Car retailer Pendragon (PDG) revved up 2.75% to 8.22p on Wednesday after the Nottingham-headquartered company issued a bullish strategy update ahead of half year results (28 Sep).
Pendragon outlined an ambitious plan to ‘transform automotive retail through digital innovation and operational excellence’.
The company also said it has cut the size of its workforce as it pursues ‘further cost base efficiencies’ as part of a strategy overhaul it hopes can deliver underlying pre-tax profits of between £85 million-to-£90 million by the 2025 financial year.
EFFICIENCY DRIVE
Hard-pressed Pendragon has seen its share price crash in recent years following a string of profit warnings and management departures.
The indebted company came into the coronavirus crisis from a loss-making position and even held merger talks with fellow sector struggler Lookers (LOOK) at the height of the pandemic.
But the shares ticked higher today on the news efficiency gains made during the pandemic, principally through job cuts and the closure of unprofitable dealerships, will deliver around £37 million of annual savings.
Investors also welcomed the news that Pendragon believes there are ‘further cost base efficiencies we will be able to unlock across the property portfolio, through the replacement of manual process with systemic solutions and through reviewing existing key contracts and services’.
BERMAN’S BIG PRIORITIES
New chief executive Bill Berman, the former President and Chief Operating Officer of AutoNation, America’s largest automotive retailer, set out three strategic priorities for growth and transformation.
He believes there is significant opportunity to unlock value in the UK motor division by accelerating digital innovation. Berman also intends to accelerate the geographic expansion of Pinewood, Pendragon’s ‘Software as a Service’ business that offers a dealer management system (DMS) and customer relationship management tool.
Berman also plans to disrupt standalone used car sales in the UK. ‘Critically, our strategy is designed to equip the business to react to changing consumer patterns in the years ahead and ensuring, in particular, that we are well positioned to take advantage of digital innovation,’ insisted Berman, though he believes there will always be a major role for bricks and mortar in vehicle purchasing.
‘Pendragon has grown to become a leading motor retail group with a strong network of dealerships,’ continued Berman, who is ‘confident we can unlock the full potential of Pendragon by delivering targeted improvements to our people, our systems and our operations. We look forward to executing this strategy and embarking on an exciting new chapter for Pendragon.’
