Cazoo Group, the British online car retailer, is facing financial challenges, according to a recent announcement.
The company, listed as CZOO.N, disclosed that it currently has limited liquidity and anticipates the need to secure additional capital before the second half of 2024 in order to maintain its business operations.
In a regulatory filing, Cazoo acknowledged that if it fails to secure the necessary funds, it may be forced to make significant changes to its operations, including the possibility of discontinuing certain activities.
As of June 30, the company had cash and cash equivalents amounting to £194.6 million ($246.11 million). It projects that by the end of the year, its cash reserves will range from £100 million to £115 million.
To address its financial situation, Cazoo intends to reduce its cash utilization, targeting a range of £25 million to £35 million per quarter starting in 2024.
Currently, the company spends between £30 million and £40 million in cash each quarter.
This announcement follows closely on the heels of Cazoo’s recent completion of debt restructuring and related transactions, which helped reduce its debt from $630 million to $200 million.
The company had also implemented a reverse stock split as part of its strategy to raise capital.
Cazoo’s financial challenges can be attributed, in part, to persistent inventory problems amid a challenging economic landscape in both the UK and global markets.
The company acknowledged that it anticipates continued impact from the challenging macroeconomic environment, which could adversely affect its ability to maintain revenue growth over the next twelve months.
In summary, Cazoo Group is facing financial constraints and has expressed the urgency to secure additional capital to sustain its operations beyond the first half of 2024.
The company is actively seeking ways to reduce cash utilization and navigate through the economic challenges it currently faces.