Countrywide’s long-term recovery plan, set to be revealed with its interim results on Thursday, should be eagerly awaited by estate agents across the country.
For it is in all our vested interests to ensure this behemoth stops lumbering towards self-destruction and gets its business back on track and turning a decent profit.
This giant beast still has a £200m debt mountain – with its six lending banks breathing down its neck.
The company is said to be planning a rights issue to raise £100m to help it trade out of its problems – though why anyone thinks it would be a good investment is beyond me.
Its shares have been dropping like the proverbial stone after four profit warnings in eight months.
They are now around 50p – down from a 700p high. Hardly the thrill that its management team needs right now.
But even a wounded animal like Countrywide still has its claws into a number of chains and still does one in five mortgage surveys, so if things went pop, many of us would also be affected in some way too.
Chains would take longer to go through and there would be an unseemly scurry for their stock.
Suppliers wouldn’t get paid – and might well have cause for concern if Countrywide tries to write off its debt in any way.
Lenders may well be worried about Countrywide undertaking its surveys. After all, if anything goes wrong, whose insurance will they be claiming on?
All eyes, therefore, will be scrutinising the detail of its new action plan to see whether ‘Back to basics’ really is making a difference in the digital world we now live in.
Is the company still blanket bombing neighbourhoods with spray and pray leaflets or has it embraced and invested in technology and social media, improving its back office systems in the process?
It’s no small investment: I’ve just earmarked £6m over the next three years in new technology and systems, which will ensure that every member of my team has their office in their pocket!
I believe the only way that Countrywide can get back on track is to consolidate its brands, focusing on those that have the most potential, including Hamptons, Slater Hogg in Scotland, Taylors in the midlands, and Mann & Co/Bairstow Eves in the south-east.
It needs to close or sell any branch that isn’t profitable.
It still has a good property management book and it is being kept afloat by its financial services, but its lack of stock and under-investment in marketing has become self-perpetuating, illustrating how businesses such as ours need to be run by estate agents, not accountants.
As for its staff, surely that’s its most important asset? So wouldn’t you invest in your staff and their training and development if you want to hold on to them?
I’ve heard that Countrywide has laid off all its trainers, so that regional managers have to do the job. It’s the worst thing you can do: surely now is the time to bolster up staff training?
I’ve said all along that estate agency is a people business. Instead, Countrywide focused on looking after their acquisitions.
If you look after your people, the business will take care of itself.
Online sales still not making money
I remain intrigued by the ongoing trumpeting by internet hybrid agents about their success while their business models remain flawed and they continue to make a loss.
Surely the main marker of success is profit, not how many properties you have sold?
And how, by growing the business, are they going to achieve economies of scale when they will still have the same costs associated with selling each property – particularly when they are throwing huge sums of cash at mass marketing advertising campaigns?
If these agents would be more transparent over their figures, we could then collectively assert how many sales claimed by them had actually been completed by other agents after their disgruntled sellers had switched allegiance.
I would expect these hybrids to have made real headway by now, yet they sit at supposedly just 8% of the market. But even that statistic I question.
* Paul Smith is CEO of Spicerhaart
The wounds at CWD are almost entirely self-inflicted by the BODS.Post 2012 all the exemplar brands under the CWD umbrella had to do was turn up to ride the market.
This wasn’t enough for the BODS .They borrowed hundreds of millions to purchase existing businesses. Never has so much been paid out for disappearing revenue Often little more than golden goodbyes to retiring partners as they leave by the back door.The ink barely dry on the cheques before the goodwill wiped off in double quick time
They then ignored the highly talented individuals within the brands to bring in Platt and other industry outsiders to undertake a root and branch approach where the experiment failed .
The expression “If it ain’t broke don’t fix it ” springs to mind .
They even managed to buy back shares with borrowed monies as the SP headed south The irony is not lost that Platt and her crew have gone but the hapless BODS remain
The brands can easily break off leave the debts with the banks and self manage successfully and who can blame them !
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What will be, will be for CWD. Somebody will buy the surveying arm, so i doubt that will have much impact on anything and the successful profit making parts of CWD will also be bought out and the profitable offices rebranded. As for chains, some CWD offices handle these better than others but being honest in some situations in my local area, it would make very little difference with the Mann & Co office etc was actually open or not.
Most importantly its about time these companies were made to stand on their own 2 feet. Be it CWD, Emoov or whoever, there is only a certain amount of times investors are going to keep nailing you out. Best to knock it on the head now. The good staff will get other jobs in EA, the rubbish staff will find employment doing something else.
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I believe they will raise the funds and use the money to asset strip the company.
The pain for estate agents will last at least 3 years whilst the market price correction takes place.
Countrywide is not alone as I am sure there are other offices including Spicerhaart offices which will also need to be closed in order to survive the price correction.
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Am intrigued by The headline of Paul Smiths Article, why the hell should we get behind ‘Countrywide’?? The damage was completely self inflicted, The company was/is riddled with bad management, they were complacent. in my view, country wide is far too large and should be immediately broken up. So Paul, i do not feel sorry for them nor do we wish to get behind them.
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Couldn’t agree more.
How can one estate feel sympathy for the other when, given half a chance, he’d have your dinner off your plate.
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I think Paul Smith’s article make geed sense.
If Countrywide collapses, just think what a heyday the likes of Purple Bricks and Yopa could have with their advertising.
We could see “the high street is dead – long live the Hybrids” Remember too that PB have declared their wish to buy management portfolios and Countrywide’s element would be a prime target, if indeed they are not already. Without that element, Countrywide would indeed die.
So, be careful what you wish for !
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Pot Kettle Mr Smith – your own branches near us must be making a loss, yet you still poor money in????? must be making a killing from maybe 3 mortgage referrals a month.
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Couldn’t agree more. Oh and by the way apparently Countrywide have ‘ laid off all of their trainers’ says Mr Smith. Well that was news to the one i was talking to on Friday. Sure lets re-brand and stick the 5 million cost onto the books and write off the 30 million goodwill hit for those well known High Street Brands at the same time. Stroll on.
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