Profits plunged at Countrywide in the first half of this year.
An operating profit of £28.3m in the first half of last year plunged to £6.5m, while revenue was down from £370.3m to £333m.
Sales transactions were down from 33,940 to 27,100.
CEO Alison Platt was defiant, saying: “We are building a stronger business for our future and remain on track to broaden our digital capability, reduce our operating cost base and strengthen our balance sheet.”
But she admitted: “The first half of 2017 was tough for the Group.”
She added that the same period last year had been boosted by “the high levels of housing transactions brought forward in time as a result of the Stamp Duty changes and the EU referendum. Our income versus the first six months of 2016 is down 10% and our adjusted EBITDA down 26%.”
Platt said Countrywide had made “real progress in extending our multichannel offering”.
She went on: “On 31 July we will have completed the rollout of our digital fixed price proposition to 50% of our branches.
“This offer gives our customers the choice to transact digitally and at a fixed cost but with the assurance that they are able to upgrade to the full service proposition in branch without losing the money they have already paid.
“We have increased traffic to our estate agency websites, have been invited to carry out more market appraisals and have won more instructions.
“We have held or gained market share in the instructions that have the new offering and also learned that, even where our digital proposition is available, over 95% of customers still choose to take advantage of the services we offer in branch, confirming what we expected: that a combination of digital capability and local market expertise is what customers really want.”
The company said this morning it will not be paying its shareholders an interim dividend.
At Foxtons, there will be a dividend, although lettings and sales revenue were both down – by 2% and 29% respectively – for the half year ending in June.
Lettings revenue was £32.1m, and sales revenue was £22.2m. Like Countrywide, it also cited the sales surge of spring last year.
Profits before tax at Foxtons were £3.8m down from £10.5m. Revenues were down just over £10m, from £68.8m in the first half of last year, to £38.5m.
Chief executive Nic Budden said: “Our performance has been resilient in the context of a London property market that has been further impacted by unprecedented economic and political uncertainty.”
Both firms were this morning reporting to the stock exchange.
City analyst Anthony Codling, of Jefferies, said of Countrywide that it “is doing the right things” in “taking out costs, offering complementary digital services and growing the financial services division. However the costs of this strategy are being felt before the benefits and whilst it is difficult to see Countrywide receiving any help from the underlying housing market, we do see silver linings amid the clouds”.
Of Foxtons, he said that its results were at the top end of expectations, amid the “dreadful” London sales market. He described Foxtons as a fighter, with the stamina to stay in the ring for many more rounds to come.
In early morning trading, shares in Countrywide fell heavily. In the first 40 minutes, they were down about 10% to just under 150p.
Foxtons shares fell about 5% to 91p.
Comments (27)
It doesnt surprise me. I have lived through the Countrywide acquisition process in 2014 & saw a very good independent ruined by a total lack of, well, anything really.
Its very odd to be fair, as they clearly go after good agencies, then inadvertently ruin them! In my case the firm was lacking direction because Countrywide put people who are clearly out of their depth in charge & then a whole lot of staff left within 12 months, a trend which continues to this day. Me, I stuck it 3 years before giving up. I had put 14 years into the firm & had loved every minute. 3 years with a total lack of direction, being told what to do by people who couldnt run a bath was too much.
I do think that the Mortgage arm is good, run by some good people, and of course there are still very good agents within Countrywide. I personally hated the corporate b*llshit & the total lack of direction coming from above.
Oh the stories I could tell…..
Anyway, I hope they break up allowing the parts to go back to being what they once were, very good independents.
Judging by comments on previous stories about Countrywide is anyone at all surprised by these results?
The share price has now plunged by over 10% in the last few days.
I have one thing to suggest to shareholders…..put somebody in charge who understands full service estate agency and can develop properly future offerings rather than merely chasing the coat tails of other ideas that were first to market.
Agent V you can share your thoughts with Peter Long the Chairman at chairman@countrywide.co.uk However he has never taken the trouble to respond in the past which perhaps says it all!
I will do just that thanks.
CW also have a “horrid” looking £995 banner on their door, looks cheap, feels cheap and is defo desperate…..they also just valued and took on a 3 bed semi for £330k today, next door to an immaculate 4 bed detached for £335k we just sold….vendors of the 4 bed just laughed and said it was a joke and so were the agent!!!!
Surely, if over 95% of their clients choose the traditional offering over the cut price product, creating this mixed offering was a complete waste of time.
Countryuwide should have stuck to what they were good at…mortgages… the shops they closed would have made money just on the mortgage and life business… very strange move shutting offices…it costs nothing to close them but £200k to get established in an area…. but hey,,’retailers’ dont think of these things… oh actually they do..they have shops,,thats why they are retailers.
