Carvana Co. said it plans to complete a $1 billion reduction in operating costs by the second quarter of 2023 as the online car company looks to fix itself without layoffs, after hitting a five-win streak benefits in 2022.
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the stock fluctuated between a slight gain and loss after hours, after gaining 0.1% in the regular session to close at $10.08.
“We expect these cost reductions to be broadly applicable across all major SG&A expense components, but importantly, we don’t expect them to be,” Carvana said in a statement. The reduction of forces is part of this plan.”
“We have entered a year that is positioned for growth, similar to what we experienced the previous nine years,” the company told shareholders in a letter. “After the pandemic, troubled auto supply chains and historically fast rising interest rates have combined to have a significant impact on the affordability of used cars.”
“Rising interest rates and market sentiment have led to a significant shift in our priorities away from growth and towards profitability,” Carvana said. “This resulted in markedly lower volumes than we expected, and as a result we had to incur excessive costs.”
The company reported a loss for the fourth quarter of $806 million, or $7.61 a share, compared with a loss of $89 million, or $1.02 a share, in the same period last year. last.
Carvana reported total sales falling to $2.83 billion from $3.75 billion in the previous quarter, as retail sales fell 23% to 86,977 units.
Analysts surveyed by FactSet had forecast a loss of $2.18 a share on revenue of $3.06 billion.
“We currently expect retail unit sales in Q1 2023 to decline consistently compared to Q4 2022, as we continue to normalize inventory sizes,” the company said. , optimize marketing spend and make progress on its profit initiatives”.
Carvana shares are up 112% year-to-date, but are still down 92% over the past 12 months.
