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Countrywide share price drops to historic low, but will ‘back to basics’ deliver?

Share price has dipped to 8.6p, down from nearly £7 four years ago, but analysts are still holding out for a 'back to basics' turnaround.

Nigel Lewis

countrywide

Countrywide’s share price dipped briefly to an all-time low of 8.6p during early trading today after a brief rally on Friday, a drop blamed by City watchers on institutions offloading its shares.

The low point marks the end of a roller-coaster ride for the company; its share price has fallen by 11% over the past month and by nearly 90% since December 2017.

One specialist US stockmarket City trading watcher says the huge decline in Countrywide’s fortunes indicate its shares being ‘over-sold’ over the past two weeks.

But crunch-time for Countrywide is due to come in the New Year when it publishes the company’s preliminary announcement for its 2018 trading, due after the New Year.

This will hopefully reflect the company’s ‘back to basics’ approach since Alison Platt left in January and Peter Long took over as executive chairman, promoting Paul Creffield to Group Operations Director.

Back to basics?

countrywideRobert May (left) of recently-launched challenger portal Rummage4 and a seasoned Countrywide watcher, says back to basics at Countrywide means the company thinking once again “like a local agency” rather than a national behemoth.

“The key to the future of agency is thinking like an independent agent; [their] commission-only ‘sell’ approach meaning that if an independent agent doesn’t sell, there is no-one to pay their wages so they don’t eat,” he says.

“Connells think like independents and, no-one realises, both Thomas Morris and LSLi both already have this ‘future thinking’ in place.

“And I believe Himanshu Raja [its CFO] has taken Countrywide ‘back to the basics’ of thinking local too.”

 

December 4, 2018

2 comments

  1. Countrywide’s share price is not the only concern, last year it made losses of over 220M, having made a marginal profit the year before of over 15M. It has raised 120M a few months ago by offering shares at an all time low, but this recapitalisation exercise will only sustain them for 8 months.

    I started with Countrywide in 1985, and so have fond memories, but the basic principle of the company then was: – high fees, high level of service and dominant market share, which attracted top flight well paid staff.

    We are now in 2019, well almost and Countrywide should have pruned back all offices that have never made profit, and of course not tried to re-invent itself as a low upfront model. They failed to do this over the last 3 years.

    The basic cost of selling a property and getting it exchanged is about £2,300, if you factor in marketing costs and sales progression. If you charge less than this your business will make a loss, obviously there are bolt on’s, financial services, solicitors introductions.

    But you can only charge a higher fee if your offices perform, and the public wants to use your brand, the recent woes of John Lewis illustrate that just because you have always done well historically, in 12 months that can all be wiped out.

    I wonder two things, has the present CFO ever been an estate agent? Has Himanshu Raja spent anytime in any of the back to basic branches to see how despondent and beaten the sales teams are? I ask this question as not so long ago, most people on the Countrywide board including Aliso Platt had never done agency, and actually looked down on those who had.

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