Yes indeed but what is even crazier is borrowing money to buy businesses at say 12 multiplier on an average of say 3 years previous profits honed in frothier times then closing down the office a few months later and /or the star players waltzing off into the sunset often with clients in tow . Thanks for the golden goodbye
This is why CEO’s are a false economy. The pressure to make growth out weighs staff happiness and simple survival. They couldnt even enjoy it when i was there years ago,,,record years unimaginable 2 years before ,,what do they do ? increase targets by 20%…what did all the mangers do?..leave and set up doing it better for cheaper…what did they do? nothing.
One of our local branches of a countrywide brand has it splashed all over the windows ‘Sell your property for just £995’. Go back a year or so and their lowest fee was often £3,000 plus VAT plus an upfront marketing fee…..typically adding up to nearly double our fee.
Can’t help thinking their new window display is effectively saying to all their previous customers ‘We’ve been ripping you off for years’!
Agent V you are correct as always..i was going to knee jerk a cheap deal a few weeks ago… i know for a fact it wouldnt have worked and i would have had to reduce all my existing pipleline for being a 2 faced cheeky git.
Id rather go bust then make no money. but hey what do i know about it.
The mid sized agencies and corporates with huge head office overheads are staring down the barrel of a gun
Agency is actually becoming more personal than ever – clients want their agent – not a call centre – to handle their queries
PB has established that clients don’t want or perceive the need for an office structure – but what PB are getting wrong is the personal professional side of things
Local realtors with a hard work ethic, regulated businesses and high value service at sensible fees are what my research shows is what sellers and landlords want
Succinctly put J1 and absolutely ‘on the money’. Evolution of the industry that depends on service provision to the client. Never has quality of staff/individual been so important.
I agree totally……who is your research for?
Me
Before transforming our business we undertook some research about what people expect from an agent.
The responses ranged from cheap fees to improved service.
Interestingly more people wanted a better service.
They are happy to view houses on line, but not at all bothered about booking a viewing at 2am for example.
7 day opening though is vital for viewings, all of which are accompanied, and this is a real differentiator.
Which are of the country are you in J1?
So does this mean that CW has dropped no sale, no fee for those sellers drawn in by their £995 offer who then convert to a full service?
Also, if they charge a withdrawal fee of say £500 plus vat on their full-service offer if a seller withdraws during the cooling off notice period can they still promote no sale, no fee at all?
If you bought a computer and it did not work as a retail customer you are entitled to ask for your money back.Why should pre-paid estate agency be allowed to be any different?
If a seller changes to “full service” then the £995 is deducted from their final bill. If they try to withdraw then the £995 is not refunded.
It is no surprise that the performance is as poor as reported. There continues to be perpetuated (in the pr) the illusion that things will get better; well, with the management that is there now; it won’t. The ‘it’s retail isn’t it’ debacle has failed, the ‘we can do ‘purplebricks’ is and will fail as well as do more damage as the selling public see CWD as a ‘cheap agent’. Time to come up with another plan???? Either that or accept you are ‘out of your depth’ as the Pru, Halifax, Royal, Lloyds, Nationwide and the myriad of others who trod this path before. Evolution of the business and integration of the internet are absolutely essential as everyone knows apart it seems from Mrs Platt and more so Ms Tyrer and the sycophants that perpetuate the myth that ‘it’s just the market/election/brexit’ that is responsible for their demise. Estate agency is and remains a ‘cottage industry’. Ignore that at your considerable cost.
Todays betting:
Departure of Platt within next six months – 10 to 1 on.
Break up of Countrywide in next two years – evens.
Failure of Foxtons in next two years – 50 to 1
Foxtons break even on lettings so going nowhere..profit is just for show as no one really sees it apart from a few hedge fund managers. this is the danger of being a public company. If i was making 6 million a year in a private company it wouldnt matter about growth. Trying to find Growth in a dead country like UK is impossible unless you tell big purple lies of course…
Who is Platt trying to kid with those figures .Just goes to show the strategy of buying revenue expensively by acquistions with borrowed monies has failed as revenue has disappeared out of the door.At least the placing was successful reducing debt
Looks like the sale of LSH flopped
“We have also concluded the strategic review of Lambert Smith Hampton which will remain an important part of the Group.”
Doublespeak!!!
She gives the impression that she is thrashing around moving the deckchairs around on the Titanic
I was trying to sell my wife’s car. I conducted a ‘strategic review‘ and decided to have the scratches polished out, the dents removed and wheels refurbished. Spent so much money on it I was never going to get back what it owed me so, had to keep it!!! sound familiar?
UK transaction volumes down 7%. Countrywide’s transaction volumes down 20%.
Nothing else needs to be said.
Not a good result for Countrywide but I suppose it’s £6.3m more than Purple Bricks at least.
If i was purplebricks i would buy foxtons and countrywide with my #fake money and close them.
Wait until their “sell for £999” really kicks in.