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98. Bull, Bear & Beyond – Foxtons Group executive interview
7 Plays6 months ago
Fresh from a major capital markets day, Foxtons Group CEO Guy Gittins sits down with Edison to discuss how the UK’s fastest-growing estate agency plans to double profits – again. From data-driven lettings expansion to AI-powered prospecting and high-margin acquisitions, this candid interview is a must-watch for anyone interested in property, growth strategy and the future of real estate.
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About ‘Bull, Bear & Beyond’
Bull, Bear & Beyond': features candid conversations with senior executives and from our own team of experts from across industries, exploring strategy, innovation, and the opportunities shaping their markets and 60-second pieces are a compressed summary of content designed to convey our message in a single, easily shareable hit.
About Edison:
Edison is a content-led IR business. We believe quality investment content should inform all investors, not just brokers. Our mission: engage and build bigger, better-informed investor audiences for our clients.
Edison covers 50+ investment trusts, read about them here: https://www.edisongroup.com/equities/investment-companies/
Original interview published on 20/06/2025 and reposted as a podcast
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Transcript
Introduction to Anderson TV and Guy Gittings
00:00:07
Speaker
Welcome to Anderson TV. I am delighted to be at Fox's HQ with their CEO Guy Gittings. They've just had a capital markets day. We're filming the 5th of
Guy Gittings' Journey and New Financial Targets
00:00:16
Speaker
June. Talk to me a little bit about the journey and why you set out new financial targets for the business.
00:00:22
Speaker
Well, I returned to the business in September 2022. And really, that first part of the story was a rebuild story. um I joined a business where um we'd seen market share really decline, ah since certainly since 2016.
00:00:37
Speaker
um And the business really needed new energy.
Strategic Shift to Growth in Lettings
00:00:40
Speaker
We we came in um and at the start of 2023, we produced and presented an entirely new business. strategic plan for the business to the city. And that plan initially was delivering 28 to 33 million pounds of adjusted operating profit. and it was And we were going to achieve that by shifting the focus of this business from once what was historically very much a focus of sales, now very much focusing on the growth and the opportunity within lettings. And we love lettings for many reasons, but we particularly love it because it's a really beautiful reoccurring revenue stream. It's very, very resilient. And certainly, as we've seen coming through events like COVID and and the global financial crisis, you know, that the the predictability of that income is fantastic. And it's been such a wonderful growth area for us that that we're really excited, not just about delivering that first part of the plan, which is now very much within touching distance within the next 12 to 18 months.
Profitability and Revenue Goals
00:01:37
Speaker
But actually, this was about getting ahead of that and now looking even beyond that that horizon um and looking at part two of the story, which is what we've laid out in the capital market.
00:01:46
Speaker
What are the new financial targets and what kind of timescale are you hoping to hit them? So as as headlines, the most important one is our profitability. And we we're driving that from part one, which was 28 to 33 million of of adjusted operating profit. Part two of the story, which we've announced yesterday, is now moving towards 50 million pounds of of AOP. And we will deliver that along with around about 140 million pounds plus of revenue. um And we're moving and improving the profit margin from around about 14 percent today um up towards 20 percent. And we'll be doing that, of course, um by looking at majoritively of that will be coming through acquisitions. There's a wonderful consolidation opportunity, both within London and the surrounding commuter belt locations, um delivering great
Leveraging Data and AI for Growth
00:02:31
Speaker
organic growth. and And I think certainly the last two and a half years, we can point to some of the most, some of the strongest organic growth in the market um and delivering a big uplift in terms of our market share as well. And and actually, we're really proud in in the last two and a half years, we've become the fastest growing yeah UK estate agency, which is quite an achievement for a large agency ah like like us ourselves. And we've moved from around about 3% market share for sales and lettings up to 5% or 6% for sales and lettings today. and And we've done that through... really starting to get value out of this enormous database that Foxons has been collecting over the last 20 years and that really is something that's very very different to the majority of our competitors you know the size and the quality of the data that we've been collecting there's over 1.6 billion data points in our database and if you can imagine
00:03:21
Speaker
20 years of viewing history, buyer and tenant journeys, you know, that granular level of consumer behavior that we'll start now to get um value out of when we start to use AI plugins, I think will will really take us into the next level of of our journey. So what is the underlying strategy effectively to hit that next phase of growth?
00:03:41
Speaker
Well, let's look at the three different aspects of our business. We have lettings, we have sales and we have financial services. So if I break it down into those those those different challenges first, lettings today is the most important and largest aspect of our business. and And that's been a deliberate shift over the last two and a half years to grow that reoccurring, very consistent, very resilient income.
