EVE.L Regulatory News (EVE)

29 November 2017

eve Sleep plc ("eve" or the "Company")

Trading update

Strong sales, acceleration of investment, on track for UK profitability in Q4 2018

eve, the direct to consumer European sleep brand, today issues a trading update ahead of its 31 December financial year end.

The strong trading momentum experienced in the first six months of the year has continued in the second half of the year. With two days of November remaining, Group revenues for the first 11 months of trading are expected to have grown 130% year-on-year. Trading in the UK has been stronger than expected and is anticipated to be up over 105% year-on-year over the same period, while international revenues are expected to increase more than 180% year-on-year.

The current marketing mix is proving a great success in driving sales and at the same time improving marketing efficiency. In the UK, marketing costs as a percentage of revenue, a key metric for eve to achieve profitability, was 64% in H1 2017 and as guided at the September interim results, improved 1400bps to 50% in the month of October. November is on track to achieve a further significant improvement in UK marketing efficiency with a 1500bps reduction to 35% of revenues for the month.

In addition to using the marketing budget to drive direct revenue, eve's longer term investment in brand is proving successful following the latest data on unprompted brand awareness, which, as at 7th November had risen to 6.6% in the UK, compared to 4.1% in June this year.

The exclusive agreement with Karstadt, a leading department store chain in Germany, is progressing to plan and as at 29 November eve is in 79 stores across the country. Including the agreements with Next Home, Debenhams and Fenwicks, eve now sells through 146 stores in the UK and Germany. 

Progress across the business, including international expansion and product development, as well as the growth in retailer partnerships is ahead of the plans set out at the time of the IPO, which has resulted in some additional investment being brought forward from 2018 into 2017. The Company remains on track for the UK to reach profitability in Q4 2018 and at the Group level in 2019.

Jas Bagniewski, Chief Executive Officer, commented:

"We continue to be in a period of acceleration with strong momentum across our 15 territories. eve is making good progress towards its objective of achieving UK profitability in Q4 2018, demonstrated by the UK business now anticipated to report a maiden profit after marketing costs in Q4 this year, a significant improvement on the first half of the year. We look forward to continuing our expansion as we drive towards achieving our plans for 2018 and beyond."

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About eve Sleep

Eve is an e-commerce focused, direct to consumer European sleep brand, which designs and sells eve branded mattresses and other sleep products, including pillows, bedding and duvets.

The Company principally focuses on the design, branding, marketing and selling of its products, with other aspects of its operations, including manufacturing and fulfillment, being outsourced. This model has enabled the Company to scale quickly internationally without the requirement for significant capital investment.

The Company's strategy is to continue to penetrate existing territories further, expand into new markets, extend its product range and develop its retail partnerships. Whilst the Company has grown quickly since incorporate, its current market share of the fragmented European sleep market (estimated to be worth £26bn) is only an estimated 0.1 per cent which the Directors believe provides a significant opportunity for further expansion. The Company's aim is to become the leading pan-European sleep brand.

The CEO and co-founder of the business Jas Bagniewski, previously worked at Rocket Internet as a Country Manager of start-ups including Zalando and Groupon. He is supported by a strong and experienced management team, headed by Paul Pindar as Chairman.

In May 2017 the Company listed on the AIM market, raising £35m gross proceeds to accelerate its growth strategy. The shares floated at 101p per share, valuing the business, post new money at c. £140m.