The agonisingly painful decline of Countrywide continues, with no one sure whether it is the darkest hour before the dawn or the total eclipse of a once-great agency group.
Yesterday’s decision to delay the scheduled publication of interim trading figures and an anticipated rights issue to raise £100m, is merely the latest sign of a company which may be on a tortuous road to recovery or approaching collapse.
Many words have been said about how Countrywide has ended up in this position; our interest at Estate Agent Today is more in where the company goes from here.
Therefore we have asked a panel of experts to give their views on what it should do next: whether the troubled agency takes any of this advice will become known next week when it eventually reveals its funding proposals and any progress on its Back To Basics plan.
Thanks to our contributors for their provocative and forthright opinions. You’ll have firm views too - please feel free to leave them in our Comments section below this story.
Russell Quirk, founder and chief executive of Emoov:
Countrywide will continue to suffer from poor performance (relatively) and a relentless attack on its share price until it is future-proofed. Currently the ship is listing (no pun intended) and the shareholder lifeboats have been thrown to the icy waters below.
Six months into the 'post-Alison' era and who would have thought that a Countrywide share could degrade even further and can now be bought for less than the price of a chocolate bar, albeit more Breakaway than it is Bounty.
Titanic and confectionery analogies aside, there is a way forward for this once great institution.
With over £195 million of debt, Countrywide's market capitalisation is now way below that.
It is technically insolvent and has broken its banking covenants.
Existing shareholders coming to the rescue with a proposed £100 million rights issue will only do so at a discount on today's price and this translates to a value that is lower again.
Without structural transformation, the direction of travel will remain depressingly downwards thereafter.
The answer requires the sale of a number of their existing brands in order to a) reduce the debt burden and b) to consolidate its cost base which is much too heavily predicated around increasing high street rents and escalating business rates.
The resulting core business of a smaller basket of brands could, with a complete change of approach, prosper with the utilisation of proper, proven technology and well-executed, modern marketing methods. A thinner 'brand estate' would also allow marketing budgets to focus better and with far greater 'above the line' cut through. Margins would increase (via a full-fee proposition), profits would be restored and the City placated.
Countrywide does not need 850 branches to reverse its eroding position as the UK's largest estate agency. That's a vanity metric these days. Indeed it is this profit and loss millstone that is one of its major vulnerabilities in an increasingly digital consumer world. Some are needed, yes. But customer numbers can be gained in areas that do not have one, two, three or more Countrywide office fronts.
I've formed a detailed strategy that would make Countrywide great again that I'll share if asked. It's a shame that so far no-one has done so, despite its share price briefly rallying by over 20% two weeks ago on rumours that Emoov and Countrywide might collaborate.
Ben Taylor, managing director of Keller Williams UK and former director of Countrywide brand John D Wood:
Six months on from Alison Platt’s departure, is Countrywide now clear on the important questions; Why would I choose to work there, and as a customer, why would I choose a Countrywide agent? What is Countrywide? Retail? Online with a branch infrastructure?
The pace of change in our industry is unprecedented, certainly as far as my own, over twenty five years’ experience is concerned.
The idea that we should continue to have multiple, half-empty branches on high streets is simply not realistic for the future. A better investment is in revenue generative areas such as training people, better systems and models and enabling agents with great technology.
Putting multiple agents into one hub will allow for that investment and provide a far more inspiring place to spend time, both for a customer or an agent.
If the current trio of leaders are well on their way to answering these questions and importantly, the answers are good and clear, then I’m sure they will be making considerable progress.
It is crucial, in my view, for all ambitious organisations to have a strong culture and purpose - those that do usually thrive. Both employees and customers want to engage with organisations and people that believe what they believe.
For the many friends and ex-colleagues I still have at Countrywide, I very much hope that they are through the worst. Frankly, only the leadership will know and with such a large infrastructure, it must be a challenge.
Selling the commercial arm of the business must be a temptation and it would not be for an outsider to say. However, balancing the upside of the cash that it would certainly raise with the benefits of the complete range of services that a business such as Countrywide has historically offered will be high on the considerations list.
Certainly, the leadership will be working hard to remove any costs that are weighing the business down or holding it back. However, avoiding the danger of taking out costs that help drive revenue is a tricky balancing act, but a crucial one to get right.
Ultimately, estate agency remains a local business. If we empower local agents with great training and technology then both the customer and the agent will thrive.
Iain White, industry consultant and former Countrywide director:
It’s a shame to see Countrywide in such a bad shape. Clearly the current management has a very difficult task to bring the company back to life. They not only need to retain the good talent left in the business, but also hire new people as well.
However, this is not the hardest task on the long list of things that the company has to do. The most challenging thing for Countrywide is to convince investors that there is a light at the end of the tunnel for them.
Rightly or wrongly, the topics of disruption and online estate agents dominate the investment agenda these days, and it seems that the announcement of the ‘back to basics’ strategy didn't do Countrywide any favours in the City.
In an industry that’s being disrupted, the last place investors want to put their money is in a company that appears to be moving backwards.
Countrywide needs a sparkle at the moment. It needs to clearly articulate what its focus is and, if the current management team have a handle on that, then it is all to the good as the company needs stability right now. While both staff and investors are feeling uneasy, then there could still be worse to come.
I think selling some part of the business might be beneficial as it will help to reduce the bank debt and will bring the focus on the core. Selling some of the non-core brands could also be beneficial.
Countrywide has a great network of branches and a strong integrated business model. This combined with the right marketing and good technology solution will be a big success.
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
I don’t expect any fireworks when Countrywide’s interim results are issued. I will be more interested to hear whether its recovery plan is on track and how it intends to compete with well-funded, fast-moving online and other high-street operators.
For instance, will Countrywide’s financial and professional services, management, commercial or other parts of the business be expanded or sold off?
How do management intend to develop longer-term relationships with Build to Rent, Buy to Let and other developers as a way of generating future listings?
How will Countrywide’s most important asset – its staff - be trained to be equally proficient in sales as lettings, while embracing PropTech, and social media?
The company must decide too whether part of ‘back to basics’ means offering a ‘no frills’, hybrid sales and lettings offering, or a more traditional proposition. I suspect ‘one size won’t fit all’ and local solutions will be found for local issues.
On the ground, Countrywide is making a little more ‘noise’ although we probably don’t hear enough of the company taking advantage of its branch network, bargaining power or economies of scale.
Whichever route is followed and whoever is in charge, Countrywide will find it hard to recover from the annual fall in UK transactions of 22 and 26 per cent in its own market share, according to most recent figures.
I would say, after working with him at RICS for several years, that I have every confidence Paul Creffield will turn the business around. From the acronym of his title alone, Group Operations Director, Countrywide clearly expects Paul to work some miracles.
The company clearly must try harder to differentiate itself, close offices generating consistently poor returns and concentrate resources on the more successful brands/offices.