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D-Geeman - thanks for sharing. only 5% but Dunelm is a 3 billion dollar company. A 5% increase is equivalent to 150m market cap. 15x more than Eve in a single day.
wow outstanding profit beat. Beat market expectations by miles... from £84m to £140m profits.. that's 66% ahead of market expectations. Hopefully some of that was from selling Eve mattresses.
Is this a sustained ride up or temporary? GLA
Performance criteria for unlocking part of CC's options include 750,000 options if the achieve a positive underlying EBITDA for three consecutive months.
I anticipate CC may achieve positive underlying EBITDA for Q4, the final three consecutive months or by 2022 for the following reasons:
- Marketing costs as a % of revenue was mainly weighted in H1 2021 at 32.7% whereas 2020 it was 25.3%, this resulted in H1 net loss of (1.9m) whereas 2020 was (0.8).
-With revenue growth expecting to grow and lower marketing costs as a % of revenue h2 or q4, it could look positive for underlying EBITDA.
Although overall results for full year 2021 is expecting to be a loss or close to break-even. 2021, H2 or Q4 could be first time we see us closer to break-even point or PROFIT. Anyone else have any thoughts?
Thanks for Sharing D-Geeman. Great insight. You're right Dec traffic down may be offset by offline channels such as Next, Dunelm, Argos and Habitat. And I understand CCs objective is to bigger the basket purchases from other product categories so this could also increase revenue from all the new products introduced h2 such as the Ginkgo light, CBD oils, beverages, sleep over range etc. Of which Ginkgo Light was out of stock and blanket.
Danny.. it's hard to say. The most recent funding round raised around £10+million at 10p which valued the company at approx 25m+ if I remember correctly. The company over the years has raised in excess of around £60+ million I think.. and IPO was £100m+... but current situation has changed and the market will value the company at present value and future earnings, but note the previous chairman bought lots of shares at 10p in the previous funding round and he holds like 5% in Eve Sleep so... I think he probably expects a higher return. If Eve Sleep can generate £2-3 million earnings then I think £20-£45 million valuation at 10-15x PE seems reasonable. IMO, DYOR
Interesting read- Nectar mattress parent raises £95.7m in 2021
https://www.furniturenews.net/news/articles/2021/01/444665456-nectar-mattress-parent-raises-%C2%A3957m-latest-funding-round
Also very interesting to learn that the owners of Nectar Sleep namely "Resident" owns several mattress brands with varying levels of differentiation. https://www.residenthome.com/pages/about
From an acquisition perspective, it seems it could be possible for a holding company to hold several mattress brands to consolidate market share.
Brick&Motar Acquire Online Brands
Another interesting read is Dunelm acquired Fogarty in 2016 which is now their lead products to push on website, so I think brick and mortar stores will also be looking to acquire strong online brands to add to their portfolio as also seen in the world of Asos and Boohoo. https://thefurnishingreport.com/index.php/news-archive/1154-dunelm-acquires-fogarty-bedding-brand
So, I can see several channels for Eve getting acquired:
1) Private equity exit - as funded by Simba, Emma and recently Casper
2) Merger of brands like Nectar Mattress and DreamCloud owned by Resident PE backed holding company
3) Brick & Mortar Acquisition such as Dunelm acquire Forgarty
4) Remain IPO and attract further IIs or PI.
These are possible scenarios for Eve Sleep acquisitions IMO, DYOR.
Eve Sleep Changes from 100 days to 1 year trial period when compared with competitors this is more aligned as the following companies offer:
Simba: 200 days risk free
Emma Sleep: 200 days risk free
Nectar Sleep: 365 (Also 1 year)
Tempur: 100 nights
Silent Night: 60 nights
I think they know some will for sure abuse the system which could relatively increase once increase trial period to 1 year.. but I think they know that already and probs crunched the numbers on weighing in that majority of customers behave in good faith and for those who are likely to refund within the 100 days under the previous policy may now actually give the mattress a bit more time before refunding since they have one whole year!! and therefore delay or not refund due to "getting use to"or lazy to refund factor like your D-Geeman's mother-in-law with her pillow as some naturally may take a bit longer time to adapt to mattress or related sleep products. From a cash flow perspective, this may also be significant on cash reserves if refunds are avoided or delayed... especially not having to absorb the free delivery costs etc.
Thanks Wyn- very insightful and great analysis. I agree, it does seem downward trend that just doesn't go away... I feel it like the company and share price takes one step forward but two steps back. At this rate, 2.5 seems more likely than up... Seems very unfavoured by the market right now. I am hoping CC can prove the current market has wrong and demonstrate that this company can finally make sustainable sales and profits.
Besides, I noticed Eve has changed the return policy to 1 year trial! That does say something about their confidence in the product. And the Ginkgo Lights, weighted blankets, storage bed frame etc. are out of stock.. either high demand of supply-chain issues or combination of these.
Wyn- D-Geeman, Happy New Year! Any opinions or technical analysis on Eve Sleep currently? What scenarios/outcomes u think is likely for upcoming update? Thanks for your valued comments as usual.
I think Wyn has a point about not including anything about inflation and logistics challenges during the trade update. Inflation and delivery challenges is well reported nationally on the news which was brushed off in this update which creates market uncertainty regarding margin impacts towards the results date in Jan. Delivery costs and inflation for sure will hurt margins but just not sure to what extent... IMO the market so far has priced in very gloomy results... so any signs of turnaround or profits or significant interest will be good for the SP.
That shud also include CC and Chairman... they should get their hands dirty and also help out with dealing with unhappy customers so they know exactly the problems and where to improve the business and customer services.
They have 50+ employees at Eve Sleep.. wouldn't it be good if more colleagues from different departments besides customer services were also trained to handle calls (when available) during peak hours or season to cushion/buffer some of the demands especially for staff who are not always busy. This way all staff can have some experience dealing with customer directly.
Emma also sells on Next and Argos so can't see why they can't also list there too with many other brands. Probably a margin issue.
Was thinking wouldn’t it make a lot of sense and money to partner with John Lewis as both brands are premium and strategically aligned. Would be a significant boost to business and brand credibility if they could. A phone call from CC to the purchasing manager shouldn’t be a big problem I imagine…
Dontgiveup123- do u know what the breakdown is for the 12/13% who owns what %? Interesting...
Premium Mattress, Weighted Blanket, Sloth Toy, Candles are OUT of stock. Seems sales are either very good or supply chain impact or both. Likely the latter combined reasons. Who’s seen the sloth advert on telly recently? Which channels, when and what time they been playing? Interesting to learn ROI on every pound spent.
Eve answering all negative comments on TP very quickly after complaints. Good to see ??
Great news.. a nice top up, although relatively speaking 20k is pocket money for Mike Lloyd being the COO of McCarthy & Stone and previous director of AA. Hope he continues to dig deeper into his pockets and add at these levels! Since the valuation is still around cash in bank level... I believe CC's strategy to diversify in to other product categories to establish sleep wellness brand, should help with sales growth and eventually profitability.