Foxtons swings to a loss in weak London property market
Foxtons swung to a loss last year as the estate agent struggled with a weakened London property market, the company announced this morning.
The figures
The estate agent reported a £17.2m loss in its 2018 full-year results this morning, down from £6.5m profit the previous year, in part due to a non-recurring charge of £15.7m following the closure of six branches.
Meanwhile, revenue dropped from £117.6m in 2017 to £111.5m last year as Brexit uncertainty knocked consumer confidence.
Earnings before interest, tax, depreciation and amortisation (EBITDA) declined 76 per cent from £15.1m in 2017 to £3.6m due to falling sales and a number of investments including a targeted brand advertising campaign.
Foxtons announced it will not pay a final dividend.
Why it’s interesting
Foxtons said the London market was one of the toughest it had ever seen and reported that sales transactions had fallen to record lows due to Brexit uncertainty, the impact of stamp duty changes introduced in 2016 and ongoing affordability concerns in the capital.
As a cost-cutting exercise the business closed down its Loughton, Enfield, Beckenham, Ruislip, Barnes and Park Lane branches, which is expected to save £3m during this year.
The business also invested in brand building initiatives, technology and remuneration structures during 2018.
The company’s lettings arm continued to deliver a stable revenue stream in London, when more than 1m households now rent properties.
Looking forward, trading conditions are expected to remain challenging throughout 2019 however, the firm said it expects London to remain an attractive property market in the long term.
What the company said
Chief executive Nic Budden said: “Our performance in 2018 was impacted by a further deterioration in the sales market, with transaction levels falling for another year from their already low levels. We are pleased with the lettings business and the investment we made earlier in the year helped to drive a good second half performance.
"We are managing the business for these conditions with a focus on cost control and appropriate investment to improve efficiency and reinforce our customer focused offering.
"Our brand and its associated characteristics of high service levels, professionalism and delivering for customers, resonates in the market as evidenced by the thousands of customers who continue to trust Foxtons to sell or let their property.
"We will continue to evolve and enhance our offer in a way that builds on this and maintains our differentiation.”