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Purplebricks shares crash by a third as overseas expansion hits wall

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·Finance and policy reporter
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Purplebricks sign in Birmingham, UK. Photo by Mike Kemp/In PIctures via Getty Images.
Purplebricks sign in Birmingham, UK. Photo by Mike Kemp/In PIctures via Getty Images.

Online estate agent Purplebricks (PURP.L) saw its shares plummet by more than a third after it warned about the “challenging” UK property market and lower overseas growth.

The value of shares in the British firm, which has enjoyed significant expansion since launching in 2012, fell by 37% on Thursday.

It came after the company said its UK and US chief executives were both set to leave, and downgraded its revenue forecast for 2018-19.

The online firm said it now expected overall revenue of £130-140m, rather than the £165-175m previously forecast.

It said revenue in the USA and Australia would not meet its expectations, with a US marketing initiative not as successful as hoped.

READ MORE: UK house price growth at five-year low

Neil Wilson, chief market analyst at Markets.com, said: “Cracking foreign markets is never as easy as it looks and Purplebricks has issued a pretty horrid profit warning today for this very reason.”

He said the firm had been unfortunate to see the US and Australian markets “turn sour” just as it sought expansion, adding that the firm’s slashed revenue forecast had been “severely punished by investors.”

Purplebricks shares have tumbled. Photo: Joe Giddens/PA Wire/PA Images
Purplebricks shares have tumbled. Photo: Joe Giddens/PA Wire/PA Images

But Purplebricks is still expecting a 15-20% rise in UK revenue for 2018-19, despite signs of a slowdown in growth in the wider UK property market.

The company also expects to maintain its 75% share of UK online instructions and for Purplebricks to continue to be the clear market leader in UK hybrid estate agency,” the firm said in a statement.

It announced UK chief executive Lee Wainwright will leave, citing personal reasons, while no reasons were given for the departure of US chief executive Eric Eckardt.

Vic Darvey, chief operating officer, who only joined the company in January 2019 from MoneySuperMarket.com, will take over as UK chief executive.

READ MORE: The signs are not good for property prices in 2019

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