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Countrywide shares plunge on profit warning

Ayesha Javed
Countrywide revealed disappointing expectations for year-end performance - PA

Countrywide’s shares plunged 18pc after it issued a second profit warning in three months amid low transactions, slow sales and a company-wide restructuring.

The London-listed estate agent said that it expected total turnover for the group to be £672m for 2017, down from £737m the previous year. Earnings before interest, taxes, depreciation and amortisation are forecast to come in at £65m, more than 22pc down from the previous year’s £83.5m figure.

Countrywide, which is the biggest estate agency in the country and runs more than 55 high street brands including Bairstow Eves and John D Wood, also issued a profit warning in November due to what chief executive Alison Platt described as "tough market conditions". This included low levels of transactions as a result of Brexit uncertainty and changes to the stamp duty system.

Jon Bell, an analyst at Barclays, said: "Countrywide continues to face very challenging market conditions", which he said included Brexit, digital competition, and sluggish conditions in the wider second hand housing market, at a time when the company is attempting to restructure itself. 

Countrywide has trimmed its number of branches from 1,000 to 800 as it had an unwieldy number of brands covering the same locations.

The group’s sales and lettings business was the biggest drag on performance, with income for the division expected to be down 14pc year on year, at £360m, which the company said was driven by “disappointing fourth quarter performance”. Ebitda was expected to be down 45pc, at £26m, largely due to changes in the group’s sales and lettings structure, which it has made in the last two years.

Countrywide said: “We have begun to take a range of actions over the last quarter that we believe can restore the business back to profitable growth.” But in November the company paused its £40m digital roll-out and at the same time it was failing to attract any new business, with a 6pc fall in new listings. 

Countrywide said its UK sales and lettings business is estimated to turn over £205m for 2017, down 17pc year on year, while its London business would be down 10pc at £155m.

Is this the end of the high street estate agent?

Analysts at Peel Hunt said: "The outlook remains challenging with little or no uplift in transactions expected in 2018. The group has taken further actions to restore the sales and lettings business to profitable growth, however, as 2017 has shown, it has been difficult to predict the profit impact of a reduction in the branch network footprint/costs."

After plunging to a low of 110p in early trading, shares in Countrywide were down 15.9pc at 113.6p late morning.