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Struggling Purplebricks puts itself up for sale after predicting £15 million loss

By Nithya Bose in UK Business News, posted February 20, 2023

Struggling online estate agent Purplebricks is looking for a buyer as bosses plan to go into liquidation.

This comes after the firm had issued profit warnings in December, which led to a company-wide job cuts.

But the costs for its turnaround plan were higher than expected, resulting in one-time charges of £1.2 million.

It now expects to lose between £15 and £20 million this year.

Its share price fell by up to 15 percent after the announcement, leading to its overall value drop.

The firm has now recruited bankers to help on a strategic review that might end in the sale of a part or all of its business.

Purplebricks has been striving to recover its business, laying off employees in December and targeting its regional investment.

But the turnarounds caused greater disruption to its sales than expected, resulting in lesser new instructions and the £1.2m one-off charge.

Purplebricks then said it had found £4 million in savings to cover the additional costs.

This included cuts in its mortgage and lettings units.

The estate agent also slashed its revenue forecast for the year, with sales likely to plummet to between £60 and £65 million.

Purplebricks was formed to take on traditional estate agents by avoiding high street branches and providing sellers a fixed rate.

But the volatile housing market meant the firm has struggled.

Prices are beginning to tumble as interest rates rise, which means people have been holding off buying new homes.

£5 million tenant deposit blunder

The firm has also experienced issues over a blunder with registering tenant deposits.

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The business stated in December the error might cost up to £5 million.

It has also had a disagreement with its employees over modifications to its employment model.

Purplebricks has asserted that its agents are self-employed, despite some claims that they should have more rights; the case is still underway.

The real estate company believes its “business and brand has significant value” as it puts itself on the market.

Helena Marston, Purplebricks chief executive, said: “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.”

Source: The Telegraph

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