17.12.2018 at 22:41
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Purple Bricks Takes Huge Losses In 2018

Despite Purple Bricks' frequent claims that "everything is fine", obviously it has not been.

According to Purple Bricks' latest forecast, the company is set to become profitable in Australia in 2019.

And it has gone through many changes in its 2 years on Australia.

Just last month, for example, CEO Ryan Dinsdale departed and his position was assumed by Neil Tavender from UK.

But before that, as you can find in our many news stories about the company here, there were accusations of "sweatshop" and "toxic work environment".

And there was a mass exodus of agents, who claimed it was impossible to make a decent living working for Purple Bricks.

Then there was a scandal in which company employees were found to be talking vendors into lower their prices, rather than the agents trying to get the best price for the sellers, which is supposed to be what their job is all about.

The news is not all bad, as recently they restructured their commission arrangements so the agents can potentially make twice what they did before.

However: one thing we have noted before has been statements from corporate that "everything is on track", everything is peach keen, and going well.

When it very obviously was not.

The latest pronouncement was that Purple Bricks Australia was set to be profitable in 2019.

But the latest filings with the London Stock Exchange reveal that Purple Bricks Australia lost nearly $18 million AUD in 2018.

The losses were attributed to "one-off costs in connection with the recent restructuring and re-positioning the business which we have taken steps to correct".

However, we suspect that some of these costs were due to how dysfunctional the Australian branch of the company had become before the major changes were made.

The company stated, "Some further one-off restructuring costs are also expected in the second half of the year."

Neil Tavender chalked it all up to Australia being "a unique market", very different from the UK and US markets.

This sounds a bit off, as it has been reported that the company hasn't been doing tremendously well in US either. In fact it sounds rather like the typical talking-up of the company for which Purple Bricks has become known.

Regardless, Mr Tavender's statement on behalf of the company has its usual golden glow:

"Our strong growth is testament to the popularity of our business model and the simple fact that people do not want to pay extortionate commissions when selling their homes.

"However, in recent months it's been pivotal to iron out some operational issues and I am pleased to say we are well progressed on that journey.

"Our new business model is proving popular with customers and has boosted agent remuneration."

It is fair to say that last sentence is true. Their business has been growing as commissions have improved, which has generally attracted more experienced agents, and they now have greater motivation to see sales through to settlement.

At the same time, one must keep in mind that the fees paid to the company by vendors are now very close to double what they were 2 years ago.

Along with the losses taken, Purple Bricks stock on the London Exchange is today worth only a bit more than 28 per cent of its value last February.

18 Dec 2018 Purple Bricks price on London Stock Exchange

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