Foxtons’ sales operation ‘turns a corner’ in first months of 2024

Foxtons reports much improved financial results this morning with sales revenue up 17% in the first quarter.

Revenue from sales fell 14% last year, so there is a clear upturn in the London agency’s fortunes so far this year.

The firm says sales revenue was £9.5 million (Q1 2023: £8.1m), with a significant increase in market share, and sales agreed in the quarter were 31% higher by volume.

Lettings up

Lettings revenue was up 5% in the quarter to £24 million (Q1 2023: £22.8m), with overall revenue up 9% to £35.7 million (Q1 2023: £32.9m), and financial services revenue up 16% to £2.3 million (Q1 2023: £2m).

Strong start

In its annual results released last month, Foxtons saw its profit before tax slump 34% to £7.9 million despite a 5% increase in revenue.

All the financial results are set to a background of pressure from some shareholders to sell the business.

Guy Gittins, CEO at Foxtons (main picture), says: “This has been a strong start to the year with our revenue growth demonstrating the real momentum we have built across the business.

Last year we regained our number 1 position in London.”

“Last year we regained our number 1 position in London and delivered significant growth in our market share of property instructions across both lettings and sales,” he says.

“The business is now focussed on converting these listings to transactions as we deliver results for our clients.”

Possible sell-off

Foxtons is believed to have hired merger and acquisition bankers from Rothschild to look at how the business could be sold.

It’s claimed that several large shareholders, such as Canadian investor Converium Capital, which owns about 5.3% of the estate agency, and UK-based Milkwood Capital, which also owns 5%, have said they want Foxtons to find a buyer.

Earlier this week, Foxtons claimed to have become the first estate agent to completely digitise the home selling process after it launched a collaboration with consumer app Home and Coadjute to digitise both sales and lettings.

Greg Poulton, of Foxtons’ corporate broker Singer Capital Markets, says: “After a year of outperformance in FY23, strong momentum has continued, with a solid Q1 trading performance (revenue +9%).

“Expectations are reiterated at this early stage in the year and the Group has continued to deliver progress against its strategic objective,” he says.

“We expect continued strong earnings growth as the Group progresses towards achievement of its medium term target. We remain at Buy with an 88p target price.”

Industry reaction

Andy Murphy, Director of Financials & Industrials at Edison Group, says: “Foxtons Q1 revenue grew 9% to £35.7m with robust growth recorded in all three divisions.

“The group is trading inline with management’s full year expectations and is making solid progress towards achieving its medium term adjusted operating profit target,” he says.

“Again, we believe Foxtons is outpacing the market, taking share. The under-offer pipeline is expected to support further revenue growth in Q2 as mortgage availability and rates have stabilised and the market has good levels of available stock”

Anthony Codling, MD Equity Research at RBC Capital Markets, says: “Foxtons turn around is gathering pace with CEO Guy Gittins at the helm, its sales under-offer pipeline at its highest level since the Brexit referendum in 2016 and Foxton’s is living up to its strapline of ‘Get it done with London’s number 1’.

It still has a way to go, the lettings book appears a little leaky, but with the share price up more than 50% since Mr Gittins arrival, shareholders should be pleased that the Foxtons brand is starting to shine agai,” he says.

“Foxton’s performance is also good news for the wider London housing market, despite the continued economic and election uncertainty, the rental market is stabilizing and the number of active homebuyers is growing. Like Foxtons itself, the London housing market appears to have turned a corner.”