Eve Sleep ends merger talks with Simba as it reports challenging trading
Eve Sleep has ended talks with rival mattress brand Simba after deciding that it was not the right time to pursue a potential merger.
Instead, the retailer will continue to focus on rebuilding its business.
Eve also said that trading has been more challenging than previously anticipated due weak consumer confidence and an uncertain economic outlook. The retailer has also suffered due to heavy discounting and promotional activity by its competitors.
As a result, Eve now expects 2019 revenues to come in at between f £25 million and £27 million. The retailer’s losses were reduced by 50% in its first half compared to a year earlier. However, Eve said the reduction in revenue expectations will have some “flow throw” to its EBITDA loss.
James Sturrock, chief executive of Eve Sleep, said: “We have continued to make progress with our rebuild strategy and have taken action to reduce our cost base, including a significant reduction in administrative expenses compared to 2018 along with a refocused and reduced marketing investment strategy removing inefficient activity. We anticipate a significant reduction in losses in 2019.”
Eve said its new marketing strategy has delivered a 50% improvement in the level of brand awareness from 10% at the beginning of the year. The retailer has also extended its product range and introduced a new ERP system to increase operational effectiveness.
Sturrock added: “I am confident that Eve’s rebuild strategy, centred around a differentiated brand positioning, expanded product range, lower friction customer experience, combined with increasing brand awareness sets out a clear path to building a profitable business, which delivers for shareholders. We will continue to examine ways of accelerating Eve’s rebuild strategy and the move to profitability, through organic and inorganic growth.”
