LSL delivered remarkably strong results this morning, and declared its faith in the traditional high street model, saying it would represent the “substantial majority of the sales market” until 2025. Nevertheless it will continue to look at digital opportunities.
LSL also said it could not see any change in market conditions created by the Brexit process or the general election.
Although group revenue was only slightly up, at £151.5m in the first six months of this year, compared with £151.4m for the same period last year, profits rose spectacularly.
Group operating profit was up 61%, to £14.3m (£8.9m last year), and pre-tax profits were up 57% to £13.2m.
Operating profits in its core estate agency business were up 37%, with brands including Your Move and Reeds Rains delivering a “robust revenue performance in line with the same period last year which benefited from a very strong first quarter ahead of Stamp Duty changes”.
London brand Marsh Parsons also delivered “a resilient performance despite a challenging London market” with total revenue down 4%, to £16.4m. Underlying operating profit decreased by 23% to £1.7m (2016: £2.2m) with operating margins of 10.4% (2016: 12.9%).
LSL, in its interim results for the first half of this year, also announced that it is continuing to explore “a wide range of options to capitalise on digital opportunities and during the second quarter of 2017 completed the research and planning phase for new ways of working programme across our estate agency business”.
Chairman Simon Embley confirmed the results were ahead of LSL’s own expectations.
Today’s report to the stock market also says: “On 12th July 2017 the group completed the sale of its investment in the Guild of Professional Estate Agents (GPEA) with consideration made up of cash (£3m) and shares in eProp Services plc.”
There is no indication as to whether LSL could use easyProperty to launch any online offering. Today’s report says: “LSL continues to explore a wide range of options to capitalise on digital opportunities created by the continued growth in consumer acceptance of online and hybrid estate agency business models. LSL has made positive progress in the first half 2017 and a further update will be provided later in 2017.”
It continues: “The findings to date of the programme confirm LSL’s view that there is an important role for the “traditional” branch led model in the future, but it will evolve over time including the deployment of technology.
“Traditional estate agents currently represent the vast majority of the residential sales market. LSL expects this to continue and anticipates that traditional estate agents will continue to represent the substantial majority of the sales market through 2025.
“Whilst LSL expects to evolve its operating model over time to capitalise on this trend, in the foreseeable future LSL does not expect any rationalisation from the current number of its estate agency brands (12) nor any material change to the size of its branch estate.”
The strong results compare with weak ones reported by competitor Countrywide, which last week reported a plunge in profits.
City analyst Anthony Codling of Jefferies said: “LSL’s first half results were the exact opposite of its peers, profits went up rather than down, surprising perhaps as LSL has so far done the least to embrace the world of digital estate agency.
“Whilst many believe that the future of estate agency is purely digital, LSL believes that the traditional high street estate agency will be as important in 2025 as it is today. The Group expects that digital technology will assist rather than replace the traditional high street branch.
“LSL is the only listed estate agent to post a significant increase in profits so far this year, so perhaps the smart money will be found invested in bricks not clicks after all.”
The very respectable LSL results highlights how Platt has got it all badly wrong at Countrywide .
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
People are going to sing folk songs about how bad Countrywide have got it
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Dunno about folk songs. More like The Blues.
‘Woke up this morning,
Found the business had gone,
Guess all that stuff ’bout retail
Was just a great big con..’
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Well done LSL.
Foxtons said last week that the market had been hampered by “unprecedented economic and political uncertainty”. Countrywide (after a 98% fall in pre-tax profits) said “We’re not optimistic about the housing market in the next half and our mantra has been one of self help.”
This is what Anthony Codling (Broker for Countrywide) said about Countrywide’s results “We continue to believe that Countrywide is doing the right things.”
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
This is just wonderful! the slightly slow kid sat at the back blurting out stuff that makes no sense but showing up how little they really know or understand.
Mr Codling wears more hats than the Queen, taking one thing he’s said and forcing it into a different story or context makes as much sense as suggesting all cars will run on diesel because both are sold at petrol stations
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I think it demonstrates that if you leave good estate agents to do their job you will get results. Against the backdrop of city expectation to always increase profits you have to appreciate that selling property is a different proposition to letting them and external forces effect the size of the market and your slice of the pie. Yes you can try and increase your slice of the pie but it does not happen overnight. When/if the market comes back, and statistics say it will, those agents who have good sales people in place will reap the rewards with dividends because a lot of the competition has been decimated by the likes of Countrywide. Hang on in there, I have seen numerous recessions and resurgences and what always surprises me is the speed at which it can change, often against what is touted in the media by supposedly knowledgeable commentators.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
The BODS are a highly experienced bunch with proven track records in other industries yet like CWD none from a property background What is clear is that they get on with running the business letting the property professionals get on with their jobs but with a guiding hand unlike the excessive tinkering,hiring and firing by Platt
On the other hand the merger of Strutts and BNP were effectively handled by time served property professioanls Andy Martin and Joh Slade Both ex Reading Uni estate mangemnt and both cut their teeth in property investment agecy John at Richard Ellis (CBRE) and Andy at Bernard Thorpe (DTZ now Cushman & Wakefield )
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Just shows the benefits of letting the experienced run the shows with possibly pump priming when asked or needed.
Its never been totally retail, it never will be totally digital but it IS a people business dealing, on the residential side, with what is most peoples main and most expensive asset. As such the Estate Agency office staff that adds the value to both buyers and sellers experience ( an awful retail expression) succeeds. Digital is a fantastic tool to assist staff increase that service.
In short for us old but experienced farts that have seen the market change up and down as 40yearvetran08 says above know that you keep enough in the piggy bank to cover the leaner times. That was often a benefit of a rental side to an Estate Agecy business that was an important buffer in times when the sales side slowed.
Well done to LSL – it aint rocket science but it certainly aint retail.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Connells Group profits up as well!
Makes Ms Platt look a bit silly frankly.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register