Countrywide going ‘back to basics’ amid hefty losses and 2018 warning
The group is going ‘back to basics’ and slashing costs after what it described as three years of under-performance in its main sales and lettings arm.
Troubled estate agency Countrywide has seen shares slump to a new all-time low after swinging to an annual loss and warning over further pain to come in 2018.
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The group – Britain’s biggest listed estate agency and owner of brands including Hamptons and Bridgfords – said it was going “back to basics” after what it described as three years of under-performance in its main sales and lettings business.
It is axing around a third of its 450-strong central office team as part of cost-cutting efforts to help turn around its fortunes.
More than 100 staff entered into redundancy consultation on Monday.
Countrywide is pledging to go ‘back to basics’ after a dreadful year Russ Mould, AJ Bell
Shares tumbled by as much as 24% at one stage before later settling around 13% lower after Countrywide reported pre-tax losses of £212.1 million against profits of £19.5 million the year before after a raft of writedowns.
Even with these stripped out, pre-tax profits more than halved to £25.2 million from £52.7 million in 2016.
Countrywide said trading had remained under pressure so far in 2018 after starting the year with a pipeline of work “significantly” below a year earlier.
This is expected to see underlying earnings fall around £10 million in the first half.
“At this time, it is unlikely that the shortfall in the first half will be recovered,” it added.
The alert comes after a painful start to 2018, which saw its shares plummet to a record low after a shock profit warning in January, followed just days later by the departure of its chief executive, Alison Platt.
Chairman Peter Long – who has stepped in to replace Ms Platt as executive chairman until a successor is appointed – said the group was working to resolve poor performance in its core sales and lettings business, but admitted it would “take time”.
He said: “We believe these business units are fixable, know what we have to do to restore them and the steps to take that should result in a return to profitable growth.
“This will take time, but ultimately there will be much upside for our group and our shareholders, whose patience has been sorely tested recently.”
He outlined plans to take the sales and lettings arm “back to basics” after losing key experienced staff through an ill-fated restructure in 2015 that saw 200 branches closed and some 1,000 employees lost outside London.
He is driving an overhaul that will cut costs, see it invest in IT and revamp its contact centre operation.
Countywide’s results laid bare the woes in its sales and lettings arm, where earnings tumbled 47% to £14.9 million.
Across sales and lettings in London, earnings fell 44% to £11.5 million.
Russ Mould, investment director at AJ Bell, said: “Countrywide is pledging to go ‘back to basics’ after a dreadful year.”
“A restructuring launched in 2015 has proved unsuccessful and its attempt to respond to the threat posed by industry disruptor Purplebricks has also fallen flat,” he said.
As well as management mistakes, Countrywide was also hit last year as the housing market experienced a marked slowdown since the Brexit vote, and the firm said in 2016 that the EU referendum had a “sustained impact on sentiment”, with fewer buyers and sellers coming to the market.
Countrywide owns 65 brands and has nearly 9,500 staff across 881 branches.