Purplebricks cuts jobs and ups cost savings target in turnaround plan
The company said it has increased its annual cost savings target from £13 million to £17 million.
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Your support makes all the difference.Digital estate agency Purplebricks has revealed it is making redundancies across the business as it announced plans to further slash costs in an effort to return it to profit.
The company said it has increased its annual cost savings target from £13 million to £17 million.
Initial savings have been achieved by reducing the numbers of staff working across the business, closing offices and cutting the marketing budget, it said.
Purplebricks said it has a redundancy programme in place and the new savings target will involve a further reduction in its overall headcount.
The firm would not comment on the number of jobs that it has cut or plans to cut due to it being an ongoing process.
The turnaround plan is working and is being delivered at pace, with the financial benefits starting to come through in the second half of the year
The tech-led platform confirmed it had closed a London office and another regional office as part of turnaround plans.
The savings will shed excessive overhead spending and leave it “leaner and healthier, ready for growth”, it said.
It comes as the firm reported adjusted operating losses of £8.4 million from in the six months to October 31, increasing tenfold from the £800,000 in losses reported this time last year.
Revenues also fell by 16%, from £41.3 million last year to £34.5 million this year.
But Purplebricks’ chief executive Helena Marston told investors that its turnaround plan was being delivered “at pace” and she expects to see the benefits begin to show in the second half of the financial year.
She said: “The turnaround plan is working and is being delivered at pace, with the financial benefits starting to come through in the second half of the year.
“We have taken further steps to reduce our cost base, from an initial £13 million of annualised savings to £17 million, while also investing in our strategic priorities and increasing the efficiency of our field.
“We are ever mindful of the current economic environment. Our relevant, low-cost proposition, effectively communicated via our new marketing campaign, supports our customers and is especially attractive in these economically challenging times.”
The platform, which connects buyers, sellers and landlords with local property experts, also announced it is launching a new mortgage product ahead of schedule.
It will provide enhanced help for people looking for a loan or to re-mortgage, meaning it can sell additional finance products, such as insurance, to customers and bumping up the firm’s revenue per mortgage by threefold, it said.
Furthermore, the company emphasised that it is well positioned to support people looking for low-cost estate agents amid the cost of living crisis.
It stood by its full year earnings expectations, which estimates adjusted operating losses of £8.8 million, but could drop as low as £11.3 million or narrow to £4 million according to the consensus.
However, one of Purplebricks’ shareholders Lecram Holdings, which has a 5.16% stake in the company, criticised the lack of financial improvement and urged it to make changes to protect the value of its shares.
A spokesperson for Lecram said: “Purplebricks’ figures confirm our worst fears that nothing is improving. We are entering one of the worst housing market conditions in a generation, yet the leadership seems to have an overly optimistic view of prospects.
“Shareholders can’t afford to wait any longer while this business runs out of money, they need to act and act quickly to change the chairman if there is any hope of salvaging value for all investors.”
The group is campaigning for the removal of Purplebricks’ chairman, Paul Pinder, and the appointment of Rightmove and Countrywide founder Harry Hill as a director.