The pain continues for estate agent Countrywide (CWD) as it warns on first half profit, says lift will not improve in the second half and flags a big fundraise.
Earnings for the first half are expected to be £20m down on last year’s £28.1m - which had already fallen by more than a quarter on the 2016 level.
AJ Bell investment director Russ Mould comments: ‘Countrywide is facing three big challenges at present which are reflected in a profit warning.
‘The housing market is weak; its industry is facing disruption from online competitors which don’t have the costs of running high street offices; and the company is carrying too much debt.’
TURNAROUND EFFORT
In March a revamped management team, with executive chairman Peter Long promoting industry veteran Paul Creffield to the role of group operations director, announced a return to a back-to-basics approach, after a seemingly half-hearted attempt to emulate online disruptor Purplebricks.
The group reports ‘substantial progress in re-establishing industry expertise and the right level of staffing and capability in its sales and lettings businesses’ and the register of properties available for sale is up 9% on the 2017 year-end levels.
The company is looking to do something about its financial position which Mould says is very important to the business.
‘Addressing the balance sheet issues is a must as until then there will be a question mark over whether the business is being run in the interests of shareholders or creditors,’ he says.
‘However, plans to cut its borrowings in half by issuing shares implies heavy dilution. We should find out the scale of this dilution when the company reports its first half results on 26 July.’
