Shares in Eve Sleep (EVE:AIM) rallied 16% to 2.9p after the online beds-to-mattresses minnow assured it is on course for a second consecutive year of sales growth. The company said it saw ‘healthy’ sales during the key Black Friday month of November and is hopeful of a ‘positive’ Christmas.
In a trading update ahead of its December year-end, the direct-to-consumer sleep and wellness brand insisted its supply chain has ‘held up well’ and its three year turnaround strategy remains firmly on track. The company said it is on track to meet market expectations for 2021.
BEDROOM FURNITURE BOOM
Eve Sleep reported e-commerce sales order growth in the Black Friday month of 4% compared with 2020’s lockdown-inflated comparatives, with orders 64% above the pre-Covid period in 2019.
‘The bedroom furniture category in particular posted strong sales growth in November, up 14% year-on-year, and represented a pleasing 7% of the overall sales mix during this period,’ said the company.
Within mattresses, hybrid mattresses ‘remain the outstanding performer’ and accounted for over 70% of the mattress sales mix.
Guided by CEO Cheryl Calverley (pictured below), the £6.9 million cap also said its new sleep away range performed far ahead of management’s expectations, notching up over £50,000 in sales during November ‘as people prepare for their first Christmas guests in two years’.
Whilst small in terms of Eve Sleep’s overall sales, Ireland achieved one of its highest sales months ever in November, delivering 90% year-on-year growth, although the French market ‘remains soft’, with strength in Eve’s store based partnership with Olivier Desforges more than offset ‘by industry wide weakness in e-commerce channels’.
POSITIVE SIGNS FOR CHRISTMAS
Eve Sleep explained that its supply chain has held up well during this busy period, supported by ‘careful planning’ and strong relationships with European suppliers and delivery partners, as well as the group’s focus on mattress manufacturing with third party providers in the UK and Belgium.
Seeing ‘positive signs for Christmas’, Calverley stressed Eve Sleep’s recovery is ‘both sustainable and built on strong foundations. Our initial brand expansion beyond mattresses into bedframes is beginning to make a material contribution to revenue, and our wider ranges have continued to expand, further cementing our position as a sleep wellness brand, with recent additions including a non-alcoholic plant based three spirit nightcap drink, the gingko baton low glow night light and a range of CBD oils.’
THE FINNCAP VIEW
Broker Finncap said Eve Sleep’s rebuild strategy is on-track and forecasts a rise in sales from £25.2 million to £27 million in 2021, albeit with pre-tax losses widening from £2.4 million to £3.1 million.
However, this marks a major improvement on the losses of £20.3 million and £11.1 million racked up in 2018 and 2019 respectively and the broker argued the latest update ‘provides further evidence that the three-year strategic rebuild of the group remains firmly on track. The brand expansion into bedframes is now making a material revenue contribution, and the product ranges continue to expand as the group carries on building its sleep wellness brand.’
