Eve Sleep plc: Trading Update

Eve Sleep plc (EVE) 
Eve Sleep plc: Trading Update 
 
22-Jul-2020 / 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 
 
     Trading ahead of expectations, generated first positive cash flow 
 
eve Sleep ("eve", the "Company), the direct to consumer sleep wellness brand 
     operating in the UK, Ireland (together the UK&I) and France announces a 
          trading update for the six months ended 30 June 2020 (the period). 
 
            Highlights 
 
  · Group revenue of GBP12.2 million - ahead of the Board's expectations 
  following strong trading in May and June 
 
  · Positive marketing contribution for the period1 
 
  · Underlying H1 EBITDA loss reduced year-on-year by c.80% to approximately 
  GBP1.2 million - ahead of the Board's expectations 
 
  · Cash flow positive in the period 
 
  · Net cash at 30 June 2020 of GBP9.1m (31 December 2019: GBP8.0m) 
 
            Trading and market backdrop 
 
 Trading since the start of April has continued to build through the period, 
      following some weakness in the latter part of March during the initial 
           stages of lockdown. May and June trading was ahead of the Board's 
  expectations and this momentum has continued into July, buoyed by a strong 
homewares market, effective and efficient marketing and eve's online focused 
        proposition. The benefits of eve's three pillar rebuild strategy are 
    becoming increasingly evident, with strong brand awareness and the wider 
          product suite drawing new customers to the brand. Sales of premium 
    mattresses and bedframes continue to be strong, supported by wider sales 
  across toppers, pillows and duvets. There has also been a reduction in the 
breadth of the competitor landscape, with a number of online mattress brands 
   withdrawing from the European market, whilst some store based competitors 
            have reduced the size of their retail estates. 
 
  Revenues for the six months are expected to be approximately GBP12.2 million 
    (30 June 2019: GBP12.9 million), with 25% growth in Q2 2020 compared to Q2 
  2019. A year-on-year reduction in revenues was budgeted for as the Company 
 continues to prioritise profitable sales over chasing top-line growth. This 
     disciplined sales strategy has driven a halving in marketing costs as a 
            percentage of revenues in the period to 25% (2019 H1: 51%). 
 
 The benefits of the additional cost efficiency measures taken in Q4 of last 
   year, combined with improved marketing efficiency and stronger trading in 
   the period has resulted in underlying EBITDA losses for the half reducing 
    year-on-year by approximately 80% to GBP1.2 million (2019 H1: GBP5.9 million 
            EBITDA loss). 
 
         eve has been cashflow positive in the period, with the cash balance 
    increasing by approximately GBP1.1m as at 30 June 2020, the first time the 
 business has generated a positive cashflow in a six month period. While the 
       cash balance is flattered by Government coronavirus support measures, 
     resulting in the deferment of approximately GBP0.5m of tax payments until 
   after the period end, continued improvements to cash management and stock 
      control have supported an underlying increase in cash of approximately 
             GBP0.6m. 
 
         Although trading since May has been materially ahead of the Board's 
 expectations, the business has historically been second half weighted, with 
       some important trading periods to come. Accordingly and set against a 
 backdrop of ongoing economic uncertainty the Board is leaving its full year 
    expectations unchanged at this time but is increasingly confident in the 
            out-turn for 2020. 
 
            Cheryl Calverley, CEO of eve Sleep commented: 
 
       "Trading through this complex period has been robust and ahead of our 
    previous expectations, and for the first time we have generated positive 
     cash flow over a sustained period. Our goal of profitability draws ever 
closer as we continue to deliver our rebuild strategy, underpinned by growth 
in customer numbers, an increasing contribution from wider sleep categories, 
   and improved marketing efficiency. These achievements have only been made 
          possible by our experienced and highly capable team who have shown 
            remarkable resilience, engagement and commitment throughout. 
 
 We are well placed to benefit from the accelerated shift to online ordering 
  and the increase in spend on homewares as consumers increase investment in 
            their homes. eve will continue to focus on driving value for our 
     shareholders and building a sustainably profitable business with strong 
            growth potential." 
 
            Footnote 
 
  1) Marketing contribution represents profit after all direct costs 
  including marketing but before central overheads 
 
 The information contained within this announcement is deemed by the Company 
          to constitute inside information stipulated under the Market Abuse 
            Regulation (EU) No. 596/2014. 
 
For enquiries, please contact: 
 
eve Sleep plc 
 
Cheryl Calverley, Chief Executive      via M7 Communications LTD 
Officer 
 
Tim Parfitt, Chief Financial Officer 
finnCap Ltd - Nominated Adviser and    Tel: [phone] 
Broker 
 
Matt Goode / Hannah Boros - Corporate 
Finance 
 
Alice Lane - Equity Capital Markets 
M7 Communications LTD - PR/IR          Tel: [phone] 
 
Mark Reed 
 
ISIN:          GB00BYWMFT51 
Category Code: TST 
TIDM:          EVE 
LEI Code:      2138007BAC29AUXWQE6 
Sequence No.:  77136 
EQS News ID:   1098863 
 
End of Announcement EQS News Service 
 
 

(END) Dow Jones Newswires

July 22, 2020 02:00 ET (06:00 GMT)