(Sharecast News) - Nearly new-car retailer Motorpoint issued a profit warning on Friday on the back of drops in used car values and reduced selling prices in the third quarter, as the company unveiled plans to buy back up to £5m of shares.
While conditions are said to have "stabilised" in January, profitability in the three months to 31 December was hit by sharp downward used car price adjustments, with the average selling price dropping from £19,750 at the start of the financial year (1 April 2023) to just £14,500 currently.
As a result of the drop in prices, along with the timing of a seasonal increase in stock and disruption caused by Motorpoint's Derby store having to close in response to flooding, profitability for the year ending 31 March is now likely to be £5m to £6m below expectations.
"Whilst these falls had a significant negative impact on profitability, along with a reduction in finance commission, the group is optimistic for FY25 as the used car market continues to normalise," the company said in a statement.
"Encouragingly, retail volumes improved through Q3 and ended the calendar year roughly consistent with the previous year, reversing the trend of H1. This momentum has continued into Q4 and volumes are growing year on year."
The company also announced that it will shortly start a share buyback programme of no more than £5m, which it said was an "attractive use of the company's resources and beneficial for all shareholders".
Motorpoint (MOTR)