Purplebricks to move out of US market

Purplebricks will close its operations in the US and Australia at the end of the year to concentrate on its UK and Canadian interests.

The online estate agent is restructuring as it deals with rising losses which led to the exit of its co-founder and former chief executive Michael Bruce earlier this year.

The Sutton Coldfield-based group made pre-tax losses of £56m, caused by significant operating losses in America and Australia.

Vic Darvey, chief executive of Purplebricks

“We have taken the difficult decisions to exit our businesses in both Australia and the US as it is very important that we now focus our resources on the UK and Canada, where we have a strong established presence and where there are significant opportunities to grow market share and deliver profitable growth for shareholders,” he said.

“With a base of clear brand leadership in both the UK and Canada and a differentiated, technology-led proposition driving business model advantages, we now have a clear plan to unlock the next wave of growth and extend our market leadership.”

Purplebricks’ revenue was up 55% to £136.5m in the year to April 2019.

Despite the soft property market and consumer uncertainty caused by Brexit, the UK business’s revenue was up 21% year-on-year.

Canada contributed £23.7m of revenue in its first nine months of ownership and its Australian and US businesses contributed £22.7m of revenue in aggregate (2018: £13.4 million).

The company says it will now aim to build it UK and Canadian business in the next financial year to realise its medium-term objective to gain 10% share of the UK market.

Although its cash reserves have reduced by £90m to £62.8m at the year end, the group believes it still has “significant firepower to execute our strategy and improve our customer offering over the medium term”.

Chairman Paul Pinder said: “Our decision to exit the Australian and US markets is expected to significantly reduce cash burn going forward.

“Over the five years since we launched Purplebricks in the UK, we have fundamentally changed the estate agency market.

“We believe that our differentiated, technology-led proposition will drive profitable growth and will enable us to take market share from traditional agents.

“Current economic and political uncertainty in the UK means market conditions remain challenging with volumes continuing to trend downwards, partially offset by higher revenues per instruction.”