Foxtons Announce £17 Million Loss
Chiswick-based estate agent hit by sales slump and branch closure costs
The CEO of Foxtons has described 2018 as ‘one of the toughest sales markets we have ever had’ after his company announced that it had made a significant loss during the year.
The Chiswick-based estate agency made losses of £17.2 million overall compared to a £6.5 million profit in 2017.
Revenue from their sales operation fell further during the year from £43 million to £36 million and the figures would have been much worse had the lettings operation held up well. Income from rentals was up by £1million to £67 million with higher rents charged compensating for a small decline in the number of properties let.
The company handled 2,529 sales in 2018 down from just under 3,000 the previous year with an average commission charged of £14,300 which was down marginally from the previous year.
Their market share is better at the lower end of the price scale with 38% of their sales being in the £400,000 to £600,000 price bracket against a London average of 32%. 71% of their sales are between £200,000 to £600,000.
Alexander Hall mortgage broking revenue for the year was around £8 million (2017: £9m) reflecting the wider sales market.
The main reason for the slump into non-profitability was the recognition of a charge, which the company describes as non-recurring, of £16 million. £10 million of this represents the writing off of goodwill attributed to the sales part of the business and £6 million relates to the branch closures that the company announced in the second half of the year. The company says the closures will generate cash savings of £3 million in 2019.
Nic Budden, CEO, said, “2018 was one of the toughest sales markets we have ever had in London with transactions falling from last year’s historically low levels. Considering this, we have delivered a solid performance and taken steps to ensure the business is best prepared for these conditions through prudent actions on cost and enhancements to our proposition. We are confident in our model which provides high levels of service to achieve the best results for our customers. Looking ahead, we expect trading conditions in the sales market to remain challenging throughout 2019.”
A director at one of their competitors said, “They are being particularly hard hit because their strategy is a bull market one. It is easier to convince vendors a high valuation is achievable when the market is good but they are a lot more sceptical when they know making a sale will not always be straightforward.”
February 28, 2019