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BREAKING NEWS

Real estate agent Foxtons replaces finance chief as it warns of weak London market

Real estate agent Foxtons replaces finance chief as it warns of weak London market
FILE PHOTO: A Foxtons estate agent sign is seen outside a branch in west London, Britain July 29, 2016. REUTERS/Peter Nicholls/File Photo -
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Peter Nicholls(Reuters)
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By Pushkala Aripaka and Tanishaa Nadkar

(Reuters) - Real estate agent Foxtons Group Plc announced the departure of Chief Financial Officer Mark Berry on Monday as it said UK property sales were running at record lows due to the impact of Brexit on consumer confidence.

The company, which has been struggling with stiff competition from nimble, low-cost operations, named former Marks & Spencer and Laird plc executive Richard Harris, as its new chief financial officer, replacing Berry.

Shares in Foxtons, which focuses on the London market, fell as much as 6.5% on Monday to 56.1 pence. Including that drop, the stock is still up 5.5% since the start of this year.

The shake-up comes months after one of Britain's best-known property names scrapped its dividend for 2018 and reported a fall in core earnings, hurt by weaker sales and higher costs in a tough market.

Foxtons did not specify why Berry was leaving the company but said it was by "mutual agreement". He will be stepping down at the end of July, after two and a half years in the role.

Shares in the company lost more than a third of their value last year and Foxtons said on Monday that, while the first quarter was in line with expectations, revenue had fallen and it had seen no change in trading patterns in April.

"Conditions in the London property market remain very challenging," the company said in a trading update.

"Sales volumes continue to be at record low levels and ongoing Brexit uncertainty is impacting consumer confidence."

GREEN SHOOTS?

The total volume of property sales in central London fell 16% in April from a year earlier, a report https://www.londoncentralportfolio.com/Hidden-Files/LCP/PR/LCPAca%20Resi%20Index/May%20LCP%20Aca%20Resi%20Index.pdf by real estate investment advisory firm London Central Portfolio (LCP) showed on Monday, while volumes dropped 4.6% in Greater London.

However, sales in the heart of London marked an improvement since December, as investors capitalised on a weak pound and suppressed property prices in a rush to beat the original Brexit deadline of March 29, LCP said.

Britain is now scheduled to leave the European Union on Oct. 31.

"It is difficult to tell whether we are seeing the green shoots of a market recovery or a false dawn. Nevertheless, it is indicative of the weight of money waiting to return to the market," said Naomi Heaton, chief executive of LCP.

Foxtons, founded in Notting Hill as a two-person agency in 1981, has a market capitalisation of £166 million.

London's long-bullish property market has been sluggish in many areas over the past year due to the uncertainty generated by Britain's decision to leave the European Union and a rise in stamp duty property tax.

The company said it was in a strong financial position, with net cash of around £15 million at the end of the quarter, while its largest letting business had performed ahead of its expectations.

Group revenue dipped to £23.8 million for the quarter ended March 31, compared with £24.5 million a year earlier.

(Reporting by Tanishaa Nadkar and Pushkala Aripaka in Bengaluru; editing by Patrick Graham and Susan Fenton)

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