Purplebricks eyes sale after slashing costs and warning of losses
The online estate agent said it is conducting a strategic review which ‘may or may not result in a sale of the company’.
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Your support makes all the difference.Online estate agent Purplebricks could be up for sale itself after revealing its turnaround plans have been costlier than expected and it is set to sink deeper into a loss this year.
The platform, which connects buyers, sellers and landlords with property experts, has been steaming ahead with a turnaround plan in efforts to slash costs and return to a profit.
The firm already has a redundancy programme in place and had managed to make initial savings by reducing the numbers of staff working across the business, closing offices and cutting the marketing budget.
It said on Friday it has identified a further £4 million of annual cost savings since announcing a new £17 million target in December.
But it warned investors that its actions have caused more disruption to sales than it initially thought, in efforts to bring down costs and make the business more efficient.
As a result, the group has taken a hit in one-off costs of around £1.2 million since November.
Yes, the actions we have taken have caused more short-term disruption to our third quarter performance than anticipated, but we remain confident in returning to positive cash generation in the early 2024 financial year
It told investors it expects to see full-year revenues of between £60 million and £65 million for the year to April 30, and adjusted operating losses of between £15 million and £20 million.
It comes after it reported adjusted operating losses of £8.4 million for the six months to October 31, the first half of its financial year, which was ten times bigger than the £800,000 in losses it reported the previous year.
Shares in the business tumbled by around a fifth on Friday, following the announcement.
But Purplebricks maintained that the business and brand has “significant value”, and that it may be better off under different owners.
It said in a statement: “The board recognise that the potential of the group may be better realised under an alternative ownership structure, and has, therefore, decided to conduct a strategic review of the group’s business with the aim of delivering maximum value for shareholders.
The review “may or may not result in a sale of the company”, it said.
Purplebricks said it is not currently in talks with any potential buyers nor has it received any offers.
Helena Marston, the chief executive officer, said: “We have undertaken a huge amount of work in the last nine months to improve our sales business, raise standards, establish Purplebricks Financial Services, and stabilise lettings, all of which means the company has never been in better shape for the future.
“Yes, the actions we have taken have caused more short-term disruption to our third-quarter performance than anticipated, but we remain confident in returning to positive cash generation in the early 2024 financial year.
“We recognise that our upside potential is not currently reflected in our market valuation, which is why the entire board has therefore concluded that a strategic review is now in the best interests of all shareholders.”
Purplebricks’ share price has more than halved over the past year as it revealed widening losses.
It is regrettable that the lack of relevant experience at the helm of Purplebricks, which we highlighted last June, has led the company to arrive at this unfortunate juncture
One of its shareholders, Lecram Holdings, which has a 5.16% stake in the business, hit back at the group’s plans for a sale.
Lecram said in a statement: “It is regrettable that the lack of relevant experience at the helm of Purplebricks, which we highlighted last June, has led the company to arrive at this unfortunate juncture.
“We are calling for a swift conclusion of the strategic review and, should it not lead to an acceptable offer for the company, that the chairman immediately stands down and the board, in consultation with us and other shareholders, brings in someone with the knowledge and capability to guide Purplebricks back to profitability.”
Lecram has previously criticised the company’s leadership and lack of financial improvement. It has campaigned for the removal of Purplebricks’ chairman, Paul Pindar, and the appointment of Rightmove and Countrywide founder Harry Hill as a director.