Foxtons aims for £3m savings from branch closures as total revenue rises

Foxtons is set to close and consolidate some Ludlow Thompson branches as part of plans to save £3m this year.

A trading update from the agent yesterday showed it was aiming for annualised cost savings of around £3m in 2024 related to its Ludlow Thompson purchase and “consolidates certain branches within the Foxtons network by leveraging lease exit events”

 It said these savings have resulted in a one-off restructuring charge of £4.3m in 2023, of which around £3.3m is cash related and £1m is non-cash. The cash charge relates to branch closure and vacancy costs, the majority of which will be incurred over a three-year period, Foxtons said.

Asked about the extent of branch closures, a spokesperson for Foxtons said: "We are in the process of integrating Ludlow Thomson so it is too early to be definitive. Like every business, we regularly review the size and shape of our network to ensure it meets our customers' needs but we are broadly happy with the size of the current Foxtons network." 

The trading update showed total full-year revenue was ahead of market expectations, up 5% annually to around £147m.

Adjusted operating profit of £14m was also ahead of consensus market expectations and broadly flat against the prior year.

Growth was driven by lettings, Foxtons said but it highlighted TwentyCi data showing that the brand was the UK's fastest growing large lettings and sales agency for both lettings and sales instructions in 2023, up by 36% and 26% respectively.

Lettings revenue rose 16% annually and passed the £100m milestone, while sales revenue was down 14% versus 2022.

This was blamed on the challenging market conditions were primarily driven by higher interest rates and the weaker macroeconomic backdrop.

The update said Foxtons is confident that lower mortgage pricing and falling interest rates will boost sales demand this year.

It said it is “well positioned” for its medium-term growth ambition to deliver £25m to £30m of adjusted operating profit for 2024.

Guy Gittins, chief executive of Foxtons, said: “2023 has been a transformational year for Foxtons, following the implementation of a refreshed strategy and operational turnaround plan.

"We have delivered a year of market share growth and have ended the year with revenue and adjusted operating profit ahead of market expectations; our operational upgrades and investment in fee earners, training, data and brand, coupled with a return to driving innovation in the industry, are now consistently delivering material benefits to our competitiveness and market positioning, helping us to end 2023 as the UK's fastest growing large lettings and sales agency brand.  

"Our strategy to prioritise non-cyclical and recurring revenues has driven revenue and profit growth, despite a weaker sales market, and in contrast to prior years. This, combined with the operational progress and significant market share gains made to date, gives me confidence that our strategy is working, and we enter 2024 focused on delivering our strategic priorities and medium-term profit ambitions."