Realogy Tumbles Most Ever as U.S. Luxury-Home Slump Hits Profitby
Weakness in California, Florida, NYC area hurts NRT unit
Shares have their biggest drop since company’s IPO in 2012
Realogy Holdings Corp., owner of brokerage brands Coldwell Banker and Century 21, dropped to a record low as sluggish luxury home sales hurt the firm’s earnings.
Shares of Realogy fell 13 percent to $26.62 at 12:47 p.m. in New York, after earlier slumping 15 percent, the biggest decline since the company’s October 2012 initial public offering at $27 a share. Realogy had second-quarter net income of $92 million, or 63 cents a share, down from $97 million, or 66 cents, a year earlier, according to a statement Thursday.
Weakness at the high end of the housing market affected Realogy’s NRT brokerage. The firm’s top spots -- California, Florida and the area that includes New York City -- all suffered from lower volume in the three months ended June 30, and were down collectively about 8 percent from a year earlier. The three markets accounted for 60 percent of the unit’s revenue in 2015.
“Our results for the second quarter were mixed,” Realogy Chief Executive Officer Richard A. Smith said in the statement. “At NRT, a continued slowing of activity in the high-end markets and increased competitive recruiting pressures further impacted our overall transaction volume.”
At NRT, company-owned brokerage operations reported 98,314 closed home sale sides, meaning clients on one side of a transaction. That was a drop of 1 percent from a year earlier, and the average sales price was $485,688, down 2 percent. The firm also cited higher competition from rivals that have been luring Realogy’s top sales agents away with short-term economic incentives.
Realogy is implementing a plan to focus on retention and recruiting, Smith said in a conference call with investors Thursday.