NEWSFLASH: Foxtons warns that trading conditions remain challenging after slide in profits

In a trading update this morning, Foxtons said that it expects this year to be challenging following a fall in profits and revenue during 2016.

The company said that total group revenue for the year was circa £133m (2015: £150m), with revenue for the quarter ended December 31, 2016 totalling circa £26m (2015: £35m).

Adjusted EBITDA (profits after costs) for the full year is expected to be approximately £25m (2015: £46m).

The reduction in group revenue for the year reflects the “significant fall in sales volumes immediately following the first quarter of 2016′, the company said.

In the final quarter of 2016, sales revenues were circa £12m (2015: £20m) as volumes remained subdued. Lettings revenues in Q4 were circa £13m (2015: £13m) and have remained more resilient, “benefitting from our high levels of renewals despite lower levels of new tenant activity and some downward pressure on rents arising from increased stock availability”.

In its statement this morning, Foxtons said: “Our lettings business remains a consistent and recurring revenue stream which comprises over half of group revenues. We have continued to focus on maintaining tight cost control while market conditions remain challenging, which provided protection to our EBITDA margin during the second half of the year.”

Nic Budden, CEO, said: “Despite a challenging year across the residential property markets, we have continued to make good progress in respect of our strategic initiatives, including building our presence in PRS and new homes, and leveraging our technology using data analytics and digital marketing to enhance our customer proposition.

“We also opened seven new branches in 2016 and a further two branches in outer London are due to open in Q1 2017. Looking ahead, we expect trading conditions to remain challenging in 2017.

“Should current levels of sales activity continue in the short term, it is likely that 2017 volumes will be below those in 2016. Our balanced business model provides resilience against sales market cycles and we have a strong balance sheet with no debt. Our high-touch approach to customer service continues to be a key differentiator and as the most recognised residential brand in London, we are uniquely positioned to manage through the market uncertainties and take advantage of any change in conditions.”

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17 Comments

  1. Hillofwad71

    Doesant augur well for CWD either.Spectacular cliffall in revenue during last quarter for Foxtons   The saving grace (if any) for Foxtons is  they carry no debt  and at least there are some property professionals at executive level .

     

    At CWD I wonder what “prizes” Hands free Sam Tyrer  Ryder will be giving out to her ” staff “as outlined in her New Year statement  I think she is stills trying to encourage the schoolgirl saturday worker at a mobile phone shop   I can  just imagine the highly skilled property branch manger  eagerly  awaiting his microwave  for not losing any instructions for reasons probably outside their  control Patronising or what!

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  2. mrharvey

    Uh oh, spaghetti-o’s!

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  3. Robert May

    Challenging?  I have a pair of Levi 501’s I shrunk fitted when I was 18, they still have quite a lot of  wear left in them.  I face the same sort of challenges trying to get  into them as Foxtons face being a  confident, expensive agent not many people like in a market that’s falling away quite hard  in the areas they do well in when the market is rising. Foxton’s KPI’s look a little more than challenging!

    One day I might get into shrunk fit 30″ waist jeans but  I can’t say when that’ll be.

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  4. 123430

    I like Foxtons, but wait until the fee ban hits them as well.

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  5. Ding Dong

    Have a dislike for Foxtons, one of the many companies which have caused the tenant fee ban to be proposed

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  6. seenitall

     

    EBITDA   that old chestnut which PB recently used – again helpful to post a definition of what EBITDA is from Forbes.:

    EBITDA, that widely-touted measure of company performance and indicator of value otherwise known as earnings before interest, taxes, depreciation, and amortization, is a fairy tale told to investors and credit managers so that they go to sleep happy instead of running for the hills.  EBITDA purports to indicate a company’s pure operating performance, free of such esoteric characteristics as debt cost, tax burden, depreciation and amortization. In reality, EBITDA is akin to a blender, into which go normal financial statements and out of which comes a number that always seems to make the subject company look better than it did when the numbers went into said blender.

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    1. LondonR90

      To be fair that is the view held by a reported who writes for Forbes.

