Eve Sleep CEO steps down as sales fall short of expectations
Eve Sleep has said its sales fell short of expectations in the six months to 30 June after trading was more volatile than anticipated. In addition, it has reported that its chief executive has stepped down.
The company, which listed on AIM in May 2017, said group sales in the period rose by 61% to £18.6 million, while UK & Ireland and international sales were up 62% and 60% respectively.
Eve Sleep said the volatility reflected not only a challenging backdrop for consumer spending but some strategic missteps made by its management team. The company said it had underestimated what was required to develop a "meaningful footprint" across continental Europe and had also “lost focus” on creating an aspirational sleep brand in the company’s core markets.
As a result, Eve is now changing its strategy from scaling across multiple new countries to prioritising greater penetration in its core growth markets as it looks to focus on the customer experience, product differentiation and its brand. Eve is currently evaluating its existing European markets to identify which should be regarded as core.
The company said 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 the fourth quarter, although the full impact on earnings will be partially offset by cost savings.
Eve has also reported that its chief executive Jas Bagniewski is stepping down from the board and the company and that a search for his replacement has now begun. In the interim period, Abid Ismail will assume the responsibility of acting chief executive in addition to his duties as chief financial officer.
Paul Pindar, chairman of Eve Sleep, said: "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.”
Eve has also announced a tie-up with UK bed retailer Dreams. The partnership, which is a first for Dreams with a mattress in a box brand, will see the Eve mattress sold in 193 Dreams stores in th UK and through its website. With the rollout expected to take two weeks, Eve said the partnership is likely to expand to include pillows, toppers and linens. The deal builds on Eve’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 its direct to consumer approach by providing a physical touchpoint for shoppers that prefer to purchase through the traditional format while avoiding the costs of an expensive retail estate.
Pindar added: “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."
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