THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014.

 

eve Sleep plc

 ("eve", "Company" or the "Group")

 

Results of new CEO business review, trading update and planned fundraising

 

eve Sleep plc, the European sleep brand, provides the following update as part of a refocused strategy to drive long term, sustainable growth.

 

Business review

 

Following his appointment as Chief Executive Officer of the Company from 10 September 2018, James Sturrock has, with the Board, carried out a detailed review of the business. The updated strategy refocuses on the core sleep markets of the UK and Ireland ("UK&I") and France, which collectively are worth some £6bn per annum. The review concentrated on the transformation of eve into an ecommerce business model that builds a deeper repeat relationship with customers through a broader product range and stronger customer experience in order to drive a healthy customer life time value. The strategy will focus on the three core pillars of:

 

• Differentiated brand positioning;
• Expanded product range; and
• Lower friction customer experience.

 

The eve brand remains strong, awareness continues to grow and eve is now the fifth most well-known mattress brand in the UK. The Company plans to continue to build the brand in its chosen markets. An important element of this is the appointment of a new Chief Marketing Officer, who joins at the end of the year. This appointment will be targeted at building a strategy that optimises marketing effectiveness. This will be achieved with a lower investment level, concentrating on partnerships, PR and digital marketing, as well as building repeat orders, whilst continuing to build awareness and competitive differentiation.

 

To date the broadening of the product range has proved successful, with sales of non-mattress products reaching 17% of total Group revenues in the first six months of 2018. The plan is to more than double the product range in 2019, which will drive further opportunities to cross sell and increase the proportion of repeat orders. The enhanced range is also expected to reinforce the marketing initiatives to drive traffic growth.

 

On top of this marketing optimisation, there are also opportunities to improve website conversion rate. Work is already underway to enhance the search, discovery and checkout processes on the website and improve delivery options.

 

Trading update

 

With 6 weeks of trading remaining for the current financial year the Company now anticipates it will deliver revenues in line or above revised full year expectations, helped by the early success of the Dreams partnership, and early signs of conversion improvements from projects realised in Q4.

 

As part of the business review the Company has also re-evaluated its 2019 financial year expectations based on the new strategy. 2019 will shift to building capabilities in customer experience and product range, whilst optimising marketing investment. As such, whilst this work is underway, underlying revenues in the Group are now anticipated to finish below existing guidance, albeit with growth still expected to be strong in the context of the market.

 

Planned Fundraising

 

To enable the Company to implement these plans, on top of the circa £7m of existing net cash as at 31 October 2018, the Board plans to raise approximately £15m of new equity to fund the Company's refocused strategy through to profitability. This investment will allow increased focus on website customer experience, enhancing the delivery proposition and significantly developing the Company's product range. The Company has already received material levels of support for the planned fundraise from certain existing shareholders at a price that is significantly higher than the prevailing share price.

 

The planned fundraise is expected to be launched prior to the end of 2018 and a further announcement will be made in due course.

 

Commenting, James Sturrock, CEO of eve Sleep, said:

 

"The business review has reaffirmed my initial confidence in the size of the opportunity in the sleep market and eve's ability to realise it. It will however require further investment than originally expected.

 

"Our planned strategic investments will drive growth through expanding and developing our highly complementary product range and enhancing the overall customer experience and proposition, which will all serve to further strengthen our differentiated brand positioning.

 

"While we have revised our short term growth ambitions during this period of consolidation and investment, we anticipate a marked improvement moving into 2020 and beyond. eve has an exciting future ahead and we look forward to putting the business on a stronger footing and establishing eve as Europe's leading sleep and well-being brand."

 

 

Enquiries:
eve Sleep plc James Sturrock, Chief Executive Officer Abid Ismail, Chief Financial Officer	via Instinctif Partners
Peel Hunt LLP (NOMAD and broker) Dan Webster George Sellar Guy Pengelley	+44 (0) 20 7418 8900
Instinctif Partners Guy Scarborough	+44 (0) 20 7457 2020

 

The person arranging release of this announcement on behalf of the Company is Abid Ismail, Chief Financial Officer.