UPDATED: May 8, 11:25 a.m.: Citing slow sales in New York City, Douglas Elliman’s losses widened 28 percent during the first quarter, and the New York brokerage will be looking at “substantial” cost-cutting measures, parent company Vector Group said Tuesday.
The brokerage — the largest in New York City — lost $10.4 million in the quarter, compared to an $8.1 million loss during the same period last year, Vector reported. The firm pulled in $161.9 million in first-quarter revenue, up 1.5 percent from $159.4 million in 2018.
“Last year and coming into this year, we saw a decline in what we call gross commission income from the New York City market, which is the largest market for us,” said Vector CEO Howard Lorber during an earnings call with investors.
He said it’s not just Elliman that’s struggled in the current climate, citing a 65 percent year-over-year drop in Realogy’s stock price. But he disclosed that Elliman will undertake “substantial” cost-cutting measures, similar to what the company did in 2008 and 2009.
“Most of the cost cutting, obviously, is in payroll,” Lorber said. Office consolidation is also on the table. “We’re trying to put ourselves in the same position that as the market turns, we’re going to have a lower cost structure and, therefore, be more profitable than we’ve been in the past,” Lorber said.
Overall, Vector’s first-quarter revenues dropped slightly to $420.9 million, compared to $429 million last year. Net income during the quarter was $15 million, more than double the $7.2 million over the same period last year.
Last week, Realogy — the parent company for Elliman’s rival the Corcoran Group — lost $99 million, a 48 percent year-over-year decline. The company’s revenue slid 9 percent to $1.1 billion.
On Tuesday, the company’s market cap dipped below $1 billion for the first time in its seven years as a publicly-traded company.
Correction: Due to a technical error, an earlier version of this story contained inaccurate quotes.