Lookers

LN: LOOK

£90.9m market cap

23.3p last close

Lookers is vying to be the largest UK motor vehicle retailer, with its new car operations supported by the strength of used and aftersales activities. It operates 155 franchises, representing 32 marques from 100 sites around the UK.

Investment summary

Lookers is the second largest UK new car retailer. The new CEO started 2020 with lower net debt than expected, but the uncovering of fraud compounded trading issues even before COVID-19 disruption. Lookers shut all sites on 24 March to protect employees and customers, but some have reopened to service key workers vehicles. The focus on preserving cash and reducing overhead is bearing fruit with net debt at 24 April of £65m. FY19 results will be announced in June, with positive underlying PBT still expected after the initial £4m non-cash fraud charge together with any additional elements. No final dividend will be paid.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2017A 4696.3 105.4 62.1 12.61 1.8 1.4
2018A 4879.5 114.8 50.0 9.95 2.3 1.0
2019E N/A N/A N/A N/A N/A N/A
2020E N/A N/A N/A N/A N/A N/A
Industry outlook

Market dynamics favour larger motor dealership groups against smaller independent groups, which still command c 60% of the franchise market. Global manufacturing overcapacity still points to OEM support. However, the sector is normally rated for recessions economic shocks like these and survived a dramatic crisis for the sector in 2008/9. Lookers’ problems are evident but the financial footing looks relatively sound compared to that period.

Last updated on 03/06/2020
Sector
Industrials
Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (1.9) (45.8) (73.1)
Relative* (11.4) (42.4) (70.1)
52-week high/low 88.0p/11.0p
*% relative to local index
Key management
Phil White Chairman
Mark Raban CEO
Cameron Wade COO and Director of Lookers