Shares in estate agents Purplebricks plunged after it slashed its sales forecast and
announced the departure of two senior executives, reports the BBC.
Purplebricks blamed a “challenging” UK housing market and “headwinds” for its Australian business.
The chief executives of the UK and US business will both be leaving.
UK boss Lee Wainwright is leaving for “personal reasons” and no reason was given for the departure of Eric Eckardt, the chief executive of the US business in a statement reported on the bbc.co.uk news website.
Purplebricks founder and chief executive Michael Bruce’s idea was to create a lower cost, more flexible estate agent by charging a fixed fee of £1,399 in London and surrounding areas to market a property, and £899 outside of the home counties.
Purple Bricks ‘local property experts’ can be based anywhere and receive £200 when given a property to sell and £50 when the sale is completed. They also receive viewing fees of £399 in London and £300 outside.
Agents may also benefit commissions for referring buyers to conveyancers and mortgage firms.
The company has been expanding rapidly, but has seen losses grow as well. In the financial year which ended in April of last year it reported a loss of £26m, up from £6m in the previous year.
The problems at Purplebricks are a “classic case of trying to do too much, too fast”, according to Russ Mould, investment director at AJ Bell.
“Success in the UK gave management confidence they could take over the world. Alas, that has proved nothing more than a pipe dream.
Efforts to crack the US and Australia haven’t resulted in the expected revenues and so the company has been forced to issue a profit warning.
The overseas setbacks will be a huge embarrassment for the company, which has tried to be a pioneering force in the real estate sector.”