Online car retailer Cazoo has announced that it will lower marketing spending as it looks to realign its business to ‘de-risk its path to profitability’.
The European brand wishes to extend its cash runway beyond 2023 and focus more on performance marketing to conserve cash in the short term and focus on delivering sustainable profit margins.
The news comes as consumers across the UK continue to feel the pinch of the cost of living crisis and many brands battle to secure brand loyalty.
“While growth remains strong and consumers continue to embrace the Cazoo proposition, with record retail unit sales in May, the Company is not immune to the rapid shift in the global economy and the possibility of a recession in the coming months,” Cazoo said.
“As a result, management’s expectations for the full year are now more cautious, reflecting the weaker and uncertain external environment.”
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As well as lowering brand marketing spend, the firm will cut 15% of its employees – equivalent to around 750 jobs.
Despite selling 70,000 cars in the last two and a half years, Cazoo still plans to lower selling, general and admin costs per unit and manage costs and expenditure to become self-funding in the UK.
“The combination of rising inflation and interest rates with supply chain issues caused by the pandemic and war has driven up the cost of living and hit consumer confidence,” Cazoo founder and CEO Alex Chesterman OBE said.
“This perfect storm has placed cash conservation top of mind for the Company, ahead of growth. We have proven that we can buy and sell cars at scale and deliver a market-leading customer experience, but in the current climate we are focused on improving our unit economics which involves making some tough but necessary decisions around our priorities.”
“We need to be laser-focused with our drive towards profitability and preservation of capital.”
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