The Paul Smith column: What happens now that Platt is leaving Countryslide?

| Paul Smith

As widely predicted, Countrywide CEO Alison Platt is gone after presiding over what can only be described, in my view, as a catastrophic tenure at the top.

Shares fell from £6 to £1 since she took over in 2014, plunging almost a quarter in the last week alone (135p to 10op at the time of writing) following the company’s latest damaging profit warning.

You do have to question the decisions that were taken by the board that led to the exodus of top-quality staff and the introduction of an ill-conceived digital strategy that will surely now be shelved for good. In this era of collective decision-making, shouldn’t other heads roll, including the board?

The company has dropped over £1bn in value since she took over, with a market value now of £254m, and profits tumbling.

Yes, the market is sluggish, Brexit uncertainty doesn’t help and we aren’t seeing the upturn in enquiries expected following the changes to Stamp Duty; no doubt most agencies will have their own tales of woe.

But for the UK’s biggest integrated property services group, this has been a real tragedy for a company for which I have had so much admiration over the years.

I warned a few months ago that the only way forward was to break up the company instead of pouring more money down the drain. I reckon they could even get as much as £700m for all the constituent parts, almost three times what it is currently worth.

So what does the future now hold for Countryslide? Up to 300 branch closures? More job losses? How will they be able to pay off their debts with fewer assets? Will they refocus their efforts on their traditional model?

Will someone new at the helm be able to turn around this tanker quickly enough?

Or are we seeing the death throes of what was once one of the most successful estate agency groups in the country, brought to its knees in such a short time and surely a salutary case study for any future textbook on how not to run a business.

And now for the rest of my column:

 My predictions for 2018

 Here are my top ten market predictions for the year ahead:

  1. With agency income slashed by the ban on tenants’ fees plus agency fees racing to the bottom, there will be considerable consolidation in the market, with up to 18% fewer branches and online agents. It won’t just be Countrywide reviewing their future plans and closing branches – many agents will join together, particularly in neighbouring towns, to make the most of economies of scale.
  2. With fewer agents, portals will have to review their prices. Does this mean they will reduce their costs downwards? I doubt it very much. They’ve only ever gone one way – so expect further price hikes during the year ahead.
  3. Agents will have to become their own media companies, using all channels of communication and learning the art of search engine marketing using search engine optimisation (SEO) and Google Ads (Pay Per Click) as well as content marketing. They will have to work harder on their databases and understand the impact that GDPR will have on them.
  4. The future will be all about artificial intelligence, big data and propensity modelling, predicting who is likely to sell and when in the coming months – which makes the cost per lead far less than the spray and pray model being offered by the portals.
  5. Digital is the way forward and will ensure success for those that embrace social media. A good agent is more likely to invest their marketing pound in social media, where the cost per click is minuscule by comparison. We’re paying 8p for a Facebook click whereas this might cost £80 on a Google ad, because everyone is piling in and chasing up the fees.
  6. The public will put more value on ratings and reviews, particularly on Google, when choosing an agent. They will even open up more emails where emojis are used!
  7. House Simple, currently second to Purplebricks among the onliners, will waste money trying to chase the leaders – but won’t succeed. Meanwhile, Foxtons will go back to their old model, with big branches and lots of negotiators, but with virtual branches that will fail in their model. Arun Estates (Hadleys in London) will realise just how much it costs (millions of pounds) to build an online presence in the capital. I also predict Connells Sequence will have a number of poor-performing branches in London that opened in 2017.
  8. Tepilo will divorce Sarah Beeny completely, following her recent switch of status from director to shareholder. Though she currently still fronts it, how long will this continue?
  9. Following Yopa’s very strange ‘Seriously, why not?’ rebrand under its co-ownership of Savills and LSL, I predict that one will buy out the other and run the business as they see fit; they will still be arguing on how it should be run – but will still be a loser in the internet hybrid race. Talking of weird brandings, have you seen Emoov’s latest marketing campaign, the Emoovement? They will also waste millions!
  10. Those working in estate agency won’t just undertake training but will have mentors and coaches to help them develop their skills.

 Let’s reflect in a year’s time and see if any of my predictions came true.

 Landlords don’t understand tax relief changes

We need collectively, as an industry, to educate investors that they will still get a far better return on investment in property than they would on the stock market.

The change to mortgage tax relief for investors may mean they are slightly worse off – but it shouldn’t have become such a big deal breaker.

Perhaps the collapse of Carillion should serve as a warning shot across the bows that investing in a share portfolio is not always a better option.

Property will always grow in value over a long-term investment, so why are investors so shy to buy at this current moment in time when bricks and mortar are still the best way to get real bang for their buck?

  • Paul Smith is the CEO of Spicerhaart, whose brands include haart
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14 Comments

  1. Wevegotbuyers39
    January 24, 2018 at 07:36

    The “emoovment” aka oh balls we’re still doing nothing but lose money, let’s copy purple bricks and lose more!

    Fair play to the pay up front brigade they’ve nailed that corner of the market all of the others are playing catch up and copy…. pretty much like most of the high street.

