Whither Countrywide

Although Brexit, portal juggling and portal wars have stolen property industry headlines in recent months, there's been one story almost constantly running just below the surface – and sometimes above the surface too.

It's 'whither Countrywide'. 

We know the broad story about its share price (which, let's say at the outset, is neither the only way of measuring the company's activities nor necessarily the best). 

But the statistics are worth setting out, and make gory reading for Countrywide shareholders who back in March 2014 saw the firm's price sailing high at 686.

Spool forward 18 months from that period, to November 2015 – a year ago – by which time Countrywide has a new bedded-in management with radical ideas, clearly set out for company insiders, the industry and shareholders alike.

So on November 6 2015 – almost exactly one year ago – the FTSE 100 closed at 6,353; the FTSE 250 (seen by many analysts as being more representative of the wider economic forces impacting on share prices) closed at 17,166.  Countrywide's share price closed that day at 414 having lost a third of its value in 18 months. 

On February 5 2016 – nine months ago – the FTSE 100 was up to 6,117 and the FTSE 250 up to 16,662. Countrywide's price, however, had dropped further to 381.

Another three months on and we're at May 5 2016, some while before the EU referendum. The FTSE 100 was at 6,117 and the FTSE 250 at 16,662. Countrywide's share price? Down again, this time to 352.

By August 5 we're seeing shares ride relatively high in response to the pound's post-Brexit vote slump. The FTSE 100 is up to 6,784 and the FTSE 250 high at 17,465. Countrywide is down now to 244.

So on to the time of writing – November 3 2016 – and the pattern continues. The FTSE 100 is at 6,790 and the FTSE 250 up to 17,582. Countrywide, having fallen through the 200 barrier a few weeks ago, is now down to 181.

The game isn't up yet for Countrywide and its retail-led management. 

Many years of financial journalism prior to writing about property have taught me not to write off Countrywide yet: other firms have produced more Lazarus-like returns from the dead than the one required by Countrywide.

But while there can be individually-sound reasons why property shares are losing value more rapidly than other sectors, especially given the uncertainties surrounding Brexit and recent property tax changes, the persistent direction of travel of Countrywide's share price is now beginning to rattle the company.

Last week's downgrade of the estate agency's group investment status from 'Buy' to 'Hold' was all the more bitter because it came from Jefferies, a consultancy held in high regard by the property industry and hitherto a vocal City backer of Countrywide's modernisation programme. 

Even more ominous for Countrywide, perhaps, is the fact that the group is beginning to arouse quiet interest from the very small number of companies in the residential business who – at today's prices – could just about afford to buy it.

So what next?

Within the next few weeks, one or both of two tipping points may be reached.

Firstly, the third quarter trading update – expected before the end of November – will reveal how much, if any, of Countrywide's share of sales transactions has been lost. It may well be that a successful lettings performance may mask any downturn on the sales side, but this will be quickly spotted by investors and reflected in the share price.

Secondly, and still on that share price, at just what point will shareholders or possible buyers want to show their hand? The former must surely be dissatisfied with management, and the latter may well start making 'theoretical' enquiries about the process to bring this public company back into private hands.

It's possible – just – that Countrywide's problems may be lost in the bigger noise, and things will continue as now well into next year. Wider housing market uncertainty in 2017 and beyond, hinted at this week by forecasts from JLL and Savills, may temporarily disguise the fact that Countrywide is performing less well even than other publicly-quoted firms like Foxtons and LSL.

Whatever happens, it would be sad if the modernised baby was thrown out with the bathwater: many agents in other companies, for example, feel the rationalisation of Countrywide's multiple brands in overlapping patches has been long overdue.

But the next headlines about Countrywide are unlikely to be far away. 

There is industry speculation about management changes by Christmas. If these rumours are true the headlines this time are likely to be about bigger things than disgruntled veteran managers moving to rival companies. 

This time, the headlines may be about the future of Countrywide itself.

*Editor of Estate Agent Today and Letting Agent Today, Graham can be found tweeting all things property @PropertyJourn