Countrywide’s shares took another battering yesterday as they plummeted below the psychologically-painful 5p mark - reflecting a 95 per cent loss of value in a year.
As the market punished the company yet again with a closing share price of just 4.9p, long-standing critic Russell Quirk - former chief executive of collapsed online agency Emoov and now a prominent property industry public relations consultant - took to social media to offer his advice.
“Astonishing that shareholders such as Oaktree Capital Management have sat and just watched this decline. It is clear that the current management team do not have the confidence of the City and that ‘Back to Basics’ has not succeeded” Quirk wrote on LinkedIn, referring to the programme outlined by Countrywide just over a year ago to attempt to drive sales and lettings business via branches.
In recent weeks Countrywide has admitted to Estate Agent Today that it is now closing some branches, although it remains tight-lipped as to how many and where. This morning it is reported that the company is embarking on a ‘sale and leaseback’ programme with a small number of its branch offices.
Quirk continues: “It is time to get real and to implement a strategy that allows this once great estate agency institution to be great again. My strategic plan is available free of charge with no strings attached (I’m not looking for a job). Take it. Digest it. Discuss it with me and put the business back on track before there is nothing left.”
And he adds: “Banking covenants must now be being breached, staff morale at rock bottom and the slippery slope of ‘just closing a few branches’ is death by a thousand cuts.”
In recent months Quirk has suggested that in his opinion online estate agencies are likely to reach no more than 10 per cent market share overall; he has also given views on how the troubled Foxtons brand could improve its fortunes by expanding beyond the M25.
In yesterday’s social media comments Quirk made no reference to the details of his Countrywide plan, but almost a year ago he gave a glimpse of what he might have in mind in a contribution to Estate Agent Today. Back then he wrote:
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.