Today’s column should really be a critique of the longest circus act in history – Countrywide PLC. Its series of announcements, counter-announcements and farcical mis-steps of late are certainly reminiscent of bad clowns and dodgy jugglers. Funny, if it were not for the thousands of staff members that are being made to sit in the middle of the road staring into the oncoming headlights that will determine their fate.
The trouble is that although more vultures are circling now, the fundamental issues troubling this once great institution are unchanged and so probably not worthy of a further verbal kicking on my part for now. Frankly, the remedies needed are the same as those that I tried hard to impart to Peter Long when we met back in October 2017 and until someone at the top-table there actually decides to put on their listening ears, the prospect of formal administration will continue to loom larger.
No, despite the latest skewering of Countrywide’s management performance this time by Connells, today I will resist the temptation to ridicule it further and instead will turn my attention to an entity that were it not for the distraction of the drowning of Countrywide, would be gaining much more attention currently.
Foxtons have so far gotten away with being but a side-act to the antics of Coco-Long and Bozo Creffield – but remember that it too was also once a giant of its time. Jon Hunt took it from Notting Hill nobody to a darling of the UK property industry and famously (or luckily, he says) sold it to BC Partners, just as the rest of us were about to hand the keys to our BMWs back to the finance companies. The financial crisis of 2008 hit hard yet since then Mr Hunt has turned his £300m share of that sale into what amounts to a £1bn+ fortune. He is no clown.
But since his departure in 2007, ‘the London estate agency’ has had no such luck.
In recent years the Foxtons share-price has resembled a Courchevel ski-map – generally downward in direction with some heart-in-mouth black-run action along the way. The distant ‘peak’ was a price of £3.98 in February 2014 via a little jump in May 2015 albeit, otherwise, a flailing crash to the bottom where it sits today amidst a bundle of bent-up skis at just 32 pence. That’s a 92% fall. Even Eddie the Eagle could have done better.
The problem is that Foxtons is a ‘fair-weather’ business and trundles along like it’s still 1981.
Yes, it’s innovated some technology via its own CRM and it was one of the first to put inbound and outbound calling into one core place for all branches. And the Mini thing was clever – once. But its business model is still the same – a micro-market led, hard sell, high fee ethos from an unwieldy footprint of expensive branch offices.
In many ways Foxtons resembles Countrywide in that it hasn’t changed in years despite the world and the industry changing around it. And, just as importantly, its response to falling revenues, higher costs and a cascading share price has been a reactionary, short-sighted salami slicing of its business such that it quietly closes an office here and there and slashes staff salaries rather than tackling a whole new strategic direction.
Part of the reason that Foxtons doesn’t innovate is because, perhaps, the senior management do not really know or understand the industry that they are in – believing it to be a straightforward ‘sellers finds buyer’ play rather than the nuanced, intricate, moving target that us veterans know it to be. Struggling to work out what bits of the old model to keep and which bits to throw away (that’s harder than you think).
But the other hand tied behind its back is the fact that it is listed – it is a publicly quoted company.
Going public is alluring. Pushing the button on the Stock Exchange floor and watching institutions and the public alike sucking up fragmented ownership of your company is not just an egotists wet-dream but also the key to sweeping piles of money from the table for yourself. The tradeable liquidity that it provides is, quite literally, gold to founders, management, directors and shareholders.
But, with the upside comes a significant downside – scrutiny.
As a publicly listed company investors, potential investors and the press can lift the bonnet and tinker with the inner-workings. Very little is hidden not least financial performance data and even the stuff that management don’t want others to see. Each trading statement and annual address will be coated with a thick gloss of sugar but underneath analysts and journalists probe and speculate and reveal often very uncomfortable truths for CEOs, CFOs and board members.
Moreover, the slightest squeal from the tyres elicits a reaction to its worth – often not a good one.
And it’s this that is stacked against Nic Budden, the current CEO. Or so he may think.
Change is necessary. Yet change requires disruption. Change requires money and investment. Change requires risk. But public markets like none of these things and so as the head-honcho of a listed company that desperately needs to pivot before it disappears into irrelevancy, you have to convince the board and larger shareholders to do what their instincts cry not to and to shake the thing upside down. To cannibalise in order to survive and to prosper.
But if you are a CEO with a five or so year horizon and with share options and bonuses baked into your package from ‘a yesterday’s industry’, you are doubtless unwilling to throw your personal earnings overboard in favour of doing what’s needed for the long term. Put another way, in many publicly listed entities the incentives for the bosses are out of step with what is needed for the good of the company itself.
