Foxtons reported a 23% decrease in London’s overall residential property sales in the third quarter of 2023. This decline might raise eyebrows, especially for potential investors. However, it’s worth noting that Foxtons’ own performance during this period showed resilience and was slightly better than the general market trend.
Foxtons’ Financial Performance: A Closer Look
Revenue Growth Amidst Sales Decline
For the nine months leading up to 30 September 2023, Foxtons enjoyed a 5% increase in its revenue, amassing a total of £114.8m. This growth is quite impressive when compared to the £108.9m revenue recorded for the same period in the previous year. Moreover, when narrowing down to the three months ending on 30 September 2023, the revenue stayed almost unchanged at £43.9m, showcasing stability despite the backdrop of a significant sales dip.
Rising Rental Rates: A Silver Lining
As sales dipped, rental rates in London skyrocketed, reaching unparalleled levels. This boom in the rental market led to an 8% increase in Foxtons’ booking and management fees, which amounted to £31.6m.
Guy Gittins, the Chief Executive at Foxtons, attributed this growth not just to the rising rental rates but also to strategic market share gains, internal operational upgrades, and robust investment in areas like training, data analytics, and brand enhancement.
A Comparative Revenue Snapshot
To provide a clearer understanding, here’s a comparison of Foxtons’ revenue across different segments for both the 3-month and 9-month periods in 2023 and 2022:
3-month performance:
| Segment | Q3 2023 | Q3 2022 | Change (£m) | Change (%) |
|---|---|---|---|---|
| Lettings | £31.6m | £29.2m | £2.4m | 8% |
| Sales | £9.9m | £11.9m | (£2.0m) | (17%) |
| Financial Services | £2.4m | £2.8m | (£0.4m) | (13%) |
| Total | £43.9m | £43.8m | £0.1m | – |
9-month performance:
| Segment | Q3 2023 (YTD) | Q3 2022 (YTD) | Change (£m) | Change (%) |
|---|---|---|---|---|
| Lettings | £81.3m | £68.6m | £12.7m | 18% |
| Sales | £26.9m | £32.7m | (£5.9m) | (18%) |
| Financial Services | £6.6m | £7.6m | (£0.9m) | (12%) |
| Total | £114.8m | £108.9m | £5.9m | 5% |
The Road Ahead: Foxtons’ Perspective
Despite the challenges, Foxtons remains optimistic about its performance. While expecting its revenue for the upcoming fourth quarter to be marginally lower than the previous year, the agency anticipates strong earnings from its letting services. Furthermore, they believe that overall earnings will align with market forecasts.
Reinforcing this optimism, Guy Gittins stated, “Our continued efforts in operational upgrades are bearing fruit faster than anticipated. Our strategic investments have empowered us to grow our revenue year-to-date even amidst reduced sales transactions, a consequence of the prevailing high-interest rate environment.”
He further added about their recent marketing campaign titled “Foxtons – London’s No. 1”, which signifies Foxtons’ re-emergence as London’s top estate agency brand. Gittins believes that the progress made so far and a shift towards non-cyclical revenues will help insulate the company from sales market fluctuations, ensuring they remain on track with their medium-term profitability goals.