© Reuters. FILE PHOTO: Vehicles are displayed at a Carvana dealership that allows customers to buy used cars online and have them delivered or picked up from an automatic tower in Austin, Texas, U.S., March 9, 2017.Photo taken on March 9, 2017. REUTERS/Brian Snyder
(Reuters) – Kavanagh Co (NYSE: CO) on Friday forecast solid 2023 core earnings, as the online used-car retailer laid out plans to rein in spending on advertising, expansion and other areas to offset falling demand.
Shares in the company known for its car vending machines rose 12.9% after the opening bell.
A few days ago, Carvana said it would lay off about 2,500 employees, or 12% of its workforce, as part of its efforts to return to profitability after a poor quarter.
Demand for used cars has waned due to sky-high prices and a shortage of supply, and Carvana said it didn’t see typical seasonal demand in the first quarter of the year.
Carvana’s first-quarter capital expenditures were about $220 million, and it plans to cut budgets quarterly until it reaches about $50 million in the fourth quarter. It plans to maintain that number every quarter, so it can post “significantly” positive EBITDA in 2023.
The company also said it would rapidly reduce selling, general and administrative expenses per vehicle sold and balance sales and staffing levels.
Carvana’s stock price has more than halved since it raised $1.25 billion in a stock offering last month.