DJ Eve Sleep plc: Final Results
Eve Sleep plc (EVE)
Eve Sleep plc: Final Results
18-March-2021 / 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.
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eve Sleep plc ("eve" the "Company" or the "Group")
Full Year Results
2020 results ahead of twice raised expectations, strong start to 2021
eve, a direct-to-consumer sleep wellness brand operating in the UK, Ireland (together the "UK&I") and France, today
issues its audited results for the year ended 31 December 2020 (the "Period").
Financial Highlights 1
2020 2019
Year ended 31 December Movement
GBPm GBPm
Revenue 25.2 23.9 +6%
Gross profit 14.5 12.7 +14%
Gross profit margin 57.3% 53.1% +418 bps
Marketing contribution2 4.3 (2.5) +GBP6.8m
Underlying EBITDA loss3 (2.0) (10.9) (81%)
Statutory loss for the year (2.0) (12.1) (83%)
Net cash 8.4 8.0 +0.4
Financial Highlights - Revenue increased to GBP25.2m, with year-on-year growth in the second half of 19% - Gross margin improvement of 418 bps enabled by focus on profitable sales - Group marketing efficiency4 improved by 2634 bps to 24.2% (2019: 50.5%) - The UK&I and France generated a positive marketing contribution - Cash flow neutral for the first time, after adjusting for GBP0.3m of tax payments deferred until after the year end
Operational Highlights - Entry into sleep gifts market with launch of 'well slept' range online and in partnership with Boots UK seeing
strong success - UK brand awareness grew 200 bps to 17% in August 2020 and is expected to have remained strong since, with the
launch of eve's latest TV campaign from November - Group conversion rate grew year-on-year by 60 bps, the third consecutive year of improvement - Re-platformed the UK&I websites to Shopify, with the French website also completed post year end, to secure more
stable, scalable and lower maintenance websites - Upgraded supply chains to localise manufacturing ahead of Brexit - Restructured warehousing and distribution to allow shipments to customers to be consolidated into one delivery,
deriving lower costs and better customer experience - Winner of the best two mattresses in the UK according to Which? and 3 of the top 5, and the best mattress in France
according to Que Choisir
Current trading
Revenues in the first two months of the year increased 16%, representing an acceleration from the last quarter of 2020, where growth was held back by some supply constraints.
Cheryl Calverley, CEO of eve Sleep, commented:
"eve's rebuild strategy is essentially complete, six months ahead of plan. We move now to accelerate our business, with a mind to leveraging our strong brand, efficient marketing, high performing products and excellent customer service to allow us to diversify across markets, channels and categories. But we do so carefully. Successful e-commerce businesses win through balancing growth, with customer experience and business resilience, and we will do the same. We seek sustainable, profitable growth and will avoid growth at any cost, and certainly to the detriment of customer experience or business resilience. We're excited about the opportunities the next few years bring, and we now have a business ready to grasp those opportunities."
The management team will be hosting a live presentation with Q&A for retail investors at 13:30 GMT today. The presentation can be accessed via the Investor Meet Company platform. Interested investors can sign up to Investor Meet Company for free and add to meet EVE SLEEP PLC via the link: https://www.investormeetcompany.com/eve-sleep-plc/ register-investor
Footnotes
1 Financial data has been rounded for presentation purposes. As a result of this rounding the totals, comparatives and calculations presented in this document may vary slightly from the arithmetic totals or calculations using such data.
2 Marketing contribution is defined as the profit/loss after marketing expenditure but before payroll and overhead costs; a measure also referred to as operational profitability.
3 Underlying EBITDA is defined as earnings before interest, taxation, depreciation, amortisation, impairment, share-based payment charges connected with employee remuneration, fundraise-related expenditure (2019 only) adding back IFRS16 adjustments for the office lease costs.
4 Marketing efficiency is defined as total reported marketing cost divided by the reported revenue for the specified segment, thus as the reported percentage falls marketing efficiency improves.
