D2C European sleep brand eve Sleep has issued a trading update for the six months to 30th June, and has announced that its CEO Jas Bagniewski will be leaving the business with immediate effect. eve's CFO Abid Ismail will assume the responsibility of acting CEO until a replacement is found.
The brand's sales over the period fell short of expectations, although group sales grew approximately +61% to £18.6m, with sales in the UK and Ireland up +62% and international sales up +60%. The H1 revenue shortfall is not expected to be recovered in the traditionally stronger H2.
eve blames volatile trading patterns and "strategic missteps" in rolling out its European strategy. In response, the company plans to refocus its strategy towards greater penetration in its core markets.
eve has also announced a new partnership with Dreams, which will see the eve mattress sold nationwide in 193 Dreams stores and through its website. The deal increases eve’s retail presence across its three largest markets – the UK, Germany and France – to 331 stores, building on existing partnerships with Next Home, Fenwick and Debenhams in the UK.
Paul Pindar, chairman of eve Sleep, comments: “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. 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.
"While we do not anticipate a near-term improvement in the external environment, we have a healthy net cash position, our trading continues to far outstrip that of the market and should be underpinned by company growth initiatives including the Dreams partnership that we expect to benefit the traditionally stronger second half.
"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.”
Ben Quiroga-Rivera, co-founder of rival, Emma Mattress, comments: “It’s a little unsurprising that Eve Sleep has reported lower-than-expected sales results, meaning UK profitability will be delayed. Its business strategy was based on building a sleep brand, even if this was at the expense of trading profitably and overspending on marketing.
"Eve’s business model aspired to follow technology brands that aggressively bought market share and reaped the rewards later. However, the mattress market has a long customer purchasing cycle, which means that every customer acquisition should be profitable and sustainable.
"We are concerned about the fact that some of our highly unprofitable competitors are highly overselling and underdelivering."
