Countrywide’s debt cut move
COUNTRYWIDE lost nearly a third of its market value yesterday as it sounded the fourth profit warning in eight months and announced plans for an emergency fundraising to reduce debt.
Shares in Britain’s biggest estate agent plunged 23½p to 55p as it said halfyear pre-tax earnings would fall to about £8million compared with £28million last time.
The group, whose brands include Bairstow Eves and Hamptons, has been squeezed by a slowdown in the secondhand housing market and increased competition from online players such as Purplebricks.
Earlier this year its chief executive, Alison Platt, stood down after four years in charge.
Chairman Peter Long, who has been running the business since then, said its sales and lettings business had “lost focus”, amid claims that centralising operations had removed the ability of branches to make their own decisions on hiring, pricing and development. This had led to an exodus of experienced staff.
Countrywide said it was “encouraged” by early operational improvements from its strategy shake-up and management changes and had made “substantial progress in re-establishing industry expertise and the right level of staffing”. The firm's next move, which it says is supported by investor Oaktree and its lenders, is to raise funds to support a turnaround plan and halve its debt, which stood at £192million at the end of last year. Analysts believe it wants to raise about £125million from investors.
Countrywide said: “The market in the first half has continued to be subdued and we have experienced longer transaction cycles. We entered 2018 with our sales pipeline significantly below that of 2017.
“We don’t expect the earnings shortfall to be recovered in the second half.
“Our focus remains on building back the sales pipeline and we expect to substantially close the pipeline gap by the end of the year.”
Analyst at Jefferies, Anthony Codling said: “The underlying secondhand housing market is dreadful, even the online challengers are finding they cannot outperform the current market conditions, and there is little to be done when homeowners stop moving.
“If times are hard for Countrywide, we can only imagine how the rest of the market may be struggling.”