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Purplebricks shares tank as it announces CEO departure, US strategic review and Australia exit

The group also announced it was exiting Australia and placing its US business under review.
Purplebricks plans to focus its business in the UK and Canada

Purplebricks Group PLC (LON:PURP) shares slumped on Tuesday after the online estate agent announced the resignation of chief executive, Michael Bruce.

Bruce, the company’s founder, has stepped down with immediate effect and has been replaced by chief operating officer, Vic Darvey.

Darvey joined Purplebricks in January after serving as the managing director of Group PLC (LON:MONY).

READ: Purplebricks turns red again on double downgrade by Berenberg after profit warning

The group also announced it was pulling out of Australia and placing its US business under review.

Darvey 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.”

Non-executive chairman Paul Pindar said the group’s performance in the past year has been “disappointing” and “we sincerely apologise to shareholders for that”.

He also admitted the firm had made “sub-optimal decisions” in allocating capital.

“We will learn from these errors and will not make them again,” Pindar said.

Purplebricks said prospective returns from Australia, where it has operated for the past two and a half years, were “not sufficient to justify continued investment”.

The firm will also scale back investment in the US, where it has kicked off a strategic review.

In the UK, Purplebricks said the property market remains “challenging” but it continues to outperform the market and remains “confident about the future of the business”.  

The Canadian business continues to “perform well” and trading is in line with management's expectations, the company added.  

Purplebricks continues to expect revenue of £130-140mln and cash balances of no less than £62mln.

Shares fell 5.2% to 128p in morning trading.

Peel Hunt said its forecasts and recommendation remain under review until there is more clarity on the structure of the business and a further strategy update is provided by the board. 

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