Getty Images
- Cazoo working with partners “to ensure an orderly wind down”
- Company to focus on UK business in effort to reach profitability by end of 2023
Online car retailer Cazoo has confirmed it is ending its various sports sponsorship deals in Europe after announcing it will exit all markets except the UK.
The company had announced a business realignment plan last month, casting doubt over its numerous partnerships in the European Union (EU).
The strategic shift includes improving retail unit economics, reducing costs and maximising liquidity. Cazoo plans to make cash savings of more than UK£200 million (US$232 million) from June 2022 to the end of 2023. Approximately 750 roles at the company will be impacted.
Having launching in the UK in 2019, Cazoo later branched out into mainland Europe. As part of this, it spent €200 million (US$202 million) since last February to acquire Cluno in Germany, BrumBrum in Italy and Swipcar in Spain. Sports sponsorship was deemed an ideal way to help establish the Cazoo brand in new markets.
Speaking in August, Cazoo chief executive Alex Chesterman said the firm was looking at “a full range of options” when asked if it could sell its mainland European operations or close them entirely. He added that Cazoo needed to “reduce cash burn”. Losses for the first half of the year had more than doubled to UK£243 million (US$282 million).
Now, the company has decided to pull the plug on Europe, with Chesterman describing it as a “tough decision” but one that was necessary to put Cazoo on the road to profitability by the end of next year.
It means Cazoo’s extensive sponsorship portfolio in markets outside the UK will be scrapped. This includes deals with top-flight soccer clubs across France, Germany, Italy and Spain, such as Marseille, Freiburg, Bologna and Real Sociedad.
“We have a number of partnerships in mainland Europe and will work with our partners to ensure an orderly wind down of these relationships in the interest of all parties,” a Cazoo spokesperson told SportsPro.
The company did not confirm the financial cost or timeframe of ending the partnerships.
Cazoo will continue its commercial agreements in the UK, which include tie-ups with Premier League outfit Aston Villa in addition to covering the likes of cricket, rugby, snooker, darts and horse racing.
SportsPro says…
Cazoo bet the farm on sports sponsorship being the key to unlocking the European market. However, the company was unable to translate exposure into sales. Last month, Stephen Morana, Cazoo’s chief financial officer, confirmed the online car retailer’s earnings before interest, taxes, depreciation and amortisation (EBITDA) loss rate in Europe was “roughly around UK£25 million to UK£30 million a quarter”.
A plethora of soccer clubs must now begin the search for a new principal partner. Given the commitments initially promised by Cazoo, it is a hunt teams will find both surprising and unwelcoming.
