Sometimes it’s hard to tell someone when to stop, but has that moment now arrived for Countrywide?
We have been witnessing a rapid decline in its business in recent years, with poor results, declining profits and an exodus of good staff.
Any shareholder worth their salt would be saying enough is enough – and if Countrywide does not act quickly, then one of our great estate agency chains will plummet into oblivion.
Its interim results for the first six months of the year make for gloomy reading. At the same time, the company cut its cost base by £27m. The upshot was no interim dividend for investors.
Meanwhile, Countrywide shares are sitting at a new low at 113p compared with 686p in March 2014. The company dropped out of the FTSE 250 last December.
Is it questionable decision-making that has centred on turning Countrywide into a retail business, with a hybrid model that even its own staff are reluctant to push, such is the negative impact on their own earnings?
Clearly all is not well at the top, with the recent departure of certain senior management. Is this just part of their cost-cutting exercise or an acknowledgement that the decision to become more retail-led just hasn’t worked? It’s a mess.
Either way, there are many people wondering how the CEO can maintain her position at the helm (which she took over in September 2014) when her tenure is being seen as presiding over one of the worst chapters in Countrywide’s history.
Market capitalisation now stands at under £280m – dropping £1.1bn in value since she took over. I can’t think of any other CEO of a listed company that has presided over such a decline and kept their job!
So what now? Is it time to break up the company and sell it off into component parts? Surely it is worth more this way than limping along into obscurity.
The company has some good brands but its estate agencies in London are losing so much cash to the point where you may as well throw good money down the drain.
By my estimation, they could get £300m for their lettings business, with 120,000 properties under management, plus I think their financial services business is worth £150m-£175m as they’ll have 25 years of data on their database and a big remortgage book.
Their conveyancing and survey work I’d put at £90m if sold. Plus £40m from sub-letting various properties they own. Add in the value of all the estate agency brands which they could auction to independents and you are looking at around £700m – far more than what they are currently valued at.
So is it time to say goodbye to the CEO and to the business? Or will we be having the same conversation in a year’s time, watching Countrywide slide into obscurity?
* Paul Smith is CEO of Spicerhaart. He writes a monthly column for EYE – and his latest ‘Wordsmith’ appears below