Purplebricks shares slide as founder Michael Bruce quits

Michael Bruce and his brother Kenny founded Purplebricks in 2012

Shares in online estate agent Purplebricks have dropped more than 5%, after founder and chief executive Michael Bruce left the company.

Vic Darvey, who had been the firm's chief operating officer, will succeed Mr Bruce as chief executive.

Purplebricks also said it was pulling out of Australia and placing its US business under review.

Chairman Paul Pindar apologised to shareholders for its recent "disappointing" performance.

"With hindsight, our rate of geographic expansion was too rapid," he said.

The company has operated in Australia for two-and-a-half years, but said the prospective returns from the country were "not sufficient to justify continued investment".

Purplebricks is also cutting back investment in the US, although its Canadian business continues to flourish.

However, the firm is optimistic about its UK performance, saying in a statement: "Whilst the UK property market remains challenging, the company continues to outperform the market and the board remains confident about the future of the business.

"Having established a market-leading position, there remain many opportunities for further profitable growth and this will be a key area of focus going forward."

Shares in the company fell in February after it cut its sales forecast. from between £165m and £175m to between £130m and £145m.

It confirmed these figures in Tuesday's trading update, adding that cash balances at 30 April 2019 would not be less than £62m.

Mr Bruce and his brother Kenny, who grew up on a council estate in Larne, County Antrim, founded the online estate agent in 2012.

The company charges a flat rate to market a property, with fees differing around the country. For example, homeowners in London and surrounding postcodes are charged £1,399 and elsewhere £899.

Viewings can be booked online at any time and people can arrange visits themselves, or pay the company extra to do it for them.

• Purplebricks shares dive on sales outlook shock

• Purplebricks estate agent defends business model

Speaking about Mr Bruce's departure, Mr Pindar said: "Michael's vision in creating the UK's leading hybrid estate agent has been deeply impressive, as has his relentless energy in developing the business both in the UK and internationally."

Mr Darvey said: "Going forward, we have a very clear understanding of the levers available to us to achieve growth."

'Shock' departure

Property expert Henry Pryor told the BBC that Mr Bruce's departure was unexpected.

"It's a shock to the industry, although I don't know if Michael was expecting it," he said.

"He and his brother have done an extraordinary job commercially driving the company forward and I hope that this is his decision, rather than it coming about as a result of shareholders' frustration."

Online companies' share of the estate agents' market is at about the 7% mark, according to data from analysts TwentyCi.

And data from Zoopla's 2018 State of the Property Nation report indicated that 24% of consumers used an online agent in the previous year.

Purplebricks and similar companies have definitely made their mark, Mr Pryor says.

"Their impact has been significant. The estate agents' sector is not prone to innovation, so when Purplebricks came along - although they were not the first online agent - they had a cleverer and more imaginative way of delivering the hybrid model."

Paula Higgins, chief executive at pressure group HomeOwners Alliance, warned that consumers need to be careful that they choose the correct estate agent for them.

"It's so important for people to do their research," she told the BBC. "Not all agents are the same and not all online agents are the same.

"Purplebricks have been a massive innovator in a market, where one-third of agents used to refuse to give ballpark figures for commission and issue non-transparent, dodgy contracts.

"They and others opened up the market and encouraged transparency.

"Purplebricks' fee is charged up front, but other online and High Street agents have up-front or pay-later options, so people do need to shop around to get the right agent.

"Local independent agents who are more professional in their area might be a good option for certain people."