Eve Sleep issues profit warning as Simba merger talks collapse

The retailer said that its 2019 revenues are likely to be “in the range of £25m-£27m”, which in turn would “have some flow through to the EBITDA loss”.

It blamed this on a number of factors, including “challenging” trading, economic uncertainty and heavy discounting.

Eve Sleep also confirmed that discussions over its mooted merger with fellow mattress specialist Simba which were reported in August have since ended.

The retailer said its board “decided that now is not the right time to pursue the potential merger and that it is more appropriate to focus on the Eve rebuild plan”.

With merger plans shelved, trading of Eve shares resumed this morning.

Eve Sleep said its focus “in recent months” had been on its new marketing strategy, which it said had raised public awareness of the brand from 10% to 50% since the start of 2019.

It also noted it had extended product lines and had implemented new infrastructure and background systems which “improved operational effectiveness”.

Boss of Eve Sleep, James Sturrock, said: “We have continued to make progress with our rebuild strategy and have taken action to reduce 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. As detailed above, we anticipate a significant reduction in losses in 2019.”

“The opportunity to create a leading 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 sets out a clear path to building a profitable business, which delivers for shareholders.

“We will continue to examine ways of accelerating Eve’s rebuild strategy and the move to profitability, through organic and inorganic growth.”