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Piercing the gloom

Update | Automotive Retailers | 13 Nov 2017

Lookers issued a Q3 trading statement that reaffirmed management expectations for 2017. It also indicated the initiation of a share buyback programme, as in the absence of any immediate M&A opportunities the recent fall in the share price has made the returns compelling from such an allocation of capital. Clearly, new car sales in the UK are persistently lower year-on-year, with confidence declines among consumers and businesses taking their toll. However, the strength of higher-margin used car demand and aftermarket sales continue to deliver a positive mix. Overall, the rating appears undemanding and the yield attractive.


Maintaining performance

Update | Automotive Retailers | 09 Nov 2018

Lookers maintained its outlook for the current year, notwithstanding supply-side disruption that created volatility in new car markets in Q318. Used car and aftersales activities remain healthy and Q318 trading was ahead against a strong Q317. There are signs of stabilisation in new car markets in Q418 and Lookers expects to deliver against market expectations for the full year. However, a more cautious view as Brexit looms leads us to reduce our FY19e EPS by 6%. Nevertheless, the undemanding rating remains supported by an attractive yield.


Looking to the future

Update | Automotive Retailers | 24 Aug 2018

Along with its peers, in H118 Lookers continued to be challenged by market conditions, which returned to a more normal sequential development but meant that Q1 profitability was lower than in the prior year. With new and used car markets now appearing to have stabilised, management appears confident that the impact of the new vehicle testing regime is likely to be neutral across H218. With a continued focus on operating cost control, H2 profitability should recover strongly to provide a more normal H1:H2 seasonal split than was seen in 2017. As a result, we maintain our PBT and EPS forecasts.


Looking forward

Outlook | Automotive Retailers | 04 Apr 2018

Another record year of performance was achieved by the continuing activities of the group despite challenging market conditions that are persisting into 2018. As management pursues its strategy of focusing on the right brands in the right locations supported by appropriate levels of investment, it is continuing to outperform its markets. We expect this to continue with a remaining proactive focus on costs. Comparatives should ease as FY18 progresses but will start tougher due to the strength of markets in Q117. We now expect a modest decline in PBT for the full year.


Driving forward

Update | Automotive Retailers | 22 Aug 2017

A strong first half performance saw Lookers deliver yet another record trading period, overcoming the dilutive effect of the sale of the Parts business in H216. The performance of the continuing activities has been enhanced by the reinvestment of the proceeds in the two new dealership groups last year. In addition the balance sheet remains strong, facilitating both organic investment and M&A, despite the uncertainty that persists in the UK car market. Lookers looks set to continue its growth strategy with a sharper brand focus. The improved prospective yield also has attractions.


Strategy for driving growth

Update | Automotive Retailers | 16 Mar 2017

Lookers continued its impressive development in FY16, delivering yet another record performance. The buoyancy of the UK car market combined with the disposal of the parts distribution business enabled management to further its consolidate and build strategy. The addition of Warwick Holdings and Knights North West are further positive developments, with more acquisitions likely during 2017 adding to organic progression.


Still firmly on course

Update | Automotive Retailers | 11 Nov 2016

Lookers’ Q3 trading update confirms trading is on course to meet market expectations. The disposal of the Parts division has completed at GBP 120m, with GBP 82m of the proceeds used for new acquisitions. While market fears have caused a c 40% price drop against 12-month highs for the sector, we think Lookers’ nominal discount to peers on CY16 P/E rating is unjustified given its sound trading record and earnings growth potential.


Plenty of action

Outlook | Automotive Retailers | 31 Aug 2016

In just two weeks, Lookers successively announced the planned £120m disposal of its Parts division, a £55m acquisition, a fine set of interim results and, finally, another £27m acquisition introducing BMW/MINI to the group. All point positively to the future, yet the shares languish at 30% below their 12-month high and at a 45% P/E discount to the retail sector.


Adverse reaction hard to justify

Update | Automotive Retailers | 06 Jul 2016

A weak share price reflects fears about a post-Brexit economy rather than current trading, which remains on course. The challenge may again be formidable, but there are opportunities that a strong management team can use to demonstrate the quality of the group's earnings.


Record profits again

Update | Automotive Retailers | 15 Mar 2016

Lookers has an enviable record; despite new car registrations showing little change over the 12 years since 2003, the group has delivered consistent growth, increasing EPS by 188% from 5.17p in 2003 to 14.88p in 2015. Investment has continued, lifting the future profits potential. We believe that the group's impressive record still has some considerable way to go.


Perfect fit

Update | Automotive Retailers | 07 Sep 2015

The market responded positively to the Benfield Motors acquisition, liftingthe share price by 9% on the day. The natural fit, the enhancement toearnings and the minimal risks related to management synergy all point toan excellent deal for shareholders. The shares remain attractively priced.


Potential undervalued

Outlook | Automotive Retailers | 25 Aug 2015

While Lookers shares have risen by 12% over the past year, we feel the current rating still fails to recognise the future potential. Interim results prompted a rise in market estimates, which given the order book, could well be extended following the group's autumn IMS. Standing at a c 28% discount to the FTSE All-Share retailers index, we feel that the market fails to recognise the industry dynamics being exploited by management.