Online estate agency Purplebricks has confirmed further plans to scale back its overseas business by pulling out of the US market as annual losses nearly doubled.
The group, which also recently announced plans to exit Australia, confirmed it would quit the US by the end of 2019 to focus on its business in the UK and Canada amid a “very difficult period” for the firm.
Details of the US withdrawal came as the group reported pre-tax losses of £56 million for the year to April 30, against losses of £29.2 million the previous year.
It has been a tough time for the group, whose founder and chief executive Michael Bruce left in May, just months after shares in the firm tumbled when it cut annual revenue guidance and announced the departure of the bosses of its UK and US units.
New chief executive Vic Darvey, who was formerly the firm’s chief operating officer, said: “We have taken the difficult decisions to exit our businesses in both Australia and the US as it is very important that we now focus our resources on the UK and Canada, where we have a strong established presence and where there are significant opportunities to grow market share and deliver profitable growth for shareholders.
“Both exits will be conducted in an orderly manner with the expectation they will be completed by the end of 2019.”
The US exit comes less than two years after Purplebricks launched there, which was followed by rapid expansion into seven states within a year.
It has 40 staff across two offices and 110 contractors in the US.
It said: “While there remains a significant opportunity to disrupt the US market, it would take substantially more management time and resources than the company is able to commit at this time.”
Purplebricks aims to either agree a sale or close the US business.
Its results show annual losses were driven by £34.1 million of operating losses in the US and £18.8 million in Australia.
But earnings in the UK surged to £5.3 million from £2.2 million the previous year as revenues leapt 21% higher to £90.1 million.
Shares rose more than 2% after the results, but the stock has slumped by a fifth since reaching highs in August 2017 and are below the 100p price seen in its 2015 listing on London’s junior Aim market.
Purplebricks is backed by under-fire investment manager Neil Woodford and Axel Springer of Germany.
Axel has upped its stake in the firm to 27%, sparking rumours of a takeover bid.
Speaking to the PA news agency, Purplebricks boss Mr Darvey said the group is facing a “tough” market in the UK, but is “performing well” and still has ambitions to increase its market share from 4% currently to 10%.
On the outlook for house prices, he added: “It’s unpredictable. When we look at the medium-term opportunities, we are expecting to see stabilisation and a recovery in the property market.”
David Madden, market analyst at CMC Markets, said: “Purplebricks has struggled in recent years as the cooling UK housing market, in particular, the London and the South East market, has hurt the business.
“The company listed on the stock market in the latter half of 2015, and it seems it was a little late to the party.”