Even as the housing market improved and competition grew more “rational,” Realogy Holdings said it generated $5.6 billion in 2019 revenue, down 3 percent year over year.
The company also said it lost $188 million, compared to net income of $137 million in 2018, due to accounting expenses and a tax gain related to the sale of its relocation business Cartus for $400 million.
That sale comes as the conglomerate — which operates the Corcoran Group, Sotheby’s International Realty and Coldwell Banker — works to streamline its business and reduce $3.5 billion in debt.
The company said that during 2019 it reduced net debt by $78 million thanks to cost-cutting measures implemented last year. After several years of heightened competition for agents nationwide, Realogy also said it grew its agent base by 4 percent to 52,200.
During an earnings call Tuesday, CEO Ryan Schneider said the intensity of competition for agents is becoming “more rational” with fewer sign-on bonuses as well as a wave of agents returning to Realogy brands.
“More rational doesn’t mean it’s not intense, to be blunt,” he said. “But as an industry, we’ve been competing against private capital that’s been going after market share at all costs. To see the scrutiny of those companies be stronger has helped the competitive environment.”
But Schneider also said there’s been market volatility in places like New York, where lawmakers passed a new mansion tax. In January, the Department of State issued guidance banning certain tenant-paid commission fees, though that rule has since been put on hold by a judge. “That surprised everyone, including us,” Schneider said.
“I bet on New York for the long-term as a market, but New York has been tough [with] the mansion tax, the rent thing,” he said. “Of all the geographies, it’s probably the one with the most volatility around it from those types of outside forces.”
As it wrestles with those outside forces, Realogy has worked to streamline its business and reduce debt.
In a statement, CFO and treasurer Charlotte Simonelli said the fourth quarter marked a strong close to 2019, “driven by solid performance, both financially and operationally, across the business.”
“In 2019, we demonstrated a willingness to change our business mix to optimize our capital deployment and simplify our company,” she said, “and we will remain thoughtful and deliberate in our approach as we work to build a stronger overall financial profile for Realogy.”
During the fourth quarter, Realogy had revenue of $1.3 billion, up 4 percent year over year, as transactions rose 6 percent.
Realogy stock opened at $13.32 per share on Tuesday, after a tumultuous year that saw its share price plunge to just $4.78 per share in April 2019.
Early last year, Realogy announced it would trim $70 million from its 2019 expenses. In addition to selling Cartus, it said it would shutter Climb, a San Francisco brokerage it purchased in 2016, and consolidate it into Coldwell Banker. It has since closed some Coldwell Banker offices.
It is investing in other brands, including Sotheby’s and Corcoran, the latter of which signed its first franchise agreement this month.