Opinion piece: Is it time to break up Countrywide and sell off the parts?

Sometimes it’s hard to tell someone when to stop, but has that moment now arrived for Countrywide?

We have been witnessing a rapid decline in its business in recent years, with poor results, declining profits and an exodus of good staff.

Any shareholder worth their salt would be saying enough is enough – and if Countrywide does not act quickly, then one of our great estate agency chains will plummet into oblivion.

Its interim results for the first six months of the year make for gloomy reading. At the same time, the company cut its cost base by £27m. The upshot was no interim dividend for investors.

Meanwhile, Countrywide shares are sitting at a new low at 113p compared with 686p in March 2014. The company dropped out of the FTSE 250 last December.

Is it questionable decision-making that has centred on turning Countrywide into a retail business, with a hybrid model that even its own staff are reluctant to push, such is the negative impact on their own earnings?

Clearly all is not well at the top, with the recent departure of certain senior management. Is this just part of their cost-cutting exercise or an acknowledgement that the decision to become more retail-led just hasn’t worked? It’s a mess.

Either way, there are many people wondering how the CEO can maintain her position at the helm (which she took over in September 2014) when her tenure is being seen as presiding over one of the worst chapters in Countrywide’s history.

Market capitalisation now stands at under £280m – dropping £1.1bn in value since she took over. I can’t think of any other CEO of a listed company that has presided over such a decline and kept their job!

So what now? Is it time to break up the company and sell it off into component parts? Surely it is worth more this way than limping along into obscurity.

The company has some good brands but its estate agencies in London are losing so much cash to the point where you may as well throw good money down the drain.

By my estimation, they could get £300m for their lettings business, with 120,000 properties under management, plus I think their financial services business is worth £150m-£175m as they’ll have 25 years of data on their database and a big remortgage book.

Their conveyancing and survey work I’d put at £90m if sold. Plus £40m from sub-letting various properties they own. Add in the value of all the estate agency brands which they could auction to independents and you are looking at around £700m – far more than what they are currently valued at.

So is it time to say goodbye to the CEO and to the business? Or will we be having the same conversation in a year’s time, watching Countrywide slide into obscurity?

* Paul Smith is CEO of Spicerhaart. He writes a monthly column for EYE – and his latest ‘Wordsmith’ appears below

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22 Comments

  1. smile please

    I have it on pretty good authority Alison has at least admitted retail is now wrong and trying to head in a different direction – still too little too late.

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    1. Bless You

      yep,.. until they throw away this softy ‘retail’ logic and get back to selling mortgages and houses they wont go far.

      Another one for your ‘dont do’ notebook is to go on the radio..they have no branch here and have tried this online rubbish here..out of 5 adverts earlier,,3 were for online agents  lol,,,,  only people making money are the advertisers…who ironically thought they would be dead with the online adverts….weird that these online agents have to use ‘traditional’ marketing to reach their online market….Rightmove is the only true online business and they whip us all every month.bless them

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  2. surreyagent

    If I was purple bricks I would buy countrywide; an extremely cheap way to cement market position and build

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    1. Bless You

      i ve said that and then close it..but tbf, if they ever go near a brand with a branch their usp of hating any agent with an office/ service  goes out the window.  wolf and sheeps clothing keeps coming back on this outfit.

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  3. Bluebell73

    FACT….the Company did have some good Brands! One in Northampton in particular that has been ruined by Countrywide’s stupid targets and greed! They need to focus on good morals not ripping people off! The ship continues to sink!

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  4. Hillofwad71

    Paul I think you are grossly overestimating the values there  Financial  Services and surveying  have  got  half  a chance  Most likely to be MBO,s with large  discounts People object paying for themselves! Dont forget the pressure by the banks on the £217m debt where  they will be thinking back to the disaster at DTZ  when they expensively bought Donaldsons   and the turnover walked straight out of the door

    Who is likely to be buying  turnover at premium prices  in today’s market ?

     

    They hawked LSH around at the beginning of the year  which morphed so they are  effectively soiled goods  Just have a little chat with the canny partners at BTW Shiells  who have sold out twice to CWD in its various guises and bought themsleves back each time for  a bag of gobstoppers

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  5. J1

    A rather sad read for anyone who works there

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    1. Bless You

      trouble with being a public owned business,,rather then give the cash back to staff they have to give it to the hedgefunds who spend it on wine at lunch…  no one wins from public companies apart from ceo’s who leave with a golden handshake.

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  6. Rivero

    I really believe their best bet would be to welcome back Robert Scarff, but in the position of CEO. There are very few people who understand the industry better than him, he is open to progressive strategy, has the benefit of having stood from outside looking in and has spoken and listened to many others within the industry. Can’t see it happening mind you.

