Sales confidence for Redrow
Speaking about Redrow’s full year results, released on September, John Tutte executive chairman said that following a surge in demand post-lockdown, future sales performance depended on “where the economy is going and what happens with stamp duty when there are not enough high loan-to-value mortgages available.”
Tutte commented he was “quite surprised” by the market’s bounceback, “but if I think about it, I shouldn’t have been. If you go through a period of no sales, there’s going to be pent-up demand”.
Redrow’s strategy of carrying a strong order book would help combat any changes to sales following the end of both the stamp duty holiday and the first iteration of Help to Buy at the end of March, Tutte said. And with the changes to Help to Buy known long in advance, “we’ve been putting a strategy in place based on our popular Heritage product which is attractive to the broad market”.
Redrow had emerged from the coronavirus crisis “in good shape”, Tutte stated. However, it had been a challenging period for the business, affecting its full year performance.
During its year ending June 28 2020, the company’s legal completions fell 37% to 4,032against FY 2019 “due to Covid-19”. The homes’ private average selling price slipped 1% to £386,700.
Pre-tax profit slumped 66% to £140 million thanks to a combination of the pandemic and costs and impairments related to paring back the London business. Redrow is mainly limiting its London activities to its Colindale Gardens scheme.
Revenue during the period dropped 37% to £1.34 billion. Its operating profit fell from 2019’s £411 million to £148 million.
But trading since the start of Redrow’s new financial year had been “encouraging” with reservations in the first 11 weeks 12% ahead in terms of value.
The group began its new financial year with a “record” order book of £1.42 billion against 2019’s £1.02 billion.
“I expect we’ll see that demand will lessen but that doesn’t mean it will fall off a cliff; it is likely it will return to more normalised levels,” Tutte said.