Motorpoint Group PLC (LON:MOTR) shares rose on Thursday after the vehicle retailer managed to deliver a profit rise in its first half as a result of strong trading following reopening of its branches in June and July as the UK’s lockdown was eased.
In its results for the six months to September 30, the company reported a pre-tax profit of £9.7mln, up 3% year-on-year, while revenues fell 27% to £387.7mln which was attributed to the forced closure of retail branches and preparation centres between April and June. The company also said its dividend was under review and did not propose an interim payment compared to 2.6p per share last year.
The company highlighted a “significant acceleration” in online sales over the period, which accounted for over 40% of the total, adding that its market share has also grown following the reopening of its branches. Gross margins also expanded in the six months to 9.1% from 7.5% last year following what Motorpoint said was “strong customer demand and increased stock turn”.
Looking ahead, the firm said it remained confident that its home delivery and reserve & collect offerings will continue to service its customers and provide access to new markets, although given the “uncertainty of future demand and margin levels” caused by the pandemic it did not provide any earnings guidance.
“Through operational rigour and a focus on e-commerce solutions, the group delivered an improvement in profit before tax against the prior year, despite a complete closure during the UK-wide lockdown from March 24th, and order fulfilment limited to home delivery only from May 21st. Since fully reopening all branches in July, demand levels have exceeded management’s expectations…Margins have also been above recent levels, reflecting strong customer demand and continued improvements in vehicle preparation speed and marketing effectiveness”, Motorpoint chief executive Mark Carpenter said in a statement.
“Notwithstanding the challenging macroeconomic backdrop, we look to the future with confidence as we continue to innovate and build on the strengths of our low-cost, independent, flexible operating model and leading brand to drive further market share growth”, he added.
In a note on Thursday, analysts at house broker Shore Capital said the company was “excellently positioned to thrive over the medium term” and that its combination of “close to customer physical locations and a fully operational digital/online capability” was compelling.
Motorpoint shares rose 2.7% to 308p in early deals.