As fears of a property downturn increased in December, the chief executive of estate agent Foxtons made a symbolic gesture to boost morale among his staff.
“We announced the new Mini at the Christmas party,” said Guy Gittins. “It was under cover when people arrived. The cover was pulled off it, and there were 20 people fighting to get a photo . . . it was quite emotional to be honest.”
The green Mini Cooper cars have been synonymous with the Foxtons brand since it expanded in London and the south-east in the 2000s. But under previous management they were swapped for a low-budget, low-key alternative.
Gittins hopes the fleet of 350 new cars he leased this month will help restore “pride” in their profession just as the property market heads for a downturn — UK house prices fell for a third consecutive month in December and at the fastest pace since the 2008 financial crisis as borrowing costs rose.
“We have to dial everything up,” said Gittins, who was tasked with turning round the fortunes of the London-focused estate agency in September. “We became embarrassed by what we do. We have to be proud to be estate agents.”
The new boss is hoping to quell the activists who now pack Foxtons’ share register by cutting costs, redoubling on the lettings business, refreshing outdated internal processes and reinvigorating the company’s culture. The company’s share price has lost about 90 per cent of its value since the estate agent’s stock market debut in London in 2013.
Foxtons has traditionally derived the bulk of its income from selling properties. But Gittins argued the way to increase profits from the £5.6mn before tax posted last year was to expand in lettings.
“Our model is very much expansion through acquisition: there are 3,600 independent agents operating within the M25 who all have lettings incomes and clients,” he said.
The red-hot rental market is an attractive target, but tenant groups have accused Foxtons, known for its aggressive sales tactics, of profiting from a crisis that is pricing renters out of the city.
Gittins is unmoved. “We are simply advising on where the market is on market evidence. We sympathise with the renters of London, it is a supply and demand dynamic that is not healthy.”
He started his career at Foxtons in 2002, on a salary of £22,000, before leaving to work for One Hyde Park developers the Candy brothers. Before rejoining Foxtons this year, with a starting salary of £450,000 and a maximum bonus one and a half times that, he was boss of rival firm Chestertons.
“The opportunity to come back was so compelling, particularly seeing the decline from outside the business,” he said.
In his years away from Foxtons, the agent has “really become invisible within the other agents” and its culture “has been unavoidably diluted” as it has retrenched.
That is one reason why the company failed to take full advantage of the frenzied sales market of the past two years, said Gittins.
“My personal view is we have underperformed on the opportunity that was in front of us. We’ve just had two of the best sales years we’ve had in years, but because sales teams had been cut to the core we didn’t have enough people at negotiator level,” he said.
The chief executive must also please a group of activist shareholders that lobbied for an executive shake-up and strategic overhauls in the past year.
Catalist Partners, a 3 per cent shareholder, published a lengthy dossier in June last year claiming “Foxtons has lost its way” and argued that management should go after the high-end sales market and branch out to become a national agency.
But Robin Paterson, Catalist’s founder, was cheered by Gittins’ appointment and his focus on bolstering the rental business in the capital.
“Guy was at the top of our list. He hasn’t been [the] boss of a public company but he is one of the few CEOs who understands data,” said Paterson. “Lettings are quick wins . . . There’s so much low-hanging fruit in London for him to sort out.”
Michael Rapps, managing partner at Converium Capital, another activist which has pushed for Foxtons to sell itself, also welcomed the appointment.
“In our view the company clearly needed new leadership. The prior team was not the team to solve the problems at the company. We think Guy is.”
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