Today’s column should really be a critique of the longest circus act in history – Countrywide PLC. Its series of announcements, counter-announcements and farcical mis-steps of late are certainly reminiscent of bad clowns and dodgy jugglers. Funny, if it were not for the thousands of staff members that are being made to sit in the middle of the road staring into the oncoming headlights that will determine their fate.

Russell Quirk

The trouble is that although more vultures are circling now, the fundamental issues troubling this once great institution are unchanged and so probably not worthy of a further verbal kicking on my part for now. Frankly, the remedies needed are the same as those that I tried hard to impart to Peter Long when we met back in October 2017 and until someone at the top-table there actually decides to put on their listening ears, the prospect of formal administration will continue to loom larger.

No, despite the latest skewering of Countrywide’s management performance this time by Connells, today I will resist the temptation to ridicule it further and instead will turn my attention to an entity that were it not for the distraction of the drowning of Countrywide, would be gaining much more attention currently.

Foxtons have so far gotten away with being but a side-act to the antics of Coco-Long and Bozo Creffield – but remember that it too was also once a giant of its time. Jon Hunt took it from Notting Hill nobody to a darling of the UK property industry and famously (or luckily, he says) sold it to BC Partners, just as the rest of us were about to hand the keys to our BMWs back to the finance companies.  The financial crisis of 2008 hit hard yet since then Mr Hunt has turned his £300m share of that sale into what amounts to a £1bn+ fortune. He is no clown.

But since his departure in 2007, ‘the London estate agency’ has had no such luck.

In recent years the Foxtons share-price has resembled a Courchevel ski-map – generally downward in direction with some heart-in-mouth black-run action along the way. The distant ‘peak’ was a price of £3.98 in February 2014 via a little jump in May 2015 albeit, otherwise, a flailing crash to the bottom where it sits today amidst a bundle of bent-up skis at just 32 pence. That’s a 92% fall. Even Eddie the Eagle could have done better.

The problem is that Foxtons is a ‘fair-weather’ business and trundles along like it’s still 1981.

Yes, it’s innovated some technology via its own CRM and it was one of the first to put inbound and outbound  calling into one core place for all branches. And the Mini thing was clever – once. But its business model is still the same – a micro-market led, hard sell, high fee ethos from an unwieldy footprint of expensive branch offices.

In many ways Foxtons resembles Countrywide in that it hasn’t changed in years despite the world and the industry changing around it. And, just as importantly, its response to falling revenues, higher costs and a cascading share price has been a reactionary, short-sighted salami slicing of its business such that it quietly closes an office here and there and slashes staff salaries rather than tackling a whole new strategic direction.

Part of the reason that Foxtons doesn’t innovate is because, perhaps, the senior management do not really know or understand the industry that they are in – believing it to be a straightforward ‘sellers finds buyer’ play rather than the nuanced, intricate, moving target that us veterans know it to be. Struggling to work out what bits of the old model to keep and which bits to throw away (that’s harder than you think).

But the other hand tied behind its back is the fact that it is listed – it is a publicly quoted company.

Going public is alluring. Pushing the button on the Stock Exchange floor and watching institutions and the public alike sucking up fragmented ownership of your company is not just an egotists wet-dream but also the key to sweeping piles of money from the table for yourself. The tradeable liquidity that it provides is, quite literally, gold to founders, management, directors and shareholders.

But, with the upside comes a significant downside – scrutiny.

As a publicly listed company investors, potential investors and the press can lift the bonnet and tinker with the inner-workings. Very little is hidden not least financial performance data and even the stuff that management don’t want others to see. Each trading statement and annual address will be coated with a thick gloss of sugar but underneath analysts and journalists probe and speculate and reveal often very uncomfortable truths for CEOs, CFOs and board members.

Moreover, the slightest squeal from the tyres elicits a reaction to its worth – often not a good one.

And it’s this that is stacked against Nic Budden, the current CEO. Or so he may think.

Change is necessary. Yet change requires disruption. Change requires money and investment. Change requires risk. But public markets like none of these things and so as the head-honcho of a listed company that desperately needs to pivot before it disappears into irrelevancy, you have to convince the board and larger shareholders to do what their instincts cry not to and to shake the thing upside down. To cannibalise in order to survive and to prosper.

But if you are a CEO with a five or so year horizon and with share options and bonuses baked into your package from ‘a yesterday’s industry’, you are doubtless unwilling to throw your personal earnings overboard in favour of doing what’s needed for the long term. Put another way, in many publicly listed entities the incentives for the bosses are out of step with what is needed for the good of the company itself.

Regardless of such inertia, this is the conversation that Chiswick needs to have with itself:

+ Strategically rationalise its London branches – not ‘death by a thousand cuts’. 50 offices becomes 20 – but the 20 should cover the whole of London as hubs with specialist listing experts engaged across each area of the capital

+ Expand nationally to areas that ‘get’ the Foxtons brand – By my count there are 60 locations that work (Harrogate, for instance). Again, not an automatic ‘opening of 60 branches’ but a smarter expansion that mitigates costs

+ The upshot is that Foxtons should now be a national brand. But with operational costs that reflect a new way of doing things

Breaking a few eggs is what Nic Budden has to do and whilst that will mean raising money, increasing debt and scaring the usually pedestrian paced major shareholders for a bit, the alternative is, well, to be the next Countrywide.

But as with its Milton Keynes bedfellow, alas Foxtons will doubtless ignore the future. Sadly, in that event it is fuxed.