28.02.2025
Known for its iconic styling of its offices scattered across London and nearby counties, as well as the green and yellow liveried fleet of cars, the £188m-capitalised Foxtons Group (LON:FOXT) must be feeling nervous of its public perception.
Reaction To Bad Rumours
There has been a sudden explosion of comment about the pervading culture within its estate agency workforce – with claims of bullying, sexual harassment and racism being reported by past and present staff members.
That is not good news for the group, with even the Tempus column calling its shares out as an Avoid situation.
It is also going to need the group to come out strongly on to its front foot in its defence, even if the persisting comment has any basis in fact.
When companies start to grab newspaper column inches with such news then something has to be done in correction of the bad waves riding over opinion.
What is more such press scribbling can be very impactive upon stock market sentiment.
At the start of this month the group’s share price was looking strong at 69p, against an improving daily dealing volume.
However, in the last few weeks the price has been easing back on the rumours, before a massive 1.37m shares were traded on Wednesday of this week, as they fell back to just 60p.
Results Due
Next Wednesday, 5th March, will see the London-centred estate agency and lettings group reporting its Final Results for the year to end-December 2024.
On Tuesday 28th January the group issued an Unaudited 2024 Year End Trading Update declaring that its 2024 earnings will be ahead of market expectations, following the group last year making significant market share gains with double-digit revenue and earnings growth.
The group guided the market that last year its revenue growth will show an improvement of 11% to some £163m (£147.1m), with adjusted operating profit growth of around 33% to about £19m (£14.3m), both being ahead of market expectations.
Impressively the group declared that its outperformance reflected strong operational delivery, in particular significant Sales market share gains which delivered about a 30% increase in revenue year-on-year, while Lettings revenues which make up over 65% of group business being 5% better on the year.
CEO Guy Gittins stated that:
"I'm delighted that we have delivered a second consecutive year of revenue and profit growth since I returned to the business in September 2022, as our turn-around strategy continues to deliver results, and we ended the year with earnings ahead of market expectations.
Our renewed focus on training, culture and retention, supported by our best-in-class data and technology, has driven double digit market share gains in Sales, and revenue growth in Lettings. In addition, we have made two acquisitions in commuter towns as we expand into exciting new growth markets.
We enter 2025 with optimism.
We expect the Lettings business to remain resilient and, in Sales, we start the year with the highest opening under-offer pipeline since the Brexit vote in 2016.
This dynamic, coupled with our results driven-culture and industry-leading Foxtons Operating platform, leaves us well placed to continue to deliver against our strategic priorities in 2025."
Analyst View
On the back of the Trading Update, Greg Poulton at Singer Capital Markets rated the group’s shares as a Buy, with a Target Price of 94p.
His estimates for the end-December 2024 revenues are for £163.5m (£147.1m), with adjusted pre-tax profits of £18.7m (£13.8m), with earnings of 4.6p (2.8p) and paying a dividend of 1.10p (0.90p) per share.
For the year now underway he goes for £178.7m revenues, £20.8m profits, 4.9p earnings and a 1.30p dividend per share.
In My View
I am somewhat saddened to see that Foxton’s Management does not have a strong enough grip upon its culture within its offices to stymie any such rumours of ‘lad culture’ hitting the news headlines.
Glibly using lawyers to attempt to knock away growing press comment is not enough.
The market and its professional investors will be looking for stringent counteraction with the group’s staffing network – certainly enough for it to show a visible shake-up against such behaviour.
However much I like this company, until such positivity is shown I believe that the hoped-for progress in the group’s share price, now 62p, will be somewhat lethargic.
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