    Haart had an opportunity to strike whilst countrywide were wounded / sleeping but they just carried on doing the same old ****!

     

    Long may may it continue!

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    1. P-Daddy
      January 24, 2018 at 10:29

      I am now going to a darkened room with a padlock on the outside…I actually find myself agreeing with Paul Smith and his general predictions/observations. Don’t worry….I am seeking counselling!

      Now he needs to look at his own chain, although he has always boasted that he has no borrowings….he tried the off the wall biz streams in the past like iSold that was supposedly going to change the world via Tesco (from whom he bought the biz and ended up in litigation) etc and of course the essence of the SpicerHaart network in essence is the same as Countrywide. Even the HQ are nearly next door neighbours Colchester/Chelmsford. His advantage is though that he is a career estate agent and building from nothing and picking over bodies of the dead corporates!

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  2. Propro97
    January 24, 2018 at 07:47

    And Paul Smith will realise that he paid miles too much for a tin pot estate agency in the Midlands …£££££££___

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    1. AgentV
      January 24, 2018 at 08:34

      Which agency?

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      1. ARC
        January 24, 2018 at 09:52

        I assume he is referring to butters john bee though not sure the sentiment is correct

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    2. bella75094
      January 28, 2018 at 09:12

      Is that the same ‘tin pot’ agency that is a market leader in its area?

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  3. WillW72
    January 24, 2018 at 09:01

    I have worked for spicerhaart in the past. Honestly this article is self serving drivel. While I agree with a lot in it, I have to say – people in glass houses and all that. Spicerhaart should work on their own brand rep and their own staff welfare before they comment on others.

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  4. planetharsh51228
    January 24, 2018 at 09:31

    I agree with WillW72, having worked for Spicerhaart, they have too many branches running at a loss, unhappy staff and poor working conditions. Perhaps Countrywide will be a lesson learnt for all large agencies and would be corporates. #getyourownhouseinorder…..

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  5. AgentV
    January 24, 2018 at 10:09

    Times have changed, but Countrywide don’t know how to.
    What they need need is a team of experienced agents from the ‘coal face’ to build on the staff that are left, retrain and refocus everyone to become client centric.
    They need more flexibility and autonomy at the branch level, but with capable people who know exactly what they are doing.
    They then need to instil a sense of belonging to something that is worthwhile working hard for, and will provide a rewarding career for those with the right attitude that are willing to endeavour to reap the rewards.
    Back it all up with a Collective Group Marketing approach that portrays a clear message to potential customers and a company image that people are proud to belong to.
    Add in the constant research and development of new Market leading products and software……and there you go, a five point plan to give rise to the Phoenix from the ashes!!!

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  6. Thomas Flowers
    January 24, 2018 at 10:19

    I agree with most of Paul Smiths comments above.

    Surprised he has made no prediction about the future of OTM?

    Will Springett end up in a somewhat more luxurious boat than Platt for a similar outcome?

     

     

     

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  7. WGC
    January 24, 2018 at 11:49

    Point of order:- The enterprise value of CWD isn’t £250m as PS Implies that’s the “market cap”  (multiply share price by number of shares in issue)  This naively excludes the companies debts ( £200m ) so if you wanted to buy it debt free you’d need £450m not £250m as PS implies.

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  8. Beano200062
    January 24, 2018 at 12:22

    Point of order (2) –

    ‘We need collectively, as an industry, to educate investors that they will still get a far better return on investment in property than they would on the stock market.’

    We need NOT educate investors with lies or false promises; historically the stock market has delivered better returns. Unless of course you are going to guarantee that property prices can carry on at hyper inflation levels as they have done for the last 20 years?
    “Share investors have raked in the best returns over 30 years but homeowners beat them during the period of rampant property price inflation since 2000, a new study of returns from popular investments reveals.
    UK equities have delivered 1,433 per cent growth during the past three decades, or 9.9 per cent a year.
     

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  9. Hillofwad71
    January 24, 2018 at 18:41

    I think  Paul’s  valuation based on the  sum of the parts theory is stretching it a bit.  If he is that  confident  at that  level he should be filling his boots at 101p a share and in line for a multi-bagger.Little bit disappointed that the BODS hadn’t  lined up a heavyweight replacement .Surely she has been sitting on death row since the autumn which has given them ample opportunity

    The BODS  are full of what  I would describe as”professional directors” who collect directorships like badges.Uninvolved with the  day to day operations come rain ,wind or shine they collect their stipends without any censure for overseeing a disaster .In addition  a couple of fund manager types representing some of the substantial  investors  shifting nervously on their seats .I bet if the investment was their shout they have some explaining to do  back at the motherlode  harbouring some substantial losses

     

    Nothing yet in place to remedy . The temporary appointment unlikely to settle the troops Danger star players   leaving They need to load up the BODS with people from the business

    Surely after paying out millions for successful practices  there must be suitable individuals worthy of a place on the board   amongst them to drive the business forward

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  10. JAM01
    January 24, 2018 at 19:16

    Arun’s Hadley’s is not an online model. It is full service traditional agency operating out of non High Street premises. Fully staffed.

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