Purplebricks has replaced its chief executive and said it will pull out of the Australian market as the online estate agent struggles to contend with the fallout of an international expansion that it said had proved “too rapid”.
Michael Bruce, founder and chief executive, will step down with immediate effect, the group said on Tuesday. He will be replaced by chief operating officer Vic Darvey.
Paul Pindar, non executive chairman, said he was “very conscious that the group’s performance has been disappointing over the last 12 months” and apologised to shareholders.
“With hindsight, our rate of geographic expansion was too rapid and as a result the quality of execution has suffered. We have also made suboptimal decisions in allocating capital. We will learn from these errors and will not make them again,” he said.
The group, whose share price has fallen by around 75 per cent since mid 2017, has struggled with slowing growth, leading analysts to say it had “flown too close to the sun” after its initial success.
It said on Tuesday it would pull out of the Australian market after two and a half years of operations there, citing “increasingly challenging” conditions. It said prospective returns from the country were “not sufficient to justify continued investment”.
In its US business, which has also been struggling, it announced a strategic review and said it had cut investment in marketing and other expenses in order to reduce expenditure to “sustainable levels”.
Purplebricks operates a business model which involves charging vendors an upfront fee for advertising their homes for sale and arranging viewings in contrast to traditional estate agents, which only charge after a home is sold and the transaction completed.
Vic Darvey, the newly appointed chief executive, said: “Going forward, we have a very clear understanding of the levers available to us to achieve growth.”
“We have two outstanding businesses in the UK and Canada, both of which enjoy market-leading positions. We have also made significant progress in the US building a disruptive brand in the real estate market and our proposed strategic review will allow us to determine how we deliver the next phase of growth in a more effective and cost-efficient way.”
