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Purplebricks slumps to annual loss, shares tumble

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·2-min read
Sign for online estate agent Purplebricks is pictured outside a property in London
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By Aby Jose Koilparambil and Yadarisa Shabong

(Reuters) -Purplebricks on Tuesday reported an annual loss as Britain's biggest online-only estate agency struggled with implementing a new operating model and faced a challenging housing market, sending its shares down more than 10%.

The UK housing industry, which fared strongly during the pandemic due to government support and strong demand, is now facing surging costs, labour shortages and pandemic-related supply chain issues.

Chief Executive Helena Marston said last year's results were badly hit by the challenges arising from the implementation of its new operating model and investment in marketing that did not pay off, alongside a housing market which played against it.

"Our performance was not good enough," said Marston, who took over at the company in April.

Those missteps, along with higher costs and reduced new housing instructions following the end of a stamp duty holiday, hit revenue, profitability and cashflow.

Purplebricks changed its business model in 2021 by making its sales agents permanent employees, and removed a Money Back Guarantee pricing scheme that failed to lift new housing instructions.

Marston, speaking to analysts, disclosed plans of launching a new mortgage operating model by end of the current fiscal year, where Purplebricks would act as a third-party seller of mortgages.

The company's results on Tuesday coincided with weak housing data from mortgage lender Nationwide, which showed British house prices rose at a slower pace in monthly terms in July than in June.

The Nationwide data weighed on housebuilders' stocks with top players Barratt, Persimmon and Taylor Wimpey trading around 2%-3% lower.

AIM-listed Purplebricks said it now expects to deliver revenue in the range of 67.5 million to 72.5 million pounds ($82.5 million-$88.6 million) in 2023 financial year. It reported revenue of 70 million pounds in the last fiscal year.

The company, which has sold off its international assets to focus only on the UK market, said adjusted core loss for the year ended April 30 was 8.8 million pounds, compared with a profit of 12 million pounds reported a year earlier. The company's annual instructions fell 31% to 40,141.

($1 = 0.8186 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; editing by Uttaresh.V and Jane Merriman)

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