Foxtons is expecting the housing market during the first half of this year to be “more challenging” for the business compared with the same period last year with a more subdued sales market as a result of higher interest rates and general economic uncertainty, as well as inflationary pressures. But the firm says that its letting revenues is expected to remain resilient despite these headwinds.
Whilst the group is cautious about the sales market outlook, Foxtons says the steady reduction in mortgage rates from the elevated levels seen immediately after the mini-budget is encouraging and may lead to more favourable markets as the year progresses.
The company has confirmed that an operational review of the group is nearing completion covering all aspects of the business, resulting in a plan focused on driving growth and rebuilding Foxtons’ estate agency DNA. This will require investment in brand and people, including ensuring sufficient headcount capacity across our branch network, and the ability to better leverage our data and technology. Cost action already taken, alongside continued disciplined cost control, will self-fund the majority of this investment.
2022 trading review
Letting, sales and financial services all delivered revenue growth in 2022, with group revenue ahead of market expectations at c.£140m (up c.11% year-on-year). Adjusted operating profit is also ahead of market expectations.
In February 2022, the group successfully integrated the Douglas & Gordon Lettings portfolio and disposed of the loss-making Sales business, delivering significant earnings growth. Following this, in May 2022, the group acquired two further letting portfolios, adding c.2,500 tenancies. The group will continue to target further acquisition opportunities as part of its strategy to deliver attractive total returns on invested capital and improve the resilience of its revenues.
Details of the operational review and outcomes will be presented alongside the 2022 full year results on 7 March 2023.
Foxtons CEO, Guy Gittins, said: “Much has been achieved in a short period and it is great to see some of the team’s hard work reflected in the 2022 results. The economic outlook for the year ahead remains uncertain, but we have a growing portfolio of non-cyclical revenues, and a refreshed operational strategy to rebuild Foxtons’ estate agency DNA and return the business to its position as London’s go to estate agency.”
