When a Foxtons employee looks in the mirror, the estate agent can discern a reflection that others cannot.
To them, the figure smiling back is a dashingly attired young tycoon – confident that their sharp wits are about to land them another tasty commission. But many of those attempting to buy a home in London might interpret that same image as – how shall we put this? – slightly less heroic.
As Foxtons operates in London, which has largely been a sellers’ market for decades, these differing views of its frontline workers may be the inevitable function of supply and demand.
Yet the perception that the company employs punchy dealmakers is also perhaps one of the firm’s main selling points to customers (people who have houses to sell or let). It is also possibly why the company modelled its image on a cocky young gang on the make, deploying a fleet of branded Minis to zip around the capital in an unashamed hat tip to the 1969 heist film The Italian Job.
Now, a bit like the film’s fictional heroes escaping Turin, this team of brash youthful Londoners must navigate their way through the seemingly impassable gridlock of the Covid-19 economy – a theme that will be much in evidence this week as Foxtons holds its AGM.
The 2020 gathering will, of course, differ from the norm – and not just because it will have to be conducted remotely. Astonishingly, the AGM looks unlikely to host the usual scrap over executive pay, which just goes to show how the coronavirus pandemic has blown the doors off old certainties.
Shareholders will consider a new pay policy – proposed by a new head of the remuneration committee – while staff earning more than £40,000 a year have agreed to a 20% cut in salary during at least April and May to save funds during the crisis. The business was also nimble enough to secure its financing as the pandemic struck – not only by furloughing 750 employees but also raising £22m from share sales in mid-April – which management predicts should tide them over even in the event of a lengthy lockdown or a very slow recovery in the London housing market.
Hard times for estate agents look like a certainty, with rival Knight Frank predicting Greater London will experience a 35% drop in the number of sales, from 82,000 last year to 53,000 this year. Foxtons itself has said its commissions were 47% down during the first three weeks following lockdown, while it has modelled a “worst-case scenario” of revenues falling by 78% between April and September this year.
Still, while the general market is clearly in turmoil and Foxtons looks sure to be hit, it is still a large and relatively well-funded player in what remains a very fragmented market. Smaller chains of estate agents seem to be facing even more challenges, and many large rivals still need to devise escape routes.
Foxtons’ shares are, in effect, always a punt on the London housing market – which has been off-colour ever since the Brexit vote – and so holding them (even at these low levels) is an act of faith. But there will come a time when another sharp-suited salesperson, this time in the City, will sniff a commission and attempt to persuade investors that the firm is not about to fall off a cliff. “Hang on a minute, lads,” he will inevitably say. “I’ve got a great idea.”