Lookers warns over loss as accounting probe widened

Troubled car dealership Lookers has warned over a “material” first-half loss after lockdown as it also revealed an accounting investigation is being extended further across the business.

The group, which suspended shares on July 1 after it discovered a potential fraud on its books, said it would have to put back its 2019 results further after already delaying in March and June.

Lookers said the widened scope of the investigation by Grant Thornton meant further work was needed on its corporate leasing division and vehicle financing arrangements, as well as the 2018 and earlier balance sheets.

It has already alerted over a possible £19 million hit from the accounting issues and said it was assessing the impact of these matters on accounts, but still expects to remain profitable in 2019 on an underlying basis.

Lookers’ update on the investigation came as it cautioned over underlying half-year pre-tax losses after the closure of dealerships in lockdown sent revenues tumbling 38% to around £1.6 billion.

It also revealed the scale of job losses amid an overhaul launched last November, with more than a fifth – 22% – of its workforce set to be cut by the end of September, leaving it with around 6,700 staff.

This comes after the latest round of redundancies announced in June saw more than 1,400 jobs axed.

But it said trading has been “encouraging” since the staggered reopening of showrooms from June 1.

It returned to like-for-like used vehicle sales in June and said it outperformed the new retail market, with the trading trends strengthening in July.

Last month it invoiced and delivered more than 14,000 new retail and used units, up 17% on a like-for-like basis.

Lookers said: “The release of pent-up demand from over two months of closure, together with an ongoing consumer trend to avoid public transport in favour of the private car, has helped to drive activity.

“Given the group’s large internal and external retail premises, social distancing measures are less disruptive than many other forms of retailing which has helped encourage customers back to the dealerships.”