Countrywide’s share price plunged this morning after it announced that it is expecting major falls in revenue and profits, with its sales and lettings business particularly badly hit.
It is expecting group EBITDA for 2017 to be 22% down on the previous year.
The announcement resulted in a drop of nearly 17% in Countrywide’s share price in early trading. Having closed at 135.2p yesterday, it fell as low as 110p and as of 9am this morning it was at 112.4p.
The company issued a trading update this morning ahead of its preliminary results on March 8.
It said total group income is expected to be £672m, down 8.8% on 2016’s total of £737m.
Meanwhile EBITDA (earnings before other costs) for 2017 is expected to be around £65m, down 22% on the £83.5m it posted in 2016.
Total income in the sales and lettings business for the full year is expected to be circa £360m, down 14% on 2016, which Countrywide said reflected a disappointing fourth quarter performance.
Income in the UK business is expected to be circa £205m, down 17% year on year, and in London is expected to be circa £155m, down 10% year on year. Lettings income is expected to be down 4% at circa £169m, driven by an 8% decline in the UK, with London lettings revenue flat year on year.
EBITDA in sales and lettings is expected to be circa £26m, down 45% “principally as a result of the changes in the sales and lettings structure made over the last 12-24 months”.
Countrywide said: “We have begun to take a range of actions over the last quarter that we believe can restore the business back to profitable growth.”
Strikingly, there is no mention in this morning’s update of Countrywide’s online agency offering.
The B2B business, including Lambert Smith Hampton, is expected to deliver “strong” EBITDA growth of 14% to circa £36m (2016: £31.5m).
In its financial services division, lower transactional volumes from estate agency was offset by double-digit income growth across the combined Buy-to-Let business, Mortgage Bureau and Mortgage Intelligence channels. Countrywide said the division delivered “resilient performance” with EBITDA expected to be £20m (2016: £22.6m).
Countrywide said: “We have begun to take a range of actions over the last quarter that we believe can restore the business back to profitable growth.”
Things To Do:
1. Peel off the £995 stickers from the office windows.
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Totally agree
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Agree, looks horrible, customer think it’s horrible….oh and stop valuations being 30% high and taking photos with an Iphone…..sloppy.
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D’oh!
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How on earth Alison Platt is still in her job just utterly amazes me! Such a shame to see the company looking like this.
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This is like watching the biggest slow motion car crash pile up ever.
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But sincerely, it’s easy to understand how they’ve blown their Sales bottom line through race to the bottom tactics. What really needs examining is how they are pulling down their Lettings at the same time.
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Grim another disappointing statement .All that expensively bought turnover seeping through the door
Still the burden of the large debt reduced only by the monies raised with the placing last year at 175p Maybe Platt will chance her arm at another one ?
Shareholders can only glance across at Savills who announced their new CEO promoted from within -a time served professional
At least LSH turnover up which CWD’s lenders might now push harder for CWD to sell to reduce the debt pile
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One of the many problems facing the industry at the moment is a race to the bottom on fees. This is not fixed fee listing call-centre Agent’s making significant ground and affecting the market (though some agents believe the hype and believe this to be happening) but, that far too many agents know they can only compete on fees because they do not have the experience, skills, and knowledge to compete on their service or results.
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They won’t be the only ones. Lots of regional and corporate agents will have a hard time at year end.
Raise fees now, raise income, and ignore the sell it yourself sites like PB etc, they will have to do the same soon enough if they want to show profit.
Alternatively go bust – the choice is yours.
A great time to open a new agency offering outstanding service I would say.
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Nail in the coffin will be tenant fee ban.
Other corporates will also be hit hard – particularly as many take multiple applications and only select final tenant once all referenced
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If any business in the country got rid of its 14 most senior and experienced people their profits would be hit so it’s not really any surprise that after Ms Platt decided that plan was a good one that things have tanked!
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Yes, this too.
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So that’s the deck chairs organised….
What’s next?
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Ed Balls.
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There will be a lot of former executives smiling into their cornflakes this morning. Her days will be numbered that’s for sure.
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But will she get a mahoooooosive (as PeeBee would say) pay off bonus in the processs?
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I doubt there will be any fellow, former executives,feeling anything other than sadness to see what was a good business in free fall.Like most organisations the management were far from perfect, however,we at least looked a little further than our noses when planning. The current challenges facing the industry have been festering for a very long time, yet they have failed to develop and execute a meaningful strategy. Countrywide’s early success in the ‘80’s was, like Connells,largely down to taking advantage of changes within the industry and seizing advantage resulting from the failure of other corporates. Our main competition were well run independent agencies who adapted quickly,it will be the same again. Countrywide have much to do if they are to survive, it’s difficult to imagine the current management team will have the skill and as important the resolve for them to do so.
Tony Crew
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What can possibly be said that hasn’t been said before?
