Reg Vardy powers ahead with 35% boost
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The success story at the upmarket car dealer Reg Vardy continued yesterday with the announcement of a 35 per cent rise in pre-tax profits in the six months to October from pounds 4.57m to pounds 6.15m. Much of the good news had already been factored into the market, however, and the shares, which almost doubled in value last year, slipped 4p to close at 269p.
Peter Vardy, chairman and son of the company's founder, said: "We have made substantial progress in the period despite difficult trading conditions.
"Significant growth has come from the new dealerships as well as from organic growth in the core business. We are looking forward to 1996 when we believe we will see improving margins as the recovery in consumer confidence grows."
The rise in profits during the six-month period was struck from a jump in sales from pounds 184.6m to pounds 279.8m.
Almost pounds 25m of the increase came from newly acquired operations. Earnings per share moved ahead to 9p (7.5p), allowing a 12.5 per cent increase in the dividend from 2p to 2.25p.
Having inherited just one dealership on the edge of Sunderland in 1976 on the death of his father, Mr Vardy has built the company up to its current total of 40 outlets in four geographical regions. From its roots in luxury car franchises such as Aston Martin and BMW, the company has diversified into volumes ranges and has success selling nearly new and other used cars.
Breaking with the industry tradition of dealerships selling only one make of car, Vardy has set up a chain of MotorZone outlets, which concentrate on nearly new cars.
These are attractive to buyers who avoid paying the high depreciation cost of a new car, which loses a sizeable proportion of its value the moment it leaves the forecourt.
During the first half vehicle sales volumes increased by 42.4 per cent to 30,125 cars. Service, parts and bodyshop activities also moved ahead well, with sales and gross profits up more than 10 per cent.
Plans for 1996 include more MotorZone openings and the creation of a contract hire operation to use existing facilities to better effect.
When Reg Vardy was floated in 1989 its shares were valued at 90p, since when they have tripled in value. The rise in the value of the company has boosted Peter Vardy's 41 per cent stake to a little over pounds 50m.
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