Countrywide, the listed estate agent and mortgage broker, saw its shares plunge over 25 per cent yesterday (25 June) as it warned on profits and said the market was continuing to slow.
The business issued its fourth profit warning in eight months, describing a “back to basics approach”.
It said the property market has continued to be subdued and adjusted earnings before interest, tax, depreciation and amortisation is now expected to be around £20m lower in the first half of 2018 compared with the same period last year.
“We do not expect this shortfall to be recovered in the second half,” the company stated.
The company told the market it was hoping to raise capital, and had the support of major shareholder Oaktree to do this..
“This process remains at an early stage and the Group will update the market on these initiatives at its interim results on 26 July 2018,” Countrywide stated.
The group, whose brands include Mortgage Intelligence, Mann and John D Wood, parted company with chief executive Alison Platt earlier this year.
Chairman Peter Long, the former head of TUI Travel who became executive chairman earlier this year, said in March, when Countrywide produced disappointing full-year figures, that after three years of financial underperformance the group was changing its strategy.
He said that the previous strategy in sales and lettings, of operating them as a single business, had resulted in them losing significant amounts of staff and that the group is going "back to basics" to try to rebuild itself.
The company stated yesterday it was “encouraged by early operational improvements” since the March statement. It said that the financial services business, which includes the mortgage broking arm, performed in line with board expectations, and that head office functions had been reduced by a third.
Despite Countrywide’s claims that it had been affected by a softening market, mortgage broker Matthew Fleming Duffy, from Cherry Finance in Bournemouth, said that the company had brought the problems upon itself.
“Countrywide bought up agencies very aggressively, and at some points it had two estate agencies next to each other round here,” he said. “That’s bonkers.”
He added that, although the London market was softening, he was happy with the performance in his area, but said that many customers preferred to use more up-to-date agencies such as Purple Bricks.
“The Countrywide model looks a bit oldfashioned,” he said.
Parul Scampion, co-founder of online property investment platform, propio.com, said that many buyers are playing a ‘wait and see’ game with prices to see if they can get a better deal in the future.
“The Brexit factor, high stamp duty costs and the fact that house prices remain beyond the reach of many buyers are also impacting the decisions of wary retail investors,” he added.
Shares in PurpleBricks, the online estate agency which is more than a quarter owned by Neil Woodford’s funds, also fell on the news, down over four per cent in afternoon trading. Woodford declined to comment on Countrywide’s profit warning.