Swiss bank UBS has downgraded Countrywide’s status to ‘sell’ in a move which has prompted the troubled estate agency’s share price to tumble further on the London stock exchange.
In a note to investors UBS analyst Heidi Richardson says Countrywide is undergoing “structural headwinds.” She also suggests that the estate agency group’s balance sheet remains “at risk” despite its successful £38m placing last week.
Countrywide’s recent trading statement, also issued last week, put much emphasis on the roll out of its digital offer to vendors, which allows them to ‘start’ a sales process in a way similar to the budget online agencies; then, if they wish, customers can ‘upgrade’ to the traditional full service, paying the usual higher commission rate.
“While the digital roll out is clearly the focus of the growth strategy for Countrywide, we remain unclear as to the ability of this proposition to generate organic growth given the fixed fee of £995 versus average retail fee of £2,520” says Richardson.
“While Countrywide is now focused on driving organic growth and maintaining profits in 2017, the data continues to show structural weakness in the underlying business, with commission rates and market share falling” she adds.
UBS says the decision to lower its fees by operating an online option will inevitably lead to “further commission erosion” and questions whether it is positioned well enough to compete with a typical online company which would have significantly lower overheads.
At one point yesterday Countrywide’s share price were down around four per cent to 157p.
Three years ago in March 2014 the share price of Countrywide - which at the time was reported as selling around one in 10 residential properties in Britain - was around 685.0p.
Yesterday Estate Agent Today revealed that Countrywide, which has seen a string of high profile redundancies and resignations in recent months, had lost another big hitter. Former John D Wood managing director Ben Taylor has now become the managing director of the UK activities of US estate agency Keller Williams.
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Incredible. How they have fallen.
Anybody who has worked with Ben knows his real name "God" - This was a guy that should one day have been CEO.
Transformed branches, regions and brands within CW - Nobody can say anything bad about him if you work with him.
Massive loss for CW and if anybody can make KW work in the UK its Ben. If he cannot do it nobody can.
- See share price still 1.58 i think it will drop to 1.25 over the year. Cannot see a bounce back in any case.
It's really not been a good start to the year for CW, who seem to be falling apart at an alarming rate. I have some sympathy with them - given they seem to have becoming the popular punching bag for smaller agents, taking on the mantle once held by Foxtons - but all these dire results and negative press stories must mean something. Their approach - endless diversification, fingers in too many pies, too much focus on retail - is clearly having an adverse effect, but no-one at the top seems to notice. Or they are too busy jumping ship.
Not a day passes without another lurch toward the precipice. It almost seems as though destruction is the plan; although I can't fathom why? Another senior person departs to pastures new, a 'god' no less it seems according to another commentator. High praise indeed! I wonder why someone with that level of talent hasn't 'gone on his own'?
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