Ineptitude of management on a scale last seen in eighties when Pru, Halifax, Nationwide thought they could do ‘agency’. CWD isn’t retail and is now degraded, a lot of it with the il-conceived and dreadfully executed ‘on-line’ (no more on-line than it was before) offering that has only resulted in turning the operation into a ‘low fee’ operation in the eyes of a potential client. That’s ‘client’ not customer. Various brands of varying professional standing reduced to one inconsequential mass and a staff that must fear for their livelihoods. Well done whoever instigated this total debacle; you must be very proud!?!?!?
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Our local branches of Dixons and Bairstow Eves used to really annoy me;
a). Deliberately overvaluing to get instructions, making it more difficult to win business with honest appraisals.
b). Posting letters and cards (claiming to have a great buyer who very strangely hadn’t rang the telephone number on the board outside) through the doors of properties the day after we put them up for sale……..
c). Knocking on our vendor doors, demanding a one day ‘tester contract’ to prove they had people interested in the property….and then sending other members of staff round pretending to be viewers.
d). Taking photographs on appraisals, and then using them to market the property online at some point, without vendors knowing.
Now they just feel and seem…….well…insignificant.
Thanks Alison, I think you are doing a great job.
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Share price is down over 16%. Could we muster a few quid between us, buy it…and then run it properly?
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Quote from StockMarketWire.com – “Alison Platt, Chief Executive Officer, bought 112 shares in the company on the 5th January 2018 at a price of 133.54p.”
If only she had waited a few more days!
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Do you mean 112,000?
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Nope, copy and pasted.
Maybe her bonus shares!
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They are evaporating slowly but their cost base is not.
No cash = no advertising spend = no presence or relevance = no business
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Their downfall started the first day the word “retail” was used.
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MrLister
Totally agree.
There – now that’s out of the way, what can we ‘return to normal’ and argue about?
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In fairness, I’m not sure they’ll be the only ones looking at such declines. If the latest annual UK sales volume figures are correct at under 900k then it’ll be grim for many of us. Seen a few fellow independents disappear beneath the waves last year alongside the Countrywide closures.
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Its a shame such a company has gone this way.
Many of us know first hand from working there in the past the company it ‘Could’ be.
The issue has always been the roll out of new ideas, people getting promoted far too early and a disconnect from head office to the shop floor. Sadly this management team have been worse than their predecessors.
They can still make it work, but not with the current team.
Less cost cutting, less focussing on what others are doing and re-establish themselves as market leaders in each town with a sensible fee (we were up against them this week and the quoted 0.5% COUNTRYWIDE!!!).
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I wonder if there is anywhere where they are ‘market leader’? Or, have been in recent memory?
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The local offices here have tumbleweeds blowing around both inside and out. Their lettings business is a complete joke – took on a small portfolio from them last year, the landlord is still preparing his formal complaint to the TPO; its currently up to 20 pages not including attachments. Yet landlords as a breed are generally so apathetic when it comes to tolerating poor service and hang on with a bad service provider often until they’re significantly out of pocket. More than frustrating…….
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Before anyone shouts too loudly compare the performance of Countrywide against other individual agent offices. EBITDA of £26m across 800 offices where the minimum wage is mandatory, staff holiday a must and a manager taking a manager’s wage, then all the support functionality to support the corporate administration and executive board.
Hands up all the business owners who would like to be working £37.5 hours a week, getting 26 days holidays plus bank holidays and having no other worries of tackling compliance and accounting responsibilities.
I keep an fairly close eye simply to identify the needs of the industry I serve. The overriding need is to reduce fixed costs and control fee erosion.
For sure their numbers are down but the business has an EBITDA and working conditions for the branch staff that ought to make many envious.
Election, Brexit, Election, you lot are all in this together and from what I can see and can estimate you are all hurting just as bad when broken down per branch. About 5000 agent branches don’t have enough transaction income to warrant their advertising spend and that means agent principals are funding that out of their own drawings.
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You are of course right Robert, you also missed out the pension contributuions as well (ticking time bomb if you are a PB rep and want to reitre inthe future).
All i will say is certainly in my time at CW most managers are on 50 plus hours a week, do not get the bank hoildays as they are forced to work them and many do not take the hoilday as the offices are down to the bear bones staff wise.
CW (in some guise) will be here when PB is a distant memory.
*Edit – I do less figure reporting in my own business then when i was at CW 😉
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I average 70 hours a week and took 10 days holiday last year that put me on at least £5/hour less than minimum wage. From what I can see about 5000 agents share my lifestyle and income and to be brutal I’m considerably well off compared with some who must be pouring £k’s to keep the doors open. The sickening part is how those agents are collectively paying over £41m toward one portal’s profits.
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Brings to mind a tweet a while back from Mr Rutley @GrumpyOldEA
‘How to make a small fortune from estate agency……..start off with a very large one!’
