Richmond-based CarLotz founding CEO replaced as company faces mounting problems | Local business news
The founding CEO of CarLotz has been replaced in the senior executive role as the Richmond-based retailer that sells used vehicles on consignment saw sales fall short of expectations due to supply chain disruptions.
Michael Bor, who was instrumental in CarLotz’s IPO as chairman and CEO, will no longer hold those leadership positions from Wednesday but will remain in a consulting role for 12 months, the company announced late Tuesday afternoon.
Bor will be replaced as CEO on April 18 by Lev Peker, the former chief executive of CarParts.com, an e-commerce supplier of auto parts and accessories.
The company gave no reason why Bor was removed as CEO and chairman, but the chain’s new chairman of the board said: “Our board has agreed that a new CEO will help steer the company into the future.”
Bor, 48, co-founded CarLotz in 2011 with Aaron Montgomery and Will Boland. Montgomery and Boland left the company in 2019.
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The trio opened the first CarLotz store off Midlothian Turnpike in Chesterfield County in 2011. CarLotz opened a second store in Henrico County in 2012.
“Founding CarLotz nearly 12 years ago and bringing the company to this point has been by far the most rewarding and empowering experience of my career,” Bor said Tuesday in brief comments he made. during the company’s quarterly conference call with investors.
“I still remember our first consignment guest and the exact make and model of vehicle he brought us,” Bor said. “I believe then, and I still believe now, that the CarLotz consignment model is the best way to buy and sell used cars.”
CarLotz sells used vehicles on consignment and shares the profits with owners.
It now operates 22 hubs – where the company receives and refurbishes cars offered by its customers for sale – in the Mid-Atlantic, Southeast, Southwest, Midwest and Coast regions. Where is. It has two locations in the Richmond area and two others elsewhere in Virginia.
In January 2021, CarLotz became a publicly traded company with its shares trading on the Nasdaq stock exchange under the symbol LOTZ.
Shares fell 10% to close Tuesday at $1.76 – a dramatic decline until Jan. 22, 2021, when shares closed the first day of trading at $11.50.
The management change comes as CarLotz faces a used-car market that has been hit by “unprecedented disruption”, as the company’s new chairman of the board, Luis Solorzano, described it. during the conference call.
Solorzano said the price of used vehicles had risen by more than 30%, while new car production was “dramatically down” and used car inventory was “at unprecedented levels of recent memory”.
“Our new hubs have not increased unit sales as quickly as expected,” Solorzano said. “Our inventory mix has been less desirable due to strong penetration of older vehicles with a high average price, as well as greater penetration of dealer-owned units.”
“These factors have created and continue to create a significant challenge for our business,” Solorzano said.
The company reported a loss for the fourth quarter of 2021 of nearly $14.2 million, or 12 cents per share, compared to a loss of $4.34 million, or 7 cents per share, for the same period of 2020. .
For the full year of 2021, the company posted a loss of nearly $39.9 million, or 36 cents per share, compared to a loss of nearly $6.6 million, or 11 cents per share. , for the whole of 2020.
The company said it was “pausing” its 2022 property growth plans, with the exception of a hub that is currently underway, to reduce cash usage “until the business environment supply is improving”.
Prior to founding CarLotz, Bor worked for Richmond-based investment banking firm Harris Williams & Co. from 2003 to 2010, serving as a director of its transportation and logistics M&A investment banking group. . Bor also previously worked in the investment banking department of Lehman Brothers and PricewaterhouseCoopers.
Peker joins CarLotz after three years as CEO of e-commerce provider CarParts.com. Prior to that, he was Director of Marketing at Adorama, an electronics retailer. He has also held senior positions at Sears Holdings Corp and CarParts.com.
“I am thrilled to have the opportunity to lead CarLotz into a new era of growth and innovation,” Peker, who was not present on the conference call, said in a statement sent by the company. “With an innovative business model, I believe CarLotz has great potential to increase market share as we emerge from COVID-19 and the supply chain challenges that have hampered sourcing and operations throughout the area.”
Solorzano said Peker brings to CarLotz a blend of senior executive leadership experience, proven capabilities in the online retail industry and a track record of creating shareholder value. “We believe Lev will help strengthen and grow the business and that under his leadership, CarLotz will be positioned for long-term success,” Solorzano said in a statement.
The company disclosed in regulatory filings on Tuesday that it has a separation agreement with Bor in which he will receive severance pay equal to his annual base salary, continued health and welfare benefits coverage for one year. and accelerated vesting of certain stock options. Bor will also receive $300,000 to serve as a consultant to the company for 12 months.