Group 1 Automotive Inc. said Wednesday it will reduce its U.K. workforce by 10% or 300 people as the latest company to cut jobs to reduce costs in the face of an uncertain economy.
Group 1 warned it expects losses on used-vehicle wholesale sales in the U.K. to continue into the current quarter, which ends March 31.
The Houston-based auto dealership and collision-repair company also fell short of analyst estimates for fourth-quarter profit as costs rose, but it posted a slight beat on revenue.
Group 1’s stock
GPI,
fell 6% in premarket trades.
The stock rose 2% to $282.29 on Tuesday. The stock has fallen by 7.4% so far in 2024, compared to a 3.3% rise by the S&P 500
SPX.
While Group 1’s U.S. operations have executed well in an “evolving” market, its U.K. unit experienced challenges with used vehicles, said Chief Executive Daryl Kenningham.
Group 1 said it recognizes that “we have some work ahead of us to bring our costs back in-line with recent trends.”
Group1 will cut 300 jobs, a spokesperson said in an email to MarketWatch. In its annual report, the company disclosed a total of 15,491 employees including 3,487 U.K. jobs and 12,004 workers in the U.S.
The company’s fourth-quarter profit fell by 30.3% to $106.2 million, or $7.87 a share, from $152.4 million, or $10.76 a share, in the year-ago quarter.
Adjusted earnings in the latest quarter were $9.50 a share, below the FactSet consensus estimate of $10.44 a share.
Revenue rose 10% to $4.48 billion, ahead of the analyst estimate of $4.41 a share.
While new-vehicle units rose by 14.8%, margins fell due to higher selling, general and administrative expenses (SG&A).
SG&A as a percentage of gross profit increased 7.5% in the U.K., driven by higher expenses and lower margins on both used and new cars, the company said.
“Our U.K. operations began a rebalancing of our used vehicle inventory in response to market changes, which generated losses on used vehicle wholesale sales in the current quarter, which are expected to continue into the quarterly period ended March 31,” the company said.
This story originally appeared on Marketwatch
