Purplebricks has announced what it describes as “a strategic investment from Axel Springer, Europe’s leading digital publisher” - but this comes just as the agency admits it is struggling in the UK marketplace.
The investment is of approximately £125 million including a £100 million subscription for new shares in order to accelerate the company’s roll-out in the US and to support entry into new (and unspecified) markets.
The statement from the agency says the new funds will also pay for “technological innovation and [to] expand Purplebricks’ service offering”.
However, Purplebricks has admitted that in the UK it has seen “lower than expected levels of new instructions” as the spring market has begun.
In a trading statement which followed this morning’s announcement of new investment in the company, Purplebricks admits that “Market conditions in the UK during the period have been subdued due to some underlying macro issues and exacerbated by the recent periods of poor weather.”
These conditions have resulted in what the firm admits has been a slower than expected start to the key spring market “with external market statistics showing that for the industry as a whole instructions for the first three weeks of March 2018 are down 17 per cent. compared to the same period last year.”
The statement continues: “While Purplebricks has experienced strong growth in its UK division to date and it continues to build market share in both the total estate agency market and hybrid estate agency sector in the UK, it has experienced lower than expected levels of new instructions for the company during the period.”
It says that a further contributing factor was that approximately 10 per cent of its Local Property Experts were taken out of the field entirely in late February and early March to take part in a training initiative over a 10 day period.
“As a consequence of these factors in the UK market, it is expected that for the year ended 30 April 2018 the Company will report group revenues around five per cent behind company-compiled consensus of £98m with the consequential impact on the operating profit line reflecting the operational gearing in the Company’s business model” says the trading statement.
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Their model isn’t going to work, I have already explained why
Like lambs to the slaughter
Long have estate agents been worried that Rightmove would be able to offer a private listing service - although you could say with the multitude of 'online' offerings available at the moment there already was a way for private listings to appear?
Could this investment from a major digital company be seen as less a backing of Purple Bricks business model and more of a possible entry and ownership into an estate agency model?
I wonder if they will spend the money on providing a better service? Sales progression perhaps instead of letting customers (and other agents) do the work for them. Doubt it though, they have no appetite for providing a decent customer service, just look at the AllAgents reviews! 10% of customers that have used them would recommend them. DISGRACEFUL COMPANY!!!
PB shares have dropped 13.15% at 2pm on this, the day of their announcement. Not looking too good.
Bail out Bail out ??
They are on their knees.
Found out at last
I wonder whether Michael Bruce ever reads these comments and these articles...
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