MELTDOWN AT PURPLEBRICKS

Founder quits as chief executive Expansion scaled back Shares down 77pc since peak

THE founder of online estate agent Purplebricks has been ousted as chief executive after the company admitted it rushed its global expansion.

Michael Bruce ( pictured) had been in charge since setting up the business with his brother in 2012 but yesterday dramatically quit amid growing concerns about performance.

The 45-year- old was replaced by Vic Darvey, the operations chief who was poached from price comparison website Moneysupermarket in January.

Purplebricks also announced a retreat from Australia and is reviewing its US business, with chairman Paul Pindar saying growth had been ‘too rapid’.

The changes sent shares tumbling by nearly 12pc as investors fretted about the company’s future, with top shareholder Neil Woodford among those hit.

It came just months after Purplebricks slashed its sales forecasts and revealed that top executives in the UK and US had left.

Shares have fallen 67pc in the past year, and 77pc since their peak in 2017, with Pindar saying the board was ‘very conscious’ of the poor performance.

‘We sincerely apologise to shareholders for that,’ he added. ‘With hindsight, our rate of geographic expansion was too rapid and as a result the quality of execution has suffered.’

He said Purplebricks had also made ‘ sub- optimal’ choices about how to spend cash.

Pindar, 60, said: ‘ We will learn from these errors and will not make them again.’

A source close to Purplebricks claimed Bruce’s exit had been a ‘mutual decision’ with the board.

In recent months he had moved to California to oversee Purplebricks’ US business after the departure of boss Eric Eckardt.

Bruce, who has four children from two marriages, still owns 11pc of the company but will no longer sit on the board. His brother Kenny, 43, owns 2.6pc and remains sales director.

The pair set up their business together with the aim of slashing costly fees paid by home sellers to estate agents, attracting support from some of the City’s bestknown investors such as Woodford and Old Mutual. Purplebricks floated on London’s stock exchange in December 2015, valued at around £240m.

It began its international expansion by launching in Australia in September 2016, followed by a US launch a year later and the takeover of a rival in Canada in July 2018. The company is now valued at around £360m, with Michael and Kenny Bruce’s stakes worth around £40m and £9m respectively.

But despite ploughing millions of pounds into its Australian and American businesses, these have not proved as successful as its Canadian arm.

Coupled with persistent concerns about property prices, this has contributed to the share price tumbling from a high point of 526.7p in July 2017.

Yesterday Purplebricks announced it was closing the Australian division, while cutting costs at the US division and reviewing its future.

However the firm was bullish about the UK and Canada market. Darvey said: ‘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 and our proposed review will allow us to determine how we deliver the next phase of growth in a more effective and cost-efficient way.’

Purplebricks said that revenues for the financial year that ended on April 30 would be between £130m and £140m, as it indicated in February.

However, this was down from earlier guidance of between £165m and £175m.

Neil Wilson, the chief market analyst at Markets, said: ‘Purplebricks tried to run before they could walk and are paying the price for being just a little bit too ambitious.’