A trading update released by Countrywide this morning shows a 29 per cent slump in London exchanges in the third quarter of the year compared to the same period of 2015, with a one per cent dip in exchanges across the rest of the country.
The update also warns that worse is to come in 2017.
“The slowdown in activity across the market in Q3 is clearly evident in the closing pipe-lines for our [out of London] Retail and London businesses, which at the end of September were down 16 per cent and 26 per cent respectively compared to a year earlier” says the update.
Its revenue fell in the third quarter to £188.5m, down from £197.1m for the same period last year but revenue for the first nine months of the year totalled £558.7m, up from £535.7m for the same period in 2015.
Across the broader Countrywide business, the update reveals that the ‘digital pilot’ - the option for vendors to use a hybrid online service instead or, or leading up to, a ‘traditional’ full agency service - has delivered ‘consistent out-performance’.
The pilot has seen an increase in leads of four per cent, a 15 per cent rise in instructions, an eight per cent rise in registered buyers and - perhaps surprisingly - no change in the fee received per instruction, on average.
The statement to shareholders says: “What we have learned over the past few months has informed the development of the proposition going forward. The combination of our people, our high street presence and online technology is clearly differentiating. It is evident that our full service customers value the enhanced online tools that this proposition brings. We are now rolling out our digital proposition to the next wave of brands and branches as planned.”
The lettings business has grown significantly - the number of properties under management has risen over the past 12 months to 90,614 from 82,013, a rise of 11 per cent.
The firm says its new Fixflo problem-reporting app, launched in August, has been a success for both tenants and landlords.
In a critical warning for the near-term, it says: “We now expect transaction volumes for 2016 to be six per cent down on 2015 and while too early to say definitively, it is likely that the level of market transactions in 2017 will be lower than 2016.”
It also warns that rental stock has increased more than tenant numbers, meaning rents have fallen in some areas.
Chief executive Alison Platt concludes the update by saying: “We have made good progress this year despite tough market conditions since the EU referendum, particularly pleasing is our growth in market share in both sales and lettings based on available market data up to July.
“In addition, these results in our Lettings, Mortgage and Professional Service businesses underline the importance of the breadth of the group and the focus we have placed on keeping the customers we win and continuing to serve them.
“In light of the chancellor’s announcement yesterday regarding letting agents’ fees, we look forward to working with the Government through this consultation process.
“The results of our digital sales pilot and the roll out of Fixflo in Lettings signal strong steps towards building our multi-channel network across the UK. Our work to ensure we have fewer, better brands and branches continues at pace.”
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Never let the truth get in the way of a good story! Does the revenue reported include the £29m for the zoopla shares sale? Are they comparing apples with apples? How many of the 90614 rented units were acaquired in the last year? How much revenue was acquired as a result? More office closures than has been admitted and an insistence that the business is retail! Got some shares? Get them sold!!!!!!
£168.18; going down.
Not been a great year for CW, has it?
They have tried to soften the blow by talking about the positives and the progress, but the figures speak for themselves - even allowing for stamp duty changes, EU referendum uncertainty and other variables.
I appreciate that CW has become every agent's favourite punching bag lately - a position that was until recently reserved for Foxtons or online "pretenders" - but the results above aren't actually that bad. Unless I'm reading it wrong.
The lettings side of the business would appear to be thriving, with an 11% rise in the number of properties they are managing. Plus revenue is up for the first nine months of this year when compared to the same period in 2015.
That's not to say they don't have serious issues, but I wouldn't be writing CW's will and testament just yet. Whatever you think of Alison Platt, her new team and their approach to property, it's still wise to look at things with a rational, unbiased eye.
It's the same with PB - people can't see past their irrational anger and dislike of the company, and any sound judgement is impaired as a result.
An 11% increase is good but less so when a larger % than has been acquired and their 'churn' has reduced it down to the 11% quoted. If it was organic growth, that would be very good in current market conditions. The devil, as they say, is in the detail, and they won't be keen to reveal that I can assure everyone!
Hey remember Kodak? In 20 years time the same question will be asked of CW.
Excepting John D Wood, CW don't deliver service to clients. They are overly concerned with monthly returns and dubious referrals to in house service providers. They are in effect a giant listing agency with shops and people hence massive uncontrollable fixed overheads. The business model is now 30 years old and lacks flexibility to respond to market conditions. In my opinion revenue will halve before it recovers, question is can they cut overheads fast enough before they go out of business. So far as the estate agency is concerned; if I was Chair I would want to model the UK property market so that I understood the current dynamic, calculate in the light of Brexit where to cut offices and differentiate a spectrum of on line brands from the posh to the bucket shop. Second part, identify other related markets into which to diversify.
I'm not sure that JDW are the only brand that offers a good service within the Countrywide Group. What is undeniable though is that those few that do are insufficient in number to keep it afloat in any meaningful way. A mentor of mine once said 'it's a cottage industry' not BP, not ICI. If you think it is you'll come unstuck!
Your analysis is however 100% correct in my view. Lack of agility and an inability to reduce costs rapidly enough in line with volumes, is a huge problem. In addition to having staff that feel they are working for an organisation that knows where it's strengths are and are competitive in their market. That positivity can be the difference between success and failure. Get your CV ready, the job must be coming available soon surely?
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