggest major football clubs in the region.
The company, founded by Alex Chesterman, has spent nearly €200 million in Spain, Germany and Italy to expand its business, as well as multi-year sponsorship deals with European football clubs to promote its brand.
The group announced on Thursday that it would end all of its European operations in a bid to preserve cash, leading to the loss of 750 additional staff in Europe, in addition to the 750 jobs cut in the UK earlier this year .
He will also try to end a host of European football sponsorships, including deals with Real Sociedad and Valencia in the Spanish La Liga, Lille Olympique and Marseille in the French Ligue 1, Bologna FC of the Italian Serie A and SC Freiburg in German Bundesliga.
Investors reacted positively to the decision with shares of Cazoo, which have lost more than 90% of their value since the company listed last August, jumping 20% by mid-morning in New York on Thursday.
The group said it would begin an orderly liquidation of its operations in Germany and Spain and was in consultation with staff in France and Italy.
The company will end up with around 3,000 employees, mostly in the UK.
“I would like to thank all of our EU colleagues who are affected by this decision and we will of course seek to support them in any way we can,” said Chesterman, who is also chief executive.
The company announced in August that it was reviewing its European operations as it revealed a loss of £243m for the first half of 2022, more than double what it had lost a year earlier.
The move marks the end of an ambitious international campaign by Chesterman, who previously founded Zoopla and co-founded LoveFilm, launching the company with the aim of disrupting used car retail.
The group aimed to use scale and online convenience to break into the used-vehicle market, though established dealers questioned whether it was spending too much money cleaning vehicles to make a profit on the cars.
The company launched a reverse merger with a special-purpose acquisition company last summer, raising $1 billion at the height of Spac’s boom.
Cazoo said the decision was based on the amount of investment it would need to scale operations in Europe, while trying to achieve profitability. Liquidation costs would be offset by savings, the group added. He expects the decision to save him £100million by the end of 2023.
Chesterman said strong customer demand in the UK, along with the decision to pull out of mainland Europe, would ensure that the company’s balance sheet “remains strong and that we have a plan which we believe will not requires more additional external funding”.