AN expansion programme which backfired, coupled with the dramatic fall in used car values, has sent profits tumbling at dealership group D C Cook. This week the company reported a pre-tax loss of £9.2 million on turnover of £337.5 million for the year to April 30 compared to a profit of £3.5 million on turnover of £226.8 million in 1998.

As a result of the dramatic turnaround in fortunes the company has radically revised the expansion strategy it announced in 1997, with chairman Derek Cook saying expansion had now been curtailed and all under-performing outlets were being sold. 'This will reduce gearing dramatically and will assist in restoring the group to profitability,' said Cook, who revealed that 10 dealerships had been sold or closed, four non-trading properties had also been disposed of and a sale and leaseback agreement had been reached on the company's Doncaster site.

'The action we have taken in pursuing our revised strategy is proving effective in significantly reducing losses and gearing. Our future emphasis will remain focused on the reduction of gearing and the improvement in the operating performance of the reduced number of core dealerships.'

Within 18 months of the expansion programme being announced the group almost doubled in size and earlier this year, despite a profits warning, Cook said: 'We have 40 dealerships. However, over the next year my intention is to build up to 50 dealerships.' But this week he conceded: 'This rapid expansion, with the benefit of hindsight, was ill-timed but was based on the perceived need to grow the company to keep pace with our peers in the sector.'