Purplebricks boss departs as estate agent scales back global expansion
Michael Bruce will step down with immediate effect.
Purplebricks founder and chief executive Michael Bruce has left the online estate agent as the firm announced it will exit Australia and place its US operations under review.
Mr Bruce will step down from Purplebricks with immediate effect, just months after shares in the firm tumbled when it cut annual revenue guidance and announced the departure of the bosses of its UK and US units.
Replacing him will be Vic Darvey, previously the company’s chief operating officer.
Chairman Paul Pindar thanked Mr Bruce for his contribution to the creation and development of Purplebricks, but added that the firm had got things drastically wrong over the past year.
With hindsight, our rate of geographic expansion was too rapid and as a result the quality of execution has suffered Paul Pindar, Purplebricks chairman
“We are very conscious that the group’s performance has been disappointing over the last 12 months and we sincerely apologise to shareholders for that.
“With hindsight, our rate of geographic expansion was too rapid and as a result the quality of execution has suffered.
“We have also made sub-optimal decisions in allocating capital. We will learn from these errors and will not make them again.”
Purplebricks bemoaned “increasingly challenging” conditions in Australia and confessed to “execution errors”, adding that returns from the nation are “not sufficient to justify continued investment”.
It will now commence an “orderly run down” with immediate effect, pending closure.
In the US, Purplebricks has put its operations under review.
The firm said: “Whilst good progress has been made in launching our brand across the US, the board has materially cut investment in marketing and other overheads to reduce expenditure to sustainable levels and begun a strategic review.”
In February, Purplebricks warned over headwinds in the Australian housing market when it admitted that it does not expect to meet revenue forecasts for the year.
In the US, the company cautioned that there has been a “slower-than-expected response” to its marketing initiative and it also does not expect US revenue to meet expectations.
To compound matters, last month analysts downgraded the online estate agent and said it would have to raise fresh cash.
Berenberg warned in a research note that the group should either give up on its international expansion plans or raise more funding as it slashed its rating from buy to sell.
It cited a slowdown in Purplebricks’ core UK market, as well as tough conditions in Australia and the US.
Purplebricks confirmed that it expects revenue to be within the £130 million to £140 million range it guided for in February and cash balances will be no lower than £62 million.
Shares in Purplebricks shed over 5% in morning trade to 127p.
Neil Wilson, chief market analyst at Markets.com, said: “The UK housing market has softened, prices are falling in Australia and cracking the US is proving very difficult.
“It’s tried to expand a little bit too quickly, but clearly the market conditions in the UK and Australia have been less than favourable.
“In fact, it’s got so bad in Australia that the company is pulling out. In the US it looks like it will materially scale back the business. Canada is better, but small. The focus will now be on Canada, where growth is good, and shoring up the core domestic market in the UK.”