Real estate group McGrath's shares have been hammered after it admitted the loss of more than 10 per cent of agents from its company-owned offices will weigh on its full-year earnings.
McGrath, which has not yet given guidance for full-year earnings, on Monday said it expected weak second-half results would fail to meet current estimates put out by analysts.
The beleaguered real estate group on Monday said Bell Potter analysts had put out a forecast for full-year earnings of $20.9 million, and while those estimates appeared to be in line with first-half results, the company expected a weaker second half.
“We believe the second-half results will be materially weaker than the first half, which would make those full-year analyst estimates look high,” McGrath said in a statement to the ASX.
The first-half earnings results are currently being prepared for release on on February 23.
McGrath said unprecedented low listing volumes noted at its November AGM had failed to improve.
The company also said “uncharacteristically large agent churn” will make it hard to achieve the growth in market share it recorded during 2015/16, when two thirds of its total offices increased their hold on the market.
McGrath has had 36 agents depart from its company-owned offices division in the first half, with 225 agents remaining.
Chief executive Cameron Judson said the largest cohort of the departees were in the process of launching a rival business, while others had either started smaller businesses or bought into McGrath franchises.
“We’re clearly disappointed they have chosen to do that but we also respect that,” Mr Judson said.
McGrath shares fell to an all time low of 71 cents when the ASX opened on Monday morning.
By 1530 AEDT the company’s shares had partially recovered to 82 cents but remained about four per cent lower than their closing price of 87 cents on Friday.
Mr Judson said agent churn was an issue for the entire real estate sector, with many agents assessing their career situations every six to 12 months.
But he said the company had recently launched McGrath Future, a remuneration and longer term wealth creation framework aimed at retaining high performing agents.
“We would never choose to lose people they way that we have but the business will be stronger for the experience,” Mr Judson said.
Aside from staff departures, McGrath is also coping with unprecedented low volumes of listings as a percentage of total housing stock, first noted by chairman Cass O’Connor at November’s annual general meeting.
Mr Judson said he couldn’t pinpoint a reason for the low volumes but he was optimistic it was a short-term issue rather than a more pronounced long-term trend.
The trading update is the latest blow for the company, whose shares have declined by more than 50 per cent since it listed on the ASX in December 2015 and have never surpassed their $2.10 issue price.
Mr Judson was hired as joint chief executive in June and took sole charge shortly after when John McGrath relinquished day-to-day control of the real estate company he founded 28 years ago.