London-focused estate agent Foxtons has unveiled a new strategy as it aims to capitalise on a boom in property sales and see off an activist investor that is pushing for a shake-up.
The company told investors on Thursday that it would look beyond its traditional London market, targeting sales in the rest of south-east England and in other UK cities.
It is also targeting the growing build-to-rent sector and buying smaller lettings business. The company bought rival London agent Douglas & Gordon for £14.25m in March, primarily for its lettings business.
“What we’ve laid out today is where we think we can get the biggest bang for our buck,” said chief executive Nic Budden.
Once a competitive advantage, Foxtons’ focus on London has recently become a drag. Since 2014, tax changes, uncertainty about Brexit and three general elections have slowed sales and hit house prices in the capital, particularly in the more expensive corners of the market where Foxtons operates.
Shares in the company have tumbled from a peak of 399p in February 2014 to 61p on Thursday.
Budden told investors that “the last five years have been some of the most turbulent in the UK’s modern history”.
But activist investor Catalist, which owns a 2 per cent stake in the company, said last week that Foxtons had “lost its way”.
Catalist said that competitors dominated London’s lucrative super-prime market and that Foxtons’ business had “stalled” over the past five years.
In a dossier published last week, the investor said that Foxtons could become a £1bn business by pushing out of London. The company’s market value is about a fifth of that.
To hit £1bn “you would have to pull out all the stops”, said Budden, whose £389,000 short-term bonus was approved in April despite 44 per cent of shareholders failing to back it.
As well as strategic changes, Budden said the company would benefit from calmer political conditions and a housing cycle that he expected to be kinder over the next five years.
In an optimistic trading statement on Thursday morning, Foxtons said it anticipated it would deliver half-year profit “significantly ahead” of pre-pandemic levels, thanks to buoyant demand in London.
Future sales commissions were 65 per cent higher than this time last year, with the pandemic encouraging people to move. The company said sales in the first quarter were 49 per cent higher than 2020 and 2019 levels.