‘Steer clear of Foxtons’ - investors urged to stay away

A writer for the influential financial publication Money Week says investors should “steer clear” of Foxtons - at least for now.

Sarah Moore says the estate agency sector quoted on the London Stock Exchange as a whole has struggled in recent times because of the prolonged slowdown in the housing market.

But she warns that Foxtons is particularly badly affected because it specialises in high value London property.

“It’s not just about Brexit uncertainty and the ailing buy to let market; luxury property from New York to Sydney has been struggling as governments become less welcoming to ultra-wealthy overseas investors” she writes.

And whilst she acknowledges that some analysts have suggested that Foxtons is well-placed to benefit from an upturn in the capital - as and when that eventually happens - she says there is no sign of such a recovery on the horizon. 

“Given its disappointing recent performance, its decision at the beginning of the year to axe its dividend completely, and the fact that we wouldn’t bet the house on an imminent revival in the property market, we would suggest investors continue to steer clear of Foxtons for now” she writes.

To stick the knife in further, Moore says that the company’s reputation “for being flashy and a bit brash” might have worked in boom times, but not now.

In addition there has been a recent shareholder revolt over top management bonuses, as Moore says: “Foxtons has also recently come in for criticism for awarding chief executive Nick Budden and finance chief Mark Berry bonuses totalling £389,000 for 2018, up from £371,000 the year before. This came despite the fact that 22 per cent of Foxton shareholders voted against the remuneration package. It was then announced last week that Berry was set to leave the business at the end of July ‘by mutual agreement’.”

Last month Foxtons issued an unscheduled trading statement just ahead of its Annual General Meeting, warning that “Sales volumes continue to be at record low levels and ongoing Brexit uncertainty is impacting consumer confidence.”

Group revenue for the first quarter of 2019 was £23.8m compared to £24.5m in the first quarter of last year, with sales revenue down from £8.2m to £7.1m.