Eve Sleep plc: Trading update, director change, new partnership agreement (700431)
July 02 2018 - 2:01AM
UK Regulatory
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Eve Sleep plc (EVE)
Eve Sleep plc: Trading update, director change, new partnership agreement
02-Jul-2018 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
eve Sleep plc ("eve" or the "Company")
Trading update, director change, new partnership agreement
eve, the direct to consumer European sleep brand, today issues a trading
update for the six months ended 30 June and announces that Jas Bagniewski,
Chief Executive Officer, will be leaving the business with immediate effect.
Trading
While trading in the period has continued to far outperform the broader
market for big ticket consumer items, sales have fallen short of
expectations. Group sales for the six months are up by approximately 61% to
GBP18.6m, with the UK&I up 62% and international sales up 60%.
Trading patterns in the first six months of the year have experienced
greater volatility than originally expected, which in part reflects the
challenging backdrop for consumer spending. They also reflect the fact that
key growth initiatives have been launched at the latter end of the half and
as such are yet to generate a meaningful financial contribution. In
addition, management has made some strategic missteps, underestimating what
is required to develop a meaningful footprint across Continental Europe,
while losing focus on creating an aspirational sleep brand in its core
markets.
In response to the first half trading performance and the challenging retail
environment, the Company has decided to refocus its strategy, from scaling
across multiple new countries to prioritising greater penetration in its
core growth markets. This will enable eve to focus on its key strengths
around customer experience, product differentiation and brand. An evaluation
of each of our existing European markets is underway to determine those that
are core. We will report the conclusions at our interim results in
September.
Given the current change in the business and the volatile trading patterns,
as well as the recent and upcoming growth initiatives, the Company will
provide more meaningful guidance for the full year outturn at its Interim
results in September. However, notwithstanding the initiatives in place, the
revenue shortfall in the first half is not expected to be recovered in the
traditionally stronger second half given that the pull back from non-core
markets will also act as a drag on second half revenue growth. The impact of
lower growth for the year will delay UK profitability from Q4 2018, although
the full impact on earnings will be partially offset by targeted cost
savings.
Departure of CEO
It has been agreed by mutual consent that Jas Bagniewski will step down from
the Board and the Company. The search for a new CEO will commence
immediately, with both internal and external candidates being considered. As
an interim measure Abid Ismail will assume the responsibility of acting
Chief Executive Officer in addition to his duties as Chief Financial
Officer.
Nationwide partnership with Dreams
Today eve announces a major new partnership with Dreams, the UK's leading
specialist bed retailer. The partnership, which is a first for Dreams with a
mattress in a box brand, will see the eve mattress sold nationwide in 193
Dreams stores and through its website. The rollout across the estate is
expected to take just two weeks and commences today. It is expected that the
partnership will expand to include sales of ancillary products such as
pillows, toppers and linens etc.
The deal increases eve's retail presence across its three largest markets to
331 stores, building on the Company's existing partnerships with Next Home,
Fenwick and Debenhams in the UK, Karstadt in Germany and BUT in France.
The retail presence complements eve's focus on direct to consumer, providing
a physical touchpoint for those that prefer to purchase through the
traditional format, while avoiding the costs of an expensive retail estate.
A secondary benefit is that the physical presence also boosts eve's brand
awareness, which continues to grow. Latest data from independent research
agency Populus Omnibus shows that UK unprompted brand awareness has risen
from 6.3% at the end of March 2018 to 7.6% at 30 June 2018, further
cementing eve's position as the UK's most well-known direct to consumer
mattress brand. In London awareness increased from 7.3% to 11.4%.
Paul Pindar, Chairman of eve Sleep commented:
"We have fallen short of our own and the market's high expectations and as a
result have taken the tough decision to make management change. Jas has, as
one of the founders, been a driving force for this business and has much to
be proud of. He leaves with the Board's best wishes for the future. In
tandem with the search for a new CEO we will with immediate effect be
refocusing all of our efforts on strengthening the eve brand in our core
markets.
While we do not anticipate a near term improvement in the external
environment, we have a healthy net cash position, our trading continues to
far outstrip that of the market and should be underpinned by Company growth
initiatives including the Dreams partnership that we expect to benefit the
traditionally stronger second half. We remain convinced that the sleep
market will continue to transition online, that the opportunity to build a
new brand of size and strength is significant and that eve is well placed to
achieve this."
Enquiries:
eve Sleep plc via Instinctif Partners
Abid Ismail, Interim CEO and Chief
Financial Officer
Peel Hunt LLP +44(0)20 7418 8900
Dan Webster
George Sellar
Max Irwin
Instinctif Partners +44(0)20 7457 2020
Mark Reed
Guy Scarborough
About eve Sleep
eve is an e-commerce focused, direct to consumer European sleep brand, which
designs and sells eve branded mattresses and other sleep products, including
pillows, bedding and duvets.
The Company principally focuses on the design, branding, marketing and
selling of its products, with other aspects of its operations, including
manufacturing and fulfillment, being outsourced. This model has enabled the
Company to scale quickly internationally without the requirement for
significant capital investment.
The Company's strategy is to continue to penetrate existing territories
further, expand into new markets, extend its product range and develop its
retail partnerships. Whilst the Company has grown quickly since incorporate,
its current market share of the fragmented European sleep market (estimated
to be worth GBP26bn) is only an estimated 0.1 per cent which the Directors
believe provides a significant opportunity for further expansion.
In May 2017 the Company listed on the AIM market, raising GBP35m gross
proceeds to accelerate its growth strategy. The shares floated at 101p per
share, valuing the business, post new money at c. GBP140m.
The information contained within this announcement constitutes inside
information as stipulated under the Market Abuse Regulations (EU) No.
596/2014.
ISIN: GB00BYWMFT51
Category Code: TST
TIDM: EVE
LEI Code: 2138007BAC29AUXWQE6
OAM Categories: 2.2. Inside information
3.1. Additional regulated information required to be
disclosed under the laws of a Member State
Sequence No.: 5701
EQS News ID: 700431
End of Announcement EQS News Service
(END) Dow Jones Newswires
July 02, 2018 02:01 ET (06:01 GMT)
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