More than £100mln has been wiped from the value of Purplebricks Group PLC (LON:PURP) after the online estate agent announced it was parting ways with its UK and US bosses as it slashed its forecasts for the year.
UK chief executive Lee Wainwright is stepping down after a year at the helm for personal reasons, while US CEO Eric Eckardt is also leaving after two years. No reason was given for his departure.
Purplebricks’ group CEO and co-founder, Michael Bruce, is taking on the day-to-day management of the US operations with immediate effect.
Teething problems in US
The management overhaul comes amid a huge push from the agency, whose biggest shareholder is popular fund manager Neil Woodford, into the US over the past 12 months.
But the company, which has lost almost three-quarters of its value over the past year, seems to be having some teething problems across the Pond.
American home sellers haven’t responded as well as management had hoped to a recent marketing campaign, while the company has had to change its business model which means it now doesn’t receive any money until completion.
Given those issues, Purplebricks doesn’t expect its US business to meet expectations this year.
UK business still thriving
The problems aren’t just limited to the US, though, with the Australian division also set to miss its targets.
On a more positive note, Canada is performing “well”, as is the flag-bearing UK operation despite a “challenging” market backdrop.
Purplebricks is still guiding for 15-20% revenue growth in the UK this year, while it also expects the division to achieve a double-digit underlying profit margin and maintain its 75% share of UK online instructions.
But that won’t be enough to enough the troubles in America and Australia.
Back in December’s half-year results, the company told investors it was on track to generate revenue of between £165-175mln this year – at the lower end of its previous guidance. It is now forecasting revenues in the £130-140mln range.
‘Not exactly what we wanted’ - boss
“Although there are macro and industry headwinds across markets, we are well placed to capitalise on the significant opportunity for growth that exists in each country, albeit not entirely as we would have wanted before our year-end,” said group CEO and co-founder Michael Bruce.
“The UK is leading the way with continued profitable growth and a strategy to deliver greater success.
“I am also excited to be taking the reins of the US business. The team in Australia are building on the changes they implemented late last year, and Canada is delivering on plan and expectations.”
Purplebricks shares were down 35% to 106.9p on Thursday morning.