The stock market and at least one City analyst have shrugged their shoulders at the claim by Purplebricks that it is the UK’s largest estate agency.
Although the company’s share price rose slightly yesterday, it remains around 20 per cent lower than just six weeks ago, and far below its 2018 high of 489.0 at the start of February.
Its share price closed yesterday at 318.8 - a negligible 0.063 per cent rise on the day.
Purplebricks’ management may have been hoping for more after releasing full-year figures for its performance in the 12 months to the end of April. It told shareholders it sold and completed on £9.7 billion worth of UK property in the full year with a further £3.7 billion sold subject to contract. This was, it said, 3.1 times the number of properties sold by its closest (unnamed) rival in UK agency - a proportion that accelerated to 3.3 times in the second half of the year under review.
However, the figures also showed pre-tax losses of £26m over the year, up from £6m a year earlier, on higher marketing and expansion costs. During the 12 months under review Purplebricks spent £42m on marketing costs as well as expanding in Australia and north America. It doubled revenues to £93.7m thanks to an 81 per cent increase in the UK.
In an opinion piece in the Financial Times today, a columnist cautions that Purplebricks’ own broker, Peel Hunt, now says higher costs and softer markets will push break-even back by two years, to 2021.
“Property sellers might be willing to be patient if Purplebricks costs them three times less than rivals. Investors other than Mr Woodford [who owns 27 per cent of the shares] might not, given the shares trade at more than three times the earnings multiple of rivals Winkworth or Savills” says the newspaper.
Anthony Codling, an analyst at Jefferies - which has worked for other property companies including ZPG and Countrywide - says Purplebricks continues to claim that it sells large numbers of properties “without backing up that rhetoric with actual figures.”
He says of the full-year figures: “At the half year Purplebricks had 650 UK LPEs, at the full year it had 630. It seems odd to us that if Purplebricks really is the lifeboat for a sinking high street why are there fewer people in the boat? Does the lifeboat itself have a leak?”
Codling adds that in his opinion “Purplebricks' model remains unproven.”
Meanwhile a long-standing critic, Chris Wood - who runs a single-branch agency in Cornwall but has waged a campaign against online agencies in general and Purplebricks in particular - used Twitter to ask the company to substantiate a claim he says its senior management made regarding an 88 per cent listings-to-completion ratio.
Despite the stock market’s indifference to the results, Purplebricks chief executive Michael Bruce was upbeat yesterday, telling the BBC: "The UK business is profitable and considerably more profitable than last year, it is growing considerably. We've recently launched into places like Australia and the US and they are earlier in their evolution, but as far as the business is concerned it is very, very well positioned for future growth."