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Foxtons’ ‘shiny shoes’ add a glow to its share price despite big drops in revenue and profit

ONE UTILITY BILL NS

Foxtons’ share price rose nearly 3% yesterday, despite releasing a trading update in the morning containing gloomy numbers covering last year.

The agent also warned of “challenging conditions” this year.

Yesterday, it posted a 12% slide in revenue and a 39% drop in adjusted EBITDA profits in 2017. Revenue from sales was down substantially, by over £10m.

Nonetheless, having closed on Wednesday at 73.9p, Foxtons shares enjoyed a rise of more than 3% to close yesterday at 76p, having hit a high of 79.1p earlier in the day. But this is well off the high of nearly 400p at which Foxtons shares were trading in early 2014.

The shares tumbled last week after dismal figures released by Countrywide sealed the fate of chief executive Alison Platt.

There were well-aired concerns that Foxtons’ numbers could be even more disappointing than Countrywide’s, given its far higher exposure to the struggling London property market.

But analysts put a relatively positive spin on the figures yesterday, despite the significant falls in revenue and profit that Foxtons expects to report next month.

Anthony Codling of Jefferies called the update, which was in line with expectations, “robust”.

Foxtons said revenue in 2017 was down to £117m from £133m the year before.

Adjusted EBITDA profits were down almost £10m, falling to £15m last year, from £24.6m in 2016.

It added that it would be recognising a £2m non-recurring charge as it continued to “manage its cost base”. It was not clear what this one-off charge is. However, EYE understands that it may be due to leases not taken up, which could suggest a slow-down in Foxtons’ high-street office expansion plans. Foxtons has yet to give any indication of any online strategy.

The firm had a particularly difficult time in its sales arm where revenue dropped by over £10m, down from £55m in 2016, according to yesterday’s update.

The lettings business was more consistent, with a slight drop in revenue from £68m in 2016 to £66m last year, which Foxtons blamed on falling rents.

Commenting on the figures, Codling said: “London has arguably the trickiest UK housing market conditions at the moment and yet with its focus on sales and lettings Foxtons has played its hand well.

“The market remains tough. However, Foxtons agents have kept their shiny shoes on the front foot and with £18m of cash on the balance sheet those agents are likely to keep that spring in their step.”

Foxtons chief executive Nic Budden said: “This was a solid performance in the context of ongoing challenging conditions in the London property market.

“We remain focused on achieving the best results for our customers and are pleased with the reaction to the recent growth initiatives in our lettings business.

“Looking ahead, we expect trading conditions to remain challenging throughout 2018.

“We are well placed to withstand these conditions due to our strong balance sheet with no debt, and we will provide an update on a number of strategic initiatives which we have been working on at our preliminary results presentation on February 28.

Meanwhile, Belvoir shares closed yesterday at a low of 95p. During the day the price went even lower, to 87.8p – a marked contrast to the high of 192.5p in September 2013.

LSL was down 4% at 274p, and Countrywide edged up 1.6% to finish at 102p – little changed from its all-time low of just under 100p earlier this week. With the disparity of share prices reported, EYE uses London Stock Exchange data.

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Source:: Foxtons’ ‘shiny shoes’ add a glow to its share price despite big drops in revenue and profit