After losing nearly $1 billion in the first half of 2022, Carvana Co. will do more to cut expenses in the coming months, including possibly further reducing employee counts at the online used-vehicle retailer.
That direction from company leaders comes after Carvana already worked on cost-cutting in its second quarter, notably announcing in May that it would eliminate 2,500 jobs. Cost reductions are a move financial analysts have been urging for the challenged retailer, especially after its cash burn-heavy first quarter.
Carvana CEO Ernie Garcia said the retailer in the most recent quarter "shifted our priorities for the first time in company history to favor efficiency and cash flow in recognition of the changes to the market and the economic landscape, as well as to enable us to quickly adjust to changes in our industry that had caused our expenses to be out of balance with sales volumes."
Carvana's back-to-back quarterly net losses in the first half of 2022 were the largest in company history. The second-quarter loss of $439 million came one year after the retailer announced its only quarterly net profit since going public in April 2017.
Carvana CFO Mark Jenkins last week said the company saw "meaningful" expense savings quarter over quarter, as it trimmed advertising costs by $24 million and payroll expense by $20 million.
"As we're looking out over the rest of the year, we really do see opportunities across all areas of the business to continue to drive" expense efficiency, Jenkins told analysts.
While cost controls will happen across the business, payroll will be one "of the bigger buckets," Jenkins said, as Carvana continues to work on better matching staffing levels to its sales volume.