The online estate agent first ventured across the pond two years ago as part of an ambitious global landgrab, which saw it also branch out into Australia and Canada.
Revealed: The online estate agent Purplebricks will disclose tomorrow that its board has decided to withdraw from the US market, the latest in a series of retrenchments from overseas operations amid a disappointing share price performance.— Mark Kleinman (@MarkKleinmanSky) July 2, 2019
The move into the US was hailed by founder and then-chief executive Michael Bruce as “the single biggest moment” in the company’s history.
Bruce and his team wanted to recreate the success it had enjoyed in the UK, where it had disrupted the traditional estate agents and driven “irreversible change”.
But the drive into foreign markets has proved costly for Purplebricks, which has lost three-quarters of its value since it launched in America.
Should bosses confirm the exit from the US on Wednesday, only the flag-bearing UK operation and the Canadian business will remain.
Purplebricks pulled the plug on Australia back in May, claiming that market conditions had become “increasingly challenging” and that continued investment in the division was simply not worth it.
It was in the same announcement that the company revealed it was slashing spending in the US as it kicked off a strategic review of its operations there.
The plan back then was to look for ways to deliver the “next phase of growth in a more effective and cost-efficient way”.
Potentially embarrassing but perhaps not surprising
But if reports are to be believed, the outcome of that review is that Purplebricks, which is now valued at less than £300mln, should just get out of that market as soon as possible.
Although any exit would be embarrassing for the company, it would unlikely come as a major shock to investors, given it had previously aired its frustration about weaker-than-expected demand for its services in the US.
It was also forced to change its business model, so it collected fees on completion of the sale rather than upfront, as it does in the UK.
Changes at the top
The company, which is heavily backed by under-fire fund manager Neil Woodford, has reshuffled its boardroom in recent months as it tries to make a success of its expansion plans.
Founder and former CEO Michael Bruce left in May, replaced by Ex-Moneysupermarket.com Group managing director Vic Darvey who had joined as chief operating officer only a few months before.
The change at the top followed hot on the heels of the departures of UK CEO Lee Wainwright after just a year and US CEO Eric Eckardt after two.
Shares were down 0.9% to 96.3p in early-afternoon trading.
Purplebricks declined to comment on the reports.