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Ability to cut staffing is critical to Foxtons future, says analyst

The flexibility of Foxtons’ business model - especially its ability to control headcount, including the number of agents it employs - is critical to the firm’s future success according to City investment consultancy Jefferies.

Yesterday’s figures revealed by the agency, informating shareholders of sharply reduced revenues and profits in the final quarter of last year, confirmed what many new about the troubles of the London market since the EU referendum, Jefferies says in a note to clients.

“Macroeconomic uncertainty has led to a fall in housing transactions and renters in sympathy seem to be staying put for longer. We are reducing our estimates ... but Foxtons remains a fighter” Jefferies tells investors.

It says one of Foxtons' particular strengths is that it has a very flexible business model. 

“Its training program acts as a crucible from which recruits pass or fail, opt in or out; as a result Foxtons can effectively manage headcount by turning the recruitment tap on or off rather than through more expensive restructurings” says the note. 

“Another strength is that the group is always willing to learn new skills: the 'MyFoxtons' dashboard enhances its digital offering and increases transparency for its customers - Foxtons is not shying away from strategic investments even when the market is tough.”

Yesterday Foxtons remained adamant that despite the poor figures - showing annual revenues down to £133m, some 11 per cent less than the year before - it will keep to its proposals to open two new offices this year. 

Foxtons chief executive Nic Budden told shareholders: “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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