65-branch London estate agency Foxtons is having a torrid old time, from the sounds of its full year trading update. As forewarned back in June (immediately after the Brexit vote result) total group revenue dropped from £150m in 2015 to £133m in 2016, while adjusted EBITDA plummeted from £46m in 2015 to a rather lower £25m last year.
The firm pulled in £26m in the last three months of 2016, compared to revenues of £35m in the same period a year earlier.
These dramatically lower numbers “reflect the significant fall in sales volumes immediately following the first quarter of 2016”, says Foxtons. Q4’s transaction tally makes this painfully clear: the agency’s sales revenues fell from £20m in 2015 to just £13m this time around. And there’s likely to be no let up this year: CEO Nic Budden warns that “it is likely that 2017 volumes will be below those in 2016.”
Lettings, on the other hand, seem to have held up better. Lettings revenues in Q4 came in at around the same level as the previous year (c.£13m), helped in no small part by a solid rate of renewals in the face of lower tenant activity and downward pressure on rents. “Our lettings business remains a consistent and recurring revenue stream,” notes the brave-faced Foxtons’ trading statement, “which comprises over half of group revenues.”
There’s no indication of a change of strategic tack, despite flailing sales figures. The agency says it will continue to focus on the higher-value London market, and, in the face of a shifting marketplace with many a cut-price online offering, pledges to continue “providing a premium service which supports premium prices”.
Nic Budden, CEO of Foxtons Plc: “Despite a challenging year across the residential property markets, we have continued to make good progress in respect of our strategic initiatives, including building our presence in PRS and new homes, and leveraging our technology using data analytics and digital marketing to enhance our customer proposition. We also opened seven new branches in 2016 and a further two branches in outer London are due to open in Q1 2017.
“Looking ahead, we expect trading conditions to remain challenging in 2017. Should current levels of sales activity continue in the short term, it is likely that 2017 volumes will be below those in 2016. Our balanced business model provides resilience against sales market cycles and we have a strong balance sheet with no debt. Our high-touch approach to customer service continues to be a key differentiator and as the most recognised residential brand in London, we are uniquely positioned to manage through the market uncertainties and take advantage of any change in conditions.”