Rebuilding Sales and Increasing Profitability
00:04:02
Speaker
And we've done that, as you've heard, by by by two ways, both through organic growth within the existing business, but then supercharging that growth with acquisitions and and really accelerating The next part of this plan will be delivered by an evolution of the part one of the plan is making sure that we continue to deliver on both of those aspects. But this new plan also includes us going further afield. Traditionally, we've been an agent that's focused very much on London.
00:04:25
Speaker
Part two now is opening up entirely new markets in high value, high volume commuter belt locations where we can buy high quality lettings businesses, bolt them into the Foxons platform and get those great synergies that we talked about earlier. So that's that's for lettings. Then for sales, and this business for the last three or four years has seen, and London has seen, very low volumes of sales within the M25, mainly because of the increases ah in interest rates, thanks to the September 22 mini budget. That's really subdued sales volumes. And what that's meant is is that our sales business has actually been loss-making, but this is a rebuild of that. And it isn't easy to get a large sales business back to profitability, um But actually, we're really close to doing that. And we know that in the next 18 months, even at the subdued volume levels within the market, we should be we should be very close to that. So that's been ah ah a major focus.
00:05:19
Speaker
Part two of the story for sales is then growing the profitability of that department from from a loss making position, which we're really confident that we can do. And we'll do that by continuing to take huge market share. And and we've seen that growth already being the largest in in the market across the whole of the UK.
00:05:35
Speaker
And we will continue to to to grow on top of that and take larger volumes. We know we can't save our way to profitability in sales. It's got to be about growing market share. But also, if we could just slightly increase our average sales price. and now In fact, our average sales price has been completely flat in London for the last four years. I mean, the the spread is incredibly tight. um But if we could just increase that average sales price by £50,000, that would add millions in additional profitability over the next year, over the next phase of growth. So that's another another part of the growth story. And then the last piece is, of course, financial services. We own a business called Alexander Hall and they provide mortgages to our um to our buyers. um And it's a really fascinating business. And I think and perhaps over the next five years, we're going to see a slight evolution, of the business model there. There's the traditional employed broker under the Alexander Hall umbrella model, which which is well proven and and and and has been in place for many years.
00:06:33
Speaker
We have a new model, which we're launching, um we talked about at the CMD, where we will be able to scale up like slightly quicker to take the advantage of the market opportunity that we're delivering from the rest of the estate agency.
Unique CRM and Operating Platform
00:06:46
Speaker
And whether that be, you know, front office sales opportunities where people are buying and need a mortgage, yeah but also our investors in lettings looking to remortgage their portfolios and things like this. So they're really exciting for those three aspects of the business um as we grow into the next phase of of our plan.
00:07:01
Speaker
You touched on elements of what makes your business different. How does your operating platform support this growth, and so the strategy for growing?
00:07:12
Speaker
And indeed, what new upgrades are you giving your operating platform that people should look out for? Well, the operating platform at Fox is is almost entirely unique and and we believe it's it's almost almost entirely impossible to be able to replicate. And and the the beauty of this is that 20 years ago, and this business invested a huge amount of money, time and effort in building its own CRM. And that CRM today covers every aspect of the business. This is a unique platform. singular system that talks to each other it's complete visibility across everything that we do and that generates huge efficiencies not just from an operational efficiency but also from an output efficiency because we have created over time um very highly efficient siloed departments and those siloed departments are really really good at at the one thing that they focus on and and actually we've've we've had a tour around head office today with your team. And we've seen some of that in action. And, you know, the prospecting, we have 100 people here and who are prospecting getting into that database of four and a half million people using AI to power the propensity modelling of who we should be calling. And the old fashioned way up until two years ago was, you know, we generate a list of ah of a street name and we'd call everybody from to Z and hope that we might find somebody that was interested in in doing something with us.
00:08:31
Speaker
Now we're looking and using those 1.6 billion data points, we're using the 4.5 million contact points, we're also ingesting huge amounts of external data. And those algorithms are helping us, in the background, propensity model that that information and say, rather than calling 100 people on a random list, Here's the top 10 that you should call because we know they're factually much more likely to do something than the other people. And that's really helped us grow that market share. And the proof point of that is being the fastest growing agent in in in the UK over the last couple of years. So that's one area, obviously the CRM, the data that powers it It's all very well creating a fantastic CRM.
