Purplebricks: 2021 off to a strong start
The online estate agent gets a boost in first half earnings
Published
September 4, 2024
Remember Purplebricks?
There was a period when the firm’s advertising campaigns flooded every online channel I used.
Maybe I was just being true to British form and giving the targeted ad teams what they wanted by constantly Googling houses.
But slashing its TV, radio and online ad budget as the pandemic took hold earlier this year means you might not have heard from the online estate agent for a while.
Reducing ad spend at the start of home-buyers’ flight to the country could seem an odd move but today’s first half results show it might have been a shrewd one.
First half results this morning show a 20% increase in instructions since May, a 110% hike in underlying earnings compared to this time last year, and £6.9m in operating profits, against a £0.2m loss last year.
That might just give investors some much-needed confidence in the brand, whose shares have faltered since their 2017 highs.
Advertising has been a judgement call for most firms this year - not wanting to disappear into the background but also under tremendous pressure to use every penny wisely.
And while today’s figures will vindicate Purplebricks’ strategy so far, level heads will remind us all that the industry isn’t out of the woods yet.
As we mentioned last week, a vaccine roll-out might win the public health battle but the economic war is just beginning.
Unemployment still looms, as firms inevitably reevaluate how to get back to business sustainably next year.
Taxes are almost sure to rise too, as the Chancellor looks to claw back some of the necessary spending dished out in 2020.
And a particular point of concern for Purplebricks and all parties connected to housing, from Barratt to Zoopla, is what the end of Rishi’s stamp duty holiday will look like.
The government has shot down any suggestion of plans to extend waiving the land tax but if nothing comes in to replace it, reservation rates might just go back down to where they came from.
London being slapped with a tier three label from tomorrow might just add fuel to the countryside exodus.
With the app in their hand, city dwellers could well head off to the shires and not come back after Christmas.
And the longer the capital dips in and out of lockdowns the more we could see first-time buyers eventually decide to start working from a regional home instead.
It might take a mass movement like this to bring the shares back into fashion.
But reading between the lines there could be a renewed marketing strategy afoot at Purplebricks to help too.
Getting rid of its Canadian entity (shareholders have not been impressed with the firm’s foreign ventures) means a bit of extra cash to beef up the public presence when the time is finally right.
But the appointment of new chief digital and chief marketing officers also signals the intent to continue owning the online space.
Whether this means a solely online ad campaign from now on or a more robust use of customer data, it’s clear Purplebricks is planning to control the controllables and keep doing what it’s good at.
In normal periods this is what investment analysts often want to see but in a year in which the top-down picture still seems so uncertain, it’s the only thing they can do.
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