LATEST: Bringing staff in-house has cost Purplebricks £4 million, report shows
Company has its hands full battling dwindling instructions, bringing its self-employed staff in-house and establishing a new pricing model.
Following yesterday’s Purplebricks trading update reporting a significant dip in instruction, more details of the company’s challenges have emerged.
The headline was instructions dropping from 35,387 to 22,000 during the second half of this year compared to the first six months.
But its City analyst Zeus Capital has now released more details, including its forecast that revenues over the next six months will dip from £96.5m to £80m, a 17% cut.
It also says gross profits will drop by 29% to £43 million and its margin from 63% to 54%.
The downturn has coincided with its recent pricing shake-up, and its new operating model that has seen LPEs and Territory Owners brought in-house.
“We are pleased with the progress we have made transitioning our sales team to a fully employed model, which will offer our agents greater security and benefits and will enable the Company to scale up quickly when market conditions improve,” the company says.
Sales team
“We have over 95% of our new sales team in position and are starting to see encouraging progress across both conversion rates and ancillary attachment rates.”
But the move has cost Purplebricks considerable sums – cash in the bank has dropped from £75 million last year to £58 million this year, which it pins on the re-organisation and the pandemic shut-down, which helped many territory owners keep their businesses afloat.
The company also expect housing market challenges to continue into 2022 and it also say profits are likely to be below expectations – as Zeus has also predicted.
