Nightmare for Eve Sleep as shares slump on profit hit
The online mattress company will not hit profit targets.
Eve Sleep’s market value more than halved on Monday after the company announced the shock departure of its chief executive and said it will not hit profit targets.
The mattress company, which floated on the London Stock Exchange last year, said Jas Bagniewski was leaving the business with immediate effect.
In morning trading, Eve Sleep’s shares plummeted 57% to 29p.
The retailer, which sells mattresses online, said volatile trading meant it will not be profitable in the fourth quarter of 2018 as expected.
The business said its sales for the six months ended June 30 had grown by 61% to £18.6 million.
Management has made some strategic missteps, underestimating what is required to develop a meaningful footprint across continental Europe, while losing focus on creating an aspirational sleep brand in its core markets Eve Sleep
Sales in the UK and Ireland were up 62%, with international sales up 60%.
Analysts at Peel Hunt said this was “well behind” expectations of growth, which was forecast to be higher than 100%.
Peel Hunt downgraded predicted revenue by 30%, and forecast an earnings before interest, tax, depreciation and amortisation loss of £18.5 million.
“While consumer conditions have been challenging for big ticket, Eve also acknowledges that the company had underestimated the challenge of opening multiple markets at the same time,” Peel Hunt said.
Eve Sleep said it was changing its strategy, and warned that trading in the first six months of the year had been more volatile than expected.
“Management has made some strategic missteps, underestimating what is required to develop a meaningful footprint across continental Europe, while losing focus on creating an aspirational sleep brand in its core markets,” the company said.
Instead of growing its business across Europe, Eve Sleep will now grow sales in the markets where it operates already.
Eve Sleep is also partnering with Dreams to sell mattresses in around 200 of its stores, building on similar deals struck with Next, Fenwick and Debenhams.
Paul Pindar, chairman of Eve Sleep, said: “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. He leaves with the board’s best wishes for the future.”