Regardless of such inertia, this is the conversation that Chiswick needs to have with itself:
+ Strategically rationalise its London branches – not ‘death by a thousand cuts’. 50 offices becomes 20 – but the 20 should cover the whole of London as hubs with specialist listing experts engaged across each area of the capital
+ Expand nationally to areas that ‘get’ the Foxtons brand – By my count there are 60 locations that work (Harrogate, for instance). Again, not an automatic ‘opening of 60 branches’ but a smarter expansion that mitigates costs
+ The upshot is that Foxtons should now be a national brand. But with operational costs that reflect a new way of doing things
Breaking a few eggs is what Nic Budden has to do and whilst that will mean raising money, increasing debt and scaring the usually pedestrian paced major shareholders for a bit, the alternative is, well, to be the next Countrywide.
But as with its Milton Keynes bedfellow, alas Foxtons will doubtless ignore the future. Sadly, in that event it is fuxed.
The 2nd article today not surprisingly by another EYE fav Headphones with the brass neck to cast this pearl at CWD as 12 months later Emoov crashes still unsorted today
” Frankly, the remedies needed are the same as those that I tried hard to impart to Peter Long when we met back in October 2017 and until someone at the top-table there actually decides to put on their listening ears, the prospect of formal administration will continue to loom larger.”
FOXTONS
It’s Jon Hunt by the way not John .
Maybe it was his attention to detail that secured his success.
The sheer brass neck
“In recent years the Foxtons share-price has resembled a Courchevel ski-map – generally downward in direction with some heart-in-mouth black-run action along the way”
I guess slightly better than a total wipeout on the nursery slopes like Emoov
“In many ways Foxtons resembles Countrywide”
Well the most fundamental difference is Foxtons have expanded almost exclusively organically without incurring a huge debt to do so .During COVID they were able to go cap in hand and raise £20m without any bother at all .
If there is one person who should recognise that is Headphones where that well quickly went dry
I am sure Foxtons will be taking everything on board he has said!
One problem they do share with CWD is those that run the company have very minor equity stakes in the company as Headphones points out they are not fully aligned with shareholders
CWD foolishly buying out businesses with borrowed cash rather than paying part with paper removing the incentive for the shakers and movers to remain on the premises .No place on the main board either .What talented property individuals would have countenanced the series of dreadful business decision undertaken by the BODS at CWD
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Why don’t all agencies just close down and join the splendidly successful Keller Williams?
Our Ego from Essex has judgement and critique for those that have stayed the course, but exhibits himself the qualities of a here-today-gone–tomorrow huckster.
An in-depth analysis of KW and its shortcomings is required.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Blah blah blah. I thought he was buying CW and expanding Emoov? Oh no, that didn’t happen.
What headphones knows about central London prime agency you could probably write on the back of a stamp.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Are you serious?
do you really think Fox should become a hybrid/online agency? That worked really well for you…
Harrogate…? What on earth are you talking about? Savills closed down there years ago… in the report to shareholders they cited one of the lowest fees in the UK and one of the most competitive markets in the UK – it is a well-known fact that there is approx one estate agent to every 620 people per capita in Harrogate town.
Go back to the black run.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Makes sense for Foxtons to close some of its 60 branches- possibly as lease renewals come up unless the situation is more urgent.
With regard to Harrogate I wouldn’t know. If the fees are that low perhaps not but then who doesn’t suffer from low fees. It’s about market research. The Foxtons brand is probably worth an extra .25/.5% to some people but not more.
I had Foxtons in Barnet. They are closed now. They charged 2% and over priced their stock or a lot of it. Nice office though. They also sold houses for nothing when they opened.
They do need to change their tactics clearly. Similar story in Enfield. Even if they expand with a percentage of their money they are throwing a lot down the drain.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Quite a nasty piece intended to whip up anti Foxtons sentiments and to give RQ something to write about.
Is it really acceptable to target individual CEOs whether they are running a listed firm or private firm? It certainly gives our industry nasty flavour to it. I suppose they are easy targets for the bully-types.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Russell Quirk thinks he knows better than everyone.
Do people actually trust or believe his hot air?
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
The allure of a public listing is strong. But it does bring severe disadvantages when things are not going well.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Hi. I meant to give a thumbs up not down. Won’t allow me to change it.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
As much as I dislike Mr Quirk (and he makes it quite easy) he is not wrong on Foxtons. The strategy was to own the M25 and outwards and infilling gaps in London with more offices. For example, they had Notting Hill and Chiswick but decided they needed Shepherds Bush in the middle of these offices as well. So no doubt cannibalising themselves and the law of diminishing returns.
So he is right to question the growth strategy since going public and it has been a **** share price story. Foxtons, at worse, looks like a flat track bully – able to make money while the market is hot but what about when the market turns?
I actually quite like the national idea but this takes money and changes the story to shareholders dramatically.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
The ego has landed – AGAIN.
Can anyone from PIE explain their fascination with RQ?
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Are other opinions welcome on PIE?
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register