Profits at real estate giant Douglas Elliman fell by nearly 75 percent in 2018, thanks at least in part to a slower residential market, according to the company’s latest earnings report.
Douglas Elliman parent Vector Group reported Thursday that the real estate company brought in a net profit of $5.2 million in all of 2018. That’s a dramatic fall from 2017, when the company saw a profit of $21.4 million — or nearly four times as much.
Thursday’s numbers weren’t all bad, however, with Douglas Elliman bringing in a total revenue of $754.1 million in 2018, up from $722.3 million in 2017. During the fourth quarter of 2018, the company saw revenue of $177.6 million, just a slight dip from the same period one year earlier, when revenue reached $177.7 million.
Vector Group is primarily known as a tobacco company but, through a subsidiary called New Valley, has a number of real estate investments as well. Those investments include 100 percent ownership of Douglas Elliman, which describes itself as the largest brokerage in the New York metro area. Overall, Vector Group earned $58.1 million in 2018, down from $84.6 million in 2017.
Vector group also reported a net income of $0.14 per share in the fourth quarter of 2018, slightly beating analyst expectations of $0.13.
The company’s stock price fluctuated following the earnings report, but was still up slightly during afternoon trading.
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During a call to discuss the earnings, Vector Group president and CEO Howard Lorber attributed the lower profits from Douglas Elliman to “more competitive” market conditions.
“Look, it surely was a tough year in general in the real estate industry,” Lorber also said. “I think we fared better than most.”
Lorber also said that Douglas Elliman did $9 billion in sales in New York City during 2018, outpacing the $4.5 billion by “our next competitor, which was Corcoran, which is owned by Realogy.” Lorber added that those numbers say “a lot about our market share and that’s worth a lot when you have big market share.”
The company is now “reviewing our expenses” and the plan going forward “is to make a lot of money,” Lorber continued. However, the company does not plan to cut agent commissions because “it’s a very competitive market out there with new players and the existing players that are all scrambling for the good brokers.”
“So we have to be competitive there,” Lorber added of agent commissions.
Douglas Elliman isn’t the first real estate company to be slammed by its latest earnings report. On Monday, flat-fee brokerage Purplebricks saw its largest single day drop in its stock price ever after adjusting its revenue projections down and announcing the departure of two executives. One day later, Realogy also reported losses and missed analyst expectations, sending its stock lower as well.
However, earnings reports didn’t hammer every company this month. Last week Zillow’s stock soared on news that the company was re-appointing co-founder Rich Barton as CEO.