00:09:09
Speaker
But you can't you can't power that without the data. And I think when we're now looking into the future, we've built over the last two years a state of the art Azure platform. We've built it in conjunction with Microsoft to make sure that it's future fit for as far as we can see ahead. All of that cost and in investment has already been taken place has already taken place. um And those AI plugins that we can't even imagine today that might be coming on stream in the next six months, a year or two years,
00:09:33
Speaker
are are ready to be actioned
Brand Recognition and Employee Development
00:09:35
Speaker
straight away. So we're constantly out there thinking about ways that we can use our historic database, you know, thinking about those insights that that historic journeys have shown us over 20 years to really be able to power forward. and So we're really, really excited about the data platform. um And then we've also got ah the UK's most recognisable estate agency brand, despite only really operating in and around London. It's remarkable if you think about it, and that's YouGov information. um And that brand...
00:10:03
Speaker
allows us to be able to go into new markets and command and and capture really good market share. It also helps us deliver a really premium fee over the vast majority of other agents on the high street. We know our average fee today across, if if you look at sales, for example, we have 8,600 properties on the market today, which is a considerable margin over over our number two competitor.
00:10:28
Speaker
We've got almost all of those units are are um are at our premium fee of 2.5%. And on average, over all of them, it's 2.25%. We know that that fee is probably double that of our closest competitors. so and And we're able to be able to command that because of the reputation of the Foxhans brand for delivering results and and also that brand recognition. So brand is is is also really important to us.
00:10:51
Speaker
And of course, people, culture and training. The people are the most important driver of a business like ours. And and I don't think... Any technology that's coming on stream in my working lifetime is going to replace an estate agency, that person to person relationship. And that is so important. So we are constantly looking to try to find ways of engaging with people who want to come into the industry We've rebuilt our employee value proposition over the last two years. And we're now bringing and talking to lots of university courses. We're we're really integrating and working with university courses to capture um a different calibre of new starter and bring them into the business earlier um and then train. um And as you heard earlier on, we're delivering a ten a tenfold increase in face-to-face training over the last two years since I've returned to the business. And what that's doing is it's helping us make our new negotiators and new team members productive much earlier on in their journey so that they're earning more, that they're more productive for the business. And and and ultimately, they can see that progression much
Expansion into New Markets
00:11:54
Speaker
quicker. So that will always be ah a key driver for for it for a business like ours. And it's something but we that would that we're pleased with the progress. But ultimately, like all businesses in the modern world, you know, culture within the business and what we're doing around the people piece is really important. And it's ah it's an always on constant journey. to to move forward.
00:12:12
Speaker
Those are fantastic sort of elements of, I guess, the moat. You've started to sort of expand outside of London. Where are you looking to ah build further offices and and and why?
00:12:25
Speaker
Well, ultimately, London will always be the core location for for for Foxton's. You know, we've got fantastic reputation. We've got lots of offices here already and we have a brilliant business. What this is about is the next layer of growth for the for for for Foxton's. And if you just take London on its own, we've calculated that we believe that the total commission pot available for everybody, the total addressable market, for sales, for lettings and financial services, the three aspects of our business.
00:12:52
Speaker
Today, London's market is around about £2 billion pounds of of commission opportunity per year. By going out into some of the closer commuter belt location, then we believe that we're expanding that now up to £3.5 billion. So it's a really considerable opportunity for
Doubling Profitability and Future Goals
00:13:09
Speaker
us. And we know that there are great quality lettings businesses out there in commuter belt locations where we can see because of the data that there's high volume and high value lettings businesses that operate in these key locations that that we would love to be talking to, acquiring, bringing onto the Foxes platform, keeping all of those brilliant people um and really supercharging as we've done with with with the businesses um such as Haslam's and Imagine Property Group over the last over the last year as well. So big opportunity for us. You had a Capital Markets Day yesterday where quite a lot of this vision was sort of outlined. um
00:13:42
Speaker
and To summarise it for people who didn't attend the Capital Markets Day, what are the sort of key messages that investors should take away from the Capital Markets Day? I think um the renewing of the medium-term targets, you know, we're we're well underway now of of having...
00:13:58
Speaker
doubled the profitability um in the last few years since I returned to the business, which we're really proud of. This is about how we then double it again yeah and the medium term. um And we've got a very, very defined plan. We've got a very, very proven playbook, having already doubled the profitability of the business and delivered that growth in stage one. And this isn't really a revolution of that story. It's simply an evolution of of those same principles that we know that we can deliver and that we've proven that we can deliver already. um And I think I've got the team, we've got the brand, we've got certainly the tech and the data behind it. And we know that we've got the best people in the industry to go and deliver this plan for our shareholders um in the medium term.
00:14:35
Speaker
Guy, it's been a fascinating run through the business. Thank you very much for coming on Edson TV. Thanks for your time. Really great to have you here.