Insight - is agency in danger of a downturn?

Last week was quite a week for major trading updates, with four of the market’s biggest players announcing either half-year or full-year results.

And, in most cases, the results could be described as a mixed bag, while in the case of Purplebricks the results have been viewed by many as disastrous, with the agency’s CEO even stating they weren’t good enough and heavily criticising many aspects of the business over the past few years.

Purplebricks experienced a significant fall in revenue and profits, while Connells Group also saw a 13% drop in revenue (albeit with its market share remaining steady). Both blamed this drop, in part, on current housing market conditions.

LSL, meanwhile, blamed an underlying loss of £1 million in its Estate Agency Division on conveyancing delays, although its financial services and surveying divisions performed much better.

Meanwhile, The Property Franchise Group released a more positive set of results, with revenues for the UK’s largest property franchisor up by 18% on the first half of 2021 – although it admitted this was mostly driven by the acquisition of Hunters and Mortgage Genie.

Its sales agreed pipeline also increased, while its net debt fell thanks to another period of strong cash generation.

On the downside, EweMove sold 19 territories, down from 37 in H1 2021. However, compared to its rivals, TPFG appeared to have the most to shout about.

Many experts point to Purplebricks as the one with the most issues to contend against, with concerns over the amounts of cash it has been burning through of late.

Some have even questioned the future of the agency altogether, although CEO Helena Marston has set out an ambitious recovery plan to try and turn around the fortunes of the troubled brand.

This morning, it was announced that Marston has purchased 629,585 ordinary shares of £0.01 pence each at an average price of 15.90p per share on August 5 2022. As a result of this purchase, she now holds 629,585 shares representing 0.21% of the total issued share capital.

As the cost-of-living crisis worsens, and the market begins to slow down slightly from the record highs witnessed over recent years, it will be interesting to see how this affects the numbers of some of the UK’s biggest agencies and agency groups.