Mattress brand eve Sleep recorded a net loss of £20m in 2018, despite revenue growth of +25% to £34.8m. This figure was held back in part by the group's decision to refocus its efforts in its core markets – the UK, Ireland and France – but also reflects a trading performance that was "lower than anticipated".
The group's annual report stated that CFO Abid Ismail is stepping down, while its partnership with Dreams to sell eve Sleep products through the retailer's stores and website will be terminated.
A full review was undertaken by CEO James Sturrock which resulted in a rebuild strategy focused on differentiation, an expanded product range, and a more friction-free customer experience, and eve Sleep asserts that it is making progress in these areas. The proportion of non-mattress sales in the core markets increased to 19% (up +5%), while repeat customer rate in the UK and Ireland rose +3% to 14%. Returns, meanwhile, decreased from 10.5% in 2017 to 9.3% in 2018. Eve Sleep also made a significant reduction in marketing costs.
As 2019 will be the first full year of trading in its core markets alone, the group's expects revenue growth to be broadly in line with this year's, but with a substantial reduction in underlying EBITDA losses. Marketing investment will be weighted towards H2. This, alongside revenue benefits from the execution of the rebuild strategy, means eve expects the majority of its revenue growth to be delivered later in the year.
The first two months of trading in this FY have been in line with the board's expectations.
James Sturrock, CEO of eve Sleep, comments: "We have made some good early progress with our rebuild strategy and have secured the funds to execute on it. As part of our pathway to profitability plan we have taken decisive action on 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. When combined with the expected benefits of our rebuild strategy, we anticipate a significant reduction in losses in 2019.
"The opportunity to create a sleep wellness brand remains undiminished and 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 will win out over peers. Our new approach focuses on sustainable growth and sets out a clear path to building a profitable business, which delivers for shareholders."