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Problem is in our area that every time the government do anything that worries the public or causes uncertainty, valuations….and therefore business levels fall;
Going well first half of 2016…….Referendum vote……someone flicked the light switch off
Going well first half of 2017…….Election called……….someone flicked the light switch off
Now we are starting into a downward spiral of sales volumes which could become self fulfilling as more and more people decide not to consider selling, because they can’t find anywhere they would like to move to!
Just hope nothing major happens in June this year.
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Transaction volumes are showing a compound trend line decline of about 2% each year
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But presumably it is area specific?
In our main area, sales completed on rightmove sold prices tab are down from over 450 two years ago to little more than 300 now….a drop of over 30%!!!
I understand there may be some sales still to be registered on the land registry for the last year, but…..
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All agreed but it’s the manner in which they’re p*ss*ng it all against the wall which is staggering. Bear in mind too that agency is almost entirely a liability based business with corresponding assets being wholly intangible. Goodwill only has a value when it’s good – as soon as it isn’t anymore, there isn’t a business.
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Robert, most individual offices have not gone to the bank borrowed a shedful of money to buy out a competitor for 15 x annual annual profit based on a top year only to find out immediately that turnover has diminished but still have to pay the bank back
Its the debt that is the main issue
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Is that debt attributable to Alison Platt or previous Chief Executives
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Both but she continued buying right up to the time she slammed the brakes on and put he bus into reverse She bought Finders Keepers for example in Oxford in April 2016 when tenants fees already raising its head
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Apparently Carillion are looking for a new CEO, Maybe Mrs Platt will apply!
I’m sure Bob Scarff is smiling from ear to ear, shame they got rid of an actual estate agent and got a shopkeeper in.
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I disagree with the Bob point. Many people bang on about how great he was… if he was that great he would of been planning some sort of online offering to compete long term. He didn’t and most of what he has gone into since has failed.
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I think you miss the point. An online offering is exactly what they didn’t need but did anyway and has contributed to the problems they now have!
There’s no smoke without fire if people say nice things about someone it’s normally because they are a decent operator.
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>Countrywide expects full-year EBITDA to be around 65 million pounds, 10 percent below Jefferies’ estimate, prompting the brokerage to cut its price target on the stock to 125 pence from 145 pence.
Currently trading at 113p so still a ‘buy’ in their eyes?
Perhaps this is why we haven’t seen the listing to completion conversion rate report from CWD broker Jefferies that was promised for last year?
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Probably because they have introduced an upfront payment model, par for the course?
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Problem is in our area that every time the government do anything that worries the public or causes uncertainty, valuations….and therefore business levels fall;
Going well first half of 2016…….Referendum vote……someone flicked the light switch off
Going well first half of 2017…….Election called……….someone flicked the light switch off
Now we are starting into a downward spiral of sales volumes which could become self fulfilling as more and more people decide not to consider selling, because they can’t find anywhere they would like to move to!
Just hope nothing major happens in June this year.
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Looks like it was #gamechanging after all.
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Funnily enough, 2 agents run by and employing ex Countrywide staff in the Sheffield area appear to be doing really well at the moment. They have a decent ranges of properties, nice offices, nice staff, take care with the property presentation and have a a good variety of properties listed. Neither are cheap in terms of fees. The best that the local Countrywide offices have been able to come up with is a sub £1000 “online” offering and a modern auction thing, both of which are not really of interest to the average vendor. They used to be the best known agent in my area, often not for all the right reasons but they’e probably way off now.
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Funnily enough, 2 agents run by and employing ex Countrywide staff in the Sheffield area appear to be doing really well at the moment. They have a decent ranges of properties, nice offices, nice staff, take care with the property presentation and have a a good variety of properties listed. Neither are cheap in terms of fees. The best that the local Countrywide offices have been able to come up with is a sub £1000 “online” offering and a modern auction thing, both of which are not really of interest to the average vendor. They used to be the best known agent in my area, often not for all the right reasons but they’e probably watch off now.
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From the inside looking outwards things seem to be getting a little better as everyone I spoke to expected more office closures and even more job losses in December but it never happened. Still a ban on recruitment in place unless essential i.e someone to turn the lights on etc. But still really poor marketing appearing centrally which continues to hack us all off as one size really does not fit all well not in my patch anyway. Interestingly there is absolutely no focus or discussion on the on-line proposition whatsoever and my office window has quietly been put back to look like an Estate Agents Office again rather than Poundland which made us all feel better. My BM came back with a very long face after a recent meeting as he was told no decision has been taken yet as to whether he will get his year end bonus well that’s a great motivator! Looks like I’m here for another year as our office still made a profit last year and we retain a decent market share. Finally from someone who can remember Bob Scarff calling in to our office a few times I have no knowledge of his business acumen but as a leader he was right up there as we really felt 10 feet tall when he left and that’s what we lack in my opinion. Alison Platt? never met the lady but seen her picture.
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I have a friend there who says its all changing for the better and they are starting to re-invest! Phoenix from the flames possibly.
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