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    1. froo-gal04

      You cannot be serious ! Scarff and his cronies started the demise . They were clueless about the London market and destroyed the morale when he brought the white sock Bedford barrow boys in . We were told we could only wear white or blue shirts , no checks , stripes , multi-colours , these guys were truly clueless .

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      1. Rivero

        Well I don’t work for Countrywide so you are in a better position than I to comment. All I know is the share price was over 5 times what it is now when he was MD and if I remember rightly net profit had been increasing year on year. I think I can say with some certainty that they wouldn’t be in anywhere near the mess they are today if he had have been given the top job. The Countrywide brand market share in my area is now so insignificant I believe it is even smaller than Haart’s.

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        1. froo-gal04

          Scarff was useless ! Countrywide needed a puppet on the board . Scarff was the man …no balls , no personality and no charisma…….He could’nt  sell ice cream in a dessert  !

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          1. froo-gal04

            sorry …Desert  I meant …..not that Bob would have noticed .

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          2. bobscarff

            Hello froo-gal04.

            Thank you for your feedback on my management style :))

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  7. porkpie

    Couldn’t happen to a nicer company.

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  8. RobMills21

    Lettings business might be worth £300 million on paper, but as we all know that is ‘goodwill’!….who would pay that much anyway? , I would not. There are so many up and coming changes in the Letting Industry’ which are going to come into play over the next few years you have to ask, is it worth anything at all?

    This will be interesting to watch, whatever happens they will not get back the money they invested!

    Why do corporate firms never learn!!!…..still, good news for the Independent Agent….., they can adapt much easier hence why they will survive…..

    Maybe they will learn from this or maybe not!

     

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    1. Hillofwad71

      She was still buying up letting agents  in the months before Brexit  -Finders Keepers and  The Lettings Bureau at fancy prices based on a multiple of highly profitable years  That has all gone down the pan

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  9. whatdoiknow58

    As someone who continues to work in this unfolding mess of a company it continues to break my heart that what was once a fine business to work for and a well paid one at that has been trashed almost beyond recognition by such a misguided attempt to re-invent the wheel. Estate Agency is not a ‘ retail business ‘ it is an almost unique business to which anyone who is prepared to work hard and have a clear vision can aspire to and be successful with the right guidance and support. Sadly the latter has been lacking from this company for at least the last 3/4 years where pretty much anyone in a position of influence has left or been pushed and replaced in the main with people with good intent but without a clue what they are doing. Bring back Bob Scarf? i don’t think that’s the right way to go ( bless him ) but at least bring in someone with his PERSONA and KNOWLEDGE to lead us out of this mess. Who is our leader? whats their vision? We ( those at Branch level like me haven’t got a clue). There are still a few of us left in this company who care but this is all just so sad.

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    1. agent orange

      My Advise – leave.

      I did – Never looked back and don’t regret it at all. Now have my own independent agency and love it

       

      The grass IS GREENER.

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  10. psychodrama04

    The FS valuation is way off the mark as the IT systems they have in place to manage their client bank is antiquated to say the least and there are a vast number of their first and second line managers looking to leave the organisation as their 2017 budgets and paydeals were plotted on the back of a napkin somewhere as they were most certainly not based on anything factual.

    Once that layer of management leaves the consultants are sure to follow and Mr Smith has already started to see a number of key Countrywide staff jump ship to join his organisation already and you can be certain that that only represents the tip of the iceberg.

    A shambles of a company being run by people who have never sold a house or a mortgage in their lives

     

     

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  11. 40yearvetran08

    Estate agency is more about the staff in the office and less about the name over the door. Countrywide have lost most of the local talent, unfortunately for them the public will not walk through their door because it has a good name over it when in any high street there are other local names with people they have heard of in them. The sales market has been tough but it will come back, it is just a matter of when! When it does countrywide will find it hard to compete in a local market without good talent, the way forward is the small local brand with local knowledge and service. That of course has always been what good estate agency is, run by estate agents. A business run by bean counters who do not know how estate agents really work is never going to work out. Everything goes full circle, perhaps we will end up with a high street full of independent agents plus 1 or 2 corporates, back to how it was 40 years ago, cooperation between friends, respect for each other and a decent living, not enough probably to appease the city though. In the 40 years I have been doing this I have made a decent living, I will never be rich but it paid to send my kids to private school, 3 holidays a year, a few properties and a nice car. More importantly it has been great fun and certainly beats getting a proper job. I took the devils shilling and sold out, now a bean counter is trying to tell me I should be doing it differently. The core values of agency have not changed, the people running them now have a different view but so far they have been proved wrong. I fear I will not be here to see the return of the old way as the fun has gone under the accountants, why are they all so miserable!

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  12. interestingreading18

    Hope Dunning buys them out.

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