Home » News » Agencies & People » BREAKING: Foxtons sells Douglas & Gordon sales arm to CEO James Evans
Agencies & People

BREAKING: Foxtons sells Douglas & Gordon sales arm to CEO James Evans

Just 11 months after it bought company, D&Gs lettings will transfer to Foxtons while the loss-making sales division has been sold off.

Nigel Lewis

douglas and gordon foxtons d&g

Foxtons has sold the sales operation of Douglas & Gordon (D&G) to its CEO James Evans just ten months after it bought the business 10 months ago for £15.5 million.

D&G’s property sales division was loss-making when the deal went through and it is clear now that Foxtons was largely interested in its profitable lettings capability.

Lettings at D&G performed well last year with its portfolio expanding by 4% to around 3,000 live tenancies and generating £10.0m of lettings revenue in the ten months of Foxtons ownership. It is expected to generate a profit of £4 million this year.

But Foxtons says the D&G sales business has also grown since the acquisition, having benefited from, among other things, improved market conditions. It has been sold to Evans for a ‘nominal sum’ with £3.7 million of cash being ‘left in the business’.

Despite this it contributed an operating loss of approximately £1.9m to the Group in 2021, from £6.8m of sales revenue.

The total gross assets of the D&G sales business at the end of December 2021 were £10.6m, primarily relating to lease right of use assets and cash.

Foxtons says it looked at three options – continuing to run D&G as a separate brand, closing down the D&G sales business and disposing of it.

The Foxtons board concluded that disposing of the sales business to D&G management and integrating the lettings business into the Foxtons network was the most attractive option.

This is primarily because Foxtons has an established branch network that overlaps significantly with D&G’s branches. All of D&G’s lettings staff will transfer to Foxtons.

Foxtons says it believes the original purchase was good value for money now that sales has been hived off – it will have paid approximately 3.9 times its expected 2022 operating profit for the D&G lettings business. The total return on invested capital is expected to be in excess of 20% in 2022, although selling off its sales arm will cost Foxtons £3 million.

nick budden foxtonsFoxtons CEO, Nic Budden (pictured), says: “D&G has performed extremely well over the last ten months under Foxtons ownership and this next step is a real win-win for both parties to the transaction.

“We have an excellent track record of acquiring and integrating lettings businesses and expect to deliver significant growth in operating profit through the integration of the D&G lettings business into Foxtons highly scalable infrastructure.

“The D&G sales business will remain as an independent brand under its current leadership and we wish them well for the future.”

Link to James Evans interviewD&G CEO, James Evans (pictured) adds: “I am thrilled to have the opportunity to lead D&G as an independent brand and excited by the prospect of continuing to grow the business and serve our customers as we have done for many years.

Foxtons is a fantastic business, I spent many happy years there myself and I know that our transferring staff and clients will have the same great experience I had.”

City reaction

Investment firm Numis has said: “In our view this looks like a sensible deal, given that the sales business lost £1.9m EBIT in Fy21 – in contrast to the lettings business which generated c.£4m.

“Therefore the disposal will transfer lease liabilities and also result in D&G seeing profits rise from c.£2m in FY21 to £4m in FY22. This is in line with our forecasts and we make no change to profits or our net cash forecasts [for Foxtons].”

January 14, 2022

What's your opinion?

Please note: This is a site for professional discussion. Comments will carry your full name and company.

This site uses Akismet to reduce spam. Learn how your comment data is processed.