Shares of major Manchester car dealership Lookers plc fell 13% on Friday as it announced CEO Andy Bruce and chief operating officer Nigel McMinn will step down immediately after weak sales led to a second profit warning in less than four months.

Lookers said it expects to report underlying profit before tax for the full year of approximately £20 million, down from £63.7 million in 2018 and significantly below analysts’ expectations.

“So much bad news is piling up at Lookers that it isn’t really a surprise to see the board want new leadership,” said AJ Bell investment director Russ Mould.

In June, Lookers made an announcement that the UK’s Financial Conduct Authority (FCA) is to carry out an investigation into the company’s sales processes between January 1, 2016 and June 13, 2019. 

In Friday’s trading update, Lookers said: “As reported in the group’s interim results statement trading during the six months ended 30 June 2019 was challenging.

“This was driven by ongoing weakness in consumer confidence in the light of political and economic uncertainty, pressure on used car margins and retail cost inflation.

“The board expected these conditions to continue to impact the group during the second half, but trading, particularly over recent weeks since mid-September, has been much more challenging than expected.

“As a result and reflecting the board’s caution about the outlook for the remainder of the year, the group now expects to report underlying profit before tax for the full year of approximately £20m …

“Working closely with its brand partners, the group identified 15 dealerships for closure and, where possible, relocation or consolidation into existing dealerships in adjacent territories.

“The board believes that as well as driving financial efficiencies, this will facilitate an enhanced customer experience in line with the group’s strategy of partnering with the right brands in the right locations.

“With the exception of two dealerships all will be closed by 31 December 2019.”

On the executive changes, Lookers said: “The group announces that Andy Bruce, chief executive officer and Nigel McMinn, chief operating officer have agreed that they will step down from the board today.

“Until permanent successors have been appointed, Phil White, chairman has agreed to become executive chairman and Richard Walker, currently a non-executive director will assume a part time executive role, both to take effect from today.

“Andy has held a number of roles in the group since joining in 2000, appointed to the board in 2002 and becoming CEO in 2014.

“Nigel joined the group as a director in 2013, becoming COO in 2017.

“Both Andy and Nigel will remain available to the group until 31 December 2019 to ensure an effective transition.:

Phil White, chairman, said: “It is disappointing to report this downturn in trading, but we have taken action to drive the future financial performance of the group.

“The board is resolute in its determination to restore the group’s fortunes with market leading practices in the sector.”  

“I would like to thank both Andy and Nigel for their significant contributions to the Group since joining and wish them both well in the future.”

Andy Bruce said: “After nearly two decades with Lookers, it is now time for me to move onto new ventures and allow new leadership to take the business into its next chapter.

“I am extremely proud of what we have achieved in building the group into one of the leading car retailers in the sector and I am confident that the talented people in the business will continue to take the business forwards. I wish them all the best for the future.”