For further information, please contact:
eve Sleep plc
Cheryl Calverley, Chief Executive Officer via M7 Communications LTD
Tim Parfitt, Chief Financial Officer
finnCap Limited (NOMAD and Broker)
Matt Goode / Ed Whiley (Corporate Finance) +44(0)20 7220 0500
Alice Lane (ECM)
M7 Communications LTD
+44(0) 7903 089 543
Mark Reed
chairman's statement
"eve is now a stronger, more resilient business, with a ready-made platform for future growth." - Paul Pindar
completing the rebuild strategy
In what has been one of the most difficult and unpredictable years for business, eve has exited 2020 in far better shape than it entered the year, through a combination of favourable external factors and sound execution of the strategy. The accelerated transition to online ordering and the strength of the homewares market brought about by the pandemic has provided tailwinds for the business. Whilst the sector remains highly competitive, there has been an improvement in the landscape, with the retrenchment of some online mattress companies, as well as reduced store based competition, from both temporary and permanent shop closures.
The rebuild strategy is largely complete and eve now has a more resilient and efficient technology, logistics and operational platform for future growth. The product ranges have been expanded, alongside a broadening of distribution in both the UK and France, which has had the added benefit of further raising brand awareness. Underpinning the whole business is the quality of the mattresses themselves, which have been widely recognised as best in class. Consumer champion Which? in November 2020 rated eve's original and its premium hybrid the two best mattresses in the UK. The Premium Hybrid has also been awarded 'Meilleur Choix' (best choice) by the French equivalent of Which? - Que Choisir.
eve has continued to build on its differentiated strategy of focusing on the broader sleep wellness category as compared to more mattress focused peers where competition is largely price driven. Existing product categories have been deepened with further products, as well as eve's move into new categories. eve's first foray into gifting with Boots for a 'well slept' range of sleep gifts for the Christmas period sold out and the new partnership with the French homewares retailer Olivier Desforges goes from strength to strength. In tandem with new partnerships, eve has exited those which were not economically viable, including Amazon UK, in order to stay focused on profitable sales growth.
The Company continued its ongoing investment in broadcast TV and supported its existing 'wake up dancing' campaign with an additional new campaign designed to build long term brand presence for eve as a sleep wellness brand. This longer term investment is a sign of increasing confidence in the business and its ongoing growth potential. The new 'switch off with eve sleep' campaign launched in November 2020 and runs every Sunday night across the Channel 4 estate, digital and mobile advertising through until spring 2021. The analytics on the campaign performance so far have been very positive, with payback above projected expectations.
Over the last two years the entire operations and processes of the business have been carefully analysed and restructuring plans put in place. The consumer websites have been re-platformed to Shopify, which, in addition to providing an improved customer experience and a more stable platform, reduces ongoing maintenance costs and is easily replicable across markets. As part of wider Brexit preparations to minimise any trade frictions and stay cost competitive, mattress manufacturing has been largely localised in the UK for the UK and Irish markets and Belgium for sales to the French market. Distribution capability for the UK&I, in terms of both warehousing and carriers has also been upgraded, resulting in an improved customer experience and a reduction in logistics cost through the consolidation of all items in an order into a single delivery.
financial performance ahead of expectations
The central focus of the rebuild strategy has always been to reduce losses and cash burn in order to put the business on a secure and sustainable long term footing. Great progress in 2020 has been made in this regard, with underlying EBITDA[1] losses cut by 81% to GBP2.0m and statutory loss reduced by 83% to GBP2.0m. Cash generation was even stronger, achieving a cash improvement of GBP0.4m, which after adjusting for GBP0.3m of tax payments deferred until post period end, resulted in a maiden cash flow neutral position for the full year. Accordingly, eve closed the year with a healthy statement of financial position, with GBP8.4m (2019: GBP8.0m) of cash and no debt (other than the lease liability for our office premises), without recourse to any further funding.
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