Countrywide Continues To Face Financial Difficulties

Estate agency Countrywide continues to face turbulent times, with the announcement that a number of branches are to close, accompanied by a harsh tumble in share prices.

This follows their profit warning at the end of April, and shareholder rebellion the previous year. 

Profit warning

At the end of April, Countrywide, which owns brands including Bairstow Eves and Gascoigne Pees reported a three percent drop in income during the first quarter to £140.3 million, a fall of £5 million.

The group also said that it was forecasting adjusted Earnings before interest, tax, depreciation, amortisation (Ebitda) to be ‘broadly in line with the board’s expectations.’

At the time, they added ‘The ongoing uncertainties surrounding Brexit continue to weigh heavily on consumer confidence as a whole. For Countrywide, this uncertainty is affecting the residential and commercial property markets, particularly in London and the South.’

However, the firm also said that its Back to Basics programme, which it describes as a ‘series of self-help measures’, is expected to show benefits towards the latter half of the year. This includes slashing IT costs by 35% with its contact centre reduced by 20%, which would help reduce costs overall by 10%.

Branch closures

While Countrywide has made no official announcement, it is understood that they are closing a number of their branches across their different brands. This belief is partly fuelled by their earlier statement that as part of their recovery plan they expect to have an average of over 600 branches in the near future, implying closures of around 200 branches.

Branches that are expected to close include Frinton-on-Sea in Essex, while staff at other branches are reported to have been offered redundancy packages. It is believed that branches at Maldon, Wickford and five other locations in the vicinity are affected.

Meanwhile, it is alleged that the entire sales team at Heatherington’s Shenfield branch have left voluntarily, apart from one secretary, ahead of a rebrand to Bairstow Eves. Other allegations include that both the senior negotiator and branch manager have decided to leave the Loughton branch of John D Wood ahead of a rebranding there.

Just last week, a spokesperson for the company, told Estate Agent Today ‘Our brands, branch network and the colleagues who work within them remain at the heart of our customer offering. As a responsible business we must constantly assess our branch footprint, the customers they serve and their profitability.’

She continued: ‘Based on that insight, there will be times when we make the difficult decision to close a branch and wherever possible, will seek to redeploy the teams.’

Share price

Following the speculation regarding branch closures Countrywide shares tumbled to just 5.9p per share on 9 May 2019. This represents a fall of 94% in share price over the last twelve months.

This followed a drop to 7p that was triggered by their profit warning in April, and has prompted speculation that, as a result, Countrywide may have little option but to sell off parts of the business if it is to survive.

A turbulent year

Countrywide has faced a turbulent year. Last summer, it was forced to cut back plans for an executive pay deal after shareholders threatened a revolt. The plans would have seen incentives worth over £20 million paid to the firm’s top bosses, including a £6 million payout to the Chairman, Peter Long.

This was in addition to their cash call in August 2018 which raised £129 million, which was largely used to pay down £115 million of their £200 million debt.

Countrywide remains in turmoil, and the industry will be watching it closely.