Purplebricks launches £13m recovery plan after major losses revealed
Purplebricks is planning to cut £13m of costs from the business after new chief executive Helena Marston launched a recovery plan for the online estate agents.
The Solihull-based group has struggled for a few years, hampered by failed overseas expansions and the difficulties in converting its potential into profits.
It has revealed it lost £42m in the year to April as instructions fell by 31%. This caused revenues to drop 23% to £70m.
Marston, who spent two years as chief people officer and chief operating officer before taking the top job in May, acknowledged “our performance was not good enough”.
Purplebricks’ share price is down 80% in the past year and 97% since early 2018. The business, once valued at more than £1bn, now has a market cap of £40m.
Marston remains upbeat and said she is “convinced that the potential for Purplebricks is huge”.
She added: “We have a proposition which is more relevant and valuable for our customers, as well as a brand which is the best known in the industry.
“I’m confident that the actions we are taking this year will set us on a clear path towards a return to sustainable, profitable growth.”
The recovery plan will include a 16% cut in costs, saving £13m, and a “radically different” approach to marketing which will be more targeted and focus on the cost benefits of its model to people selling houses.
The company says its new performance management programme and improved training has improved living room conversion by 11%, which has been helped by the greater control that the move to a directly-employed sales force has brought.
It is also looking at new opportunities and plans to launch a mortgage offer by the end of the current financial year, which runs until April.
Marston said: “Central to our plans are initiatives which we expect to drive higher instructions, grow revenues, reset our cost base and raise standards.”