Lookers to close 12 more sites and layoff 1,500 workers to survive the Coronavirus crisis

On Thursday, Lookers (LON: LOOK) revealed plans of closing another 12 sites and slashing its workforce by 1,500 employees in a bid to cushion the economic blow from COVID-19. The car dealership is also struggling to come out of an ongoing investigation into a few of its transactions.

One of the Lookers’ segments made the headlines in March as an initial probe found evidence of fraudulent expense claims and misstated balance sheet at large, that resulted in a delay in the release of its annual financial report. The British company now expects its full-year results to be published in the last week of June. Learn more about the basics of a balance sheet.

Shares of the company are currently 8% up on Thursday. At 25 pence per share, Lookers is more than 50% down year to date in the stock market after recovering from 11 pence per share in March.

Lookers suspends plans of a merger with Pendragon

The car dealership was in talks with its competitor, Pendragon, over a potential merger. As per a recent media report, Lookers decided to suspend the plan in May.

Lookers financial struggles, however, started before the Coronavirus pandemic that has so far infected more than a quarter-million people in the United Kingdom and caused over 39,500 deaths. The Altrincham-headquartered company shut down 15 of its locations in November 2019. Following the closure of another 12 sites, Lookers will now have 136 dealerships across the United Kingdom and Ireland.

The company expressed confidence that business is starting to return after the health crisis that forced it into closing all trading locations in recent months to minimise the fast spread of the novel flu-like virus. But recovery, Lookers added, is still slow.

Lookers to save £50 million annually

According to the company:

“Given the ongoing uncertainties faced by the Group in the early days of reopening the business, the Board continues to believe that it is too early to make any reasonable estimate of the financial impact on the Group during 2020 and beyond.”

Lookers also highlighted on Thursday that laying off workers and closing sites is expected to save roughly £50 million for the company annually.

The British car dealership also performed downbeat in 2019 with an annual decline of 40% in the stock market. At the time of writing, Lookers has a market cap of £97.98 million and a price to earnings ratio of 4.06.