      Foxtons are expensive but they are pretty damn good at getting a good price. They are head and shoulders above any other agent in London. So if they suffer, a lot of other agents will suffer.

      Having said that Foxtons have already started working to fix things. They are more active on social networks, have started engaging customers on review sites like Trustpilot and they have also started spending money on Adwords recently – something they never did before (except bidding on their own brand name ‘Foxtons’)

      I do not think they will struggle as much as some people make out. The loss from tenant fees will be about £3-5m per year. They can take that hit, especially if other agents are on the same level playing ground.

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      1. SE27

        Foxtons are easily the worst agency in London…

        They are basically con artists, but excellent at marketing.

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        1. Hillofwad71

          A bit like Purplebricks then !!

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        2. LondonR90

          How so?

          Overvaluing? Owning and referring customers to their own mortgage broker?

          Apart from that their charges are all online and easy to find, including sales fees. More than can be said for many high end London agencies.

          Foxtons do no worse than standard agencies to gain more business.

          There are very few agencies that play by the rules unfortunately. Those that do play by the rules limit themselves severely.

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          1. PeeBee

            “There are very few agencies that play by the rules unfortunately.”

            That is an awful statement – and one which I very much doubt you can qualify.

            “Those that do play by the rules limit themselves severely.”

            So – which camp do you pitch your tent in, London R90? Are you prepared to “limit yourself severely” in order to trade fair and square? Or do you play by another set of rules to those laid down?

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      2. londoneye

        Where is the evidence that supports your view that they are head and shoulders above any other agent?

        Social media is not being kind to them either, 97 followers on Twitter and 707 who follow Avoid Foxtons – they have not used social media in the past because they know what people will say about them.

        The offices appear to me to be running with the minimum number of ‘sales staff’ as the business is just not there at the present time.

        They are opening more offices – why, shareholders will become fed up with this management in due course, soon there will be an approach from a larger firm who wants a share of the London market and they will pick this company up.

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      3. Property Paddy

        Dear R90

        When you say “have started engaging customers”

        Physical is it ?

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  7. LondonR90

    I am sure we will have different views.

    I have worked with a lot of estate agents helping with their marketing, not only in London but all over England. I got to know how they operated from inside out. I could see what they were doing, although I did little to facilitate the shady stuff they did do. My job was marketing.

    I am very much on the side of playing far, regardless of what anyone else around me is doing. I want to fully deserve my money. I am against upfront fees and against charging tenant fees for example. My agency goes over and above what is required by law. I don’t need to play dirty but I know some agencies do have to and they will. I find it more useful to devote my time and energy into something more positive – not only for my own piece of mind, but also for the sake of my long term business plans.

    I am still new to the game and I respect everyone’s views. However, I have dealt with a lot of businesses and I know what goes on.

    So there, up to a point, I qualified my ‘opinion’.

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    1. PeeBee

      “So there, up to a point, I qualified my ‘opinion’.”

      Not even to the thinnest of points there are, I’m afraid. “I’ve been… I’ve seen…” washes with no-one.

      Stating you’ve worked with/for some of those whose ethics are questionable doesn’t do your argument any massive favours either…

       

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      1. LondonR90

        Sorry PeeBee but it’s my opinion and like I said, you might not agree with it. I am allowed to have that opinion. I have qualified why I have that opinion – like you asked. Now you’re dismissing the way I qualified it.

        It’s a comment on an article.

        Lots of other articles on here highlighting agents not displaying their fees in the legal and proper way. That’s just one point they might not be acting in a proper manner. There’s more because I know.

        If you have something to debate then go ahead, I am all ears.

        Otherwise, you are not adding much value to these comments.

         

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  8. Eamonn

    Like them of hate them, Foxtons play a high profile role within the industry and these bad results  only add credibility to propaganda  from  YOPA and Easy Property who shout about the death of the high street agents in the launch materials

    Foxtons still make more profit than purple bricks which if you believe the Daily Mail is the best thing since the light bulb. .

     

     

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