Cars.com, one of the auto industry's largest online shopping sites, is restructuring its sales operations and eliminating more than 100 sales positions amid pressure from an activist investment group that has called for a leadership change or sale at the publicly held company if there is not a marked improvement.
The move comes after a letter to Cars.com was released Monday by Starboard Value Inc. chastising the shopping site for "an almost two-year continuing trend of customer losses and organic declines in revenue," despite increased operating expenses. It's resulted in missed profit expectations and lowered guidance, said Starboard, which held a 9.18 percent stake in Cars.com as of its latest regulatory filing. It is the third-largest shareholder in the company, behind BlackRock Inc. and Vanguard Group Inc., according to Nasdaq.
Asked whether he expected the restructuring to assuage Starboard, Cars.com CEO Alex Vetter said, "We listen to all investors and take feedback seriously." In a call with Automotive News, Vetter and Chief Revenue Officer Doug Miller pointed to the company's ongoing transition from a traditional media and listings service to a digital solutions provider.
"We've intentionally been expanding our business strategy beyond media and listings to capitalize on what we see are increasing dynamics within the industry," Vetter said, adding that the vehicle sales space is rapidly changing for dealers and consumers alike. "There aren't many dealers I'm talking to today that aren't seeking operating efficiencies."
Starboard's letter included a chart (below) showing losses in adjusted earnings before interest, tax, depreciation and amortization beginning in the second quarter of 2017 and continuing through the third quarter of 2018, along with a loss of dealer customers for each period. Cars.com's revenue grew 6 percent to $497.8 million for the first three quarters of 2018, while operating income fell 37 percent to $60.1 million. Net income dropped 59 percent to $29.5 million for the nine-month period.
The company has about 1,600 employees, including 480 in sales and account management. Cars.com said only members of the sales team will be impacted by the cuts.
The restructuring will break the company's sales team into four groups: a field team focused on serving and growing customer bases; an expanded account management team; a specialized sales team focusing on more complex and deeper product offerings; and a major accounts team.
Digital products
