Eve Sleep plc: Intermediate results -3-
In the first half of the year, many new products were launched, including, beyond new bedding ranges and a new bed frame, the Morphee Sleep Aid, a Breathe Easy Protector range, a microfiber shaper pillow and the duvet. warm: cool. In the second half of the year, in addition to a new mattress and the sleep away mattress line launched in July, eve plans to launch other products from its own brand and partners. The category of sleep accessories will be expanded with the launch of eym candles and a ginko LED night light, as well as a range of Rescue Remedy’s best-selling ingestible products and a selection from their new sleep range which includes a balm. for sleep and a spray for sleep. Also later in the second half of the year, the day before plans to launch, under license, a small line of premium CBD oils.
The key to the success of a larger retail offering for sleep wellness will be ever-improving data capability. Along with building internal data capacity and improved marketing efficiency, eve is in the final stages of developing a personalized sleep content engine, which will deliver content to clients on a wide range of related topics. to sleep, by further supporting their sleep and reducing customer acquisition eve costs. This marks the first steps of eve towards a larger digital offer of content and sleep services to support the products available on the eve site.
To build a stronger, bigger and bigger and more profitable business, it is necessary to expand beyond the UK market to achieve balanced growth. The focus is currently on the French market, where eve has been trading since 2016. The French market is less developed and at an earlier stage of its online transition than the UK market. Until this year, the French company had received only minimal marketing investment as the company was at the start of its restructuring and its brand position in the local market more clearly defined. The new French advertising campaign, launched in May 2021, represents a significant investment for eve and aims to boost both brand awareness and business revenue growth in the second half of the year and through 2022. Along with the advertising campaign, there will be a continued focus on retail partnerships and on improving products and the customer experience as eve strives to evolve the business over the next several years. .
The Irish market has received increased attention and investment since the fourth quarter of 2020 and this continued into the first half of 2021. Although modest in absolute terms, the strategy has been effective, the Irish market achieving revenue growth of over 130%. in the period. As the strategy develops and progress is made in France and Ireland, the management team will seek to penetrate a limited number of adjacent European markets. The expansion will be executed in a controlled and disciplined manner, building on the existing infrastructure in France and the assets produced in order to maintain strict cost control.
Investing in growth is expected to increase costs in the current year, resulting in a year-over-year increase in the annual loss. But the investment is considered necessary to build a more balanced, larger company, which in the medium term will be sustainable profitable.
Current trading and outlook
Trade in the UK and in August was above board expectations, thanks to the continued strength of eve’s e-commerce channel. While the previous year’s comparisons were very strong, eve UK&I sales in July and August were up 46% compared to pre-Covid 2019 equivalents. The new Sleep away range performed very well and outperformed all expectations with its first sales, although demand was also strong for the rejuvenated bedding line and the high-end “spit” bed frame.
Despite well-documented global issues with rising freight costs and industry supply chains impacting availability, eve’s own supply chain revamped in 2021 has held up well. Manufacturing, warehousing and distribution are all done locally in the UK and mainland Europe, with most but not all of the raw material sourcing coming from Europe. This, combined with the early decision to keep more popular items, allowed eve to continue to meet strong customer demand.
With a strong pipeline of new products for the remainder of the year, the Board of Directors is increasingly confident in the continued strength of the UK&I business over the remaining four months of 2021 and expects a contribution positive and healthy marketing from UK&I for the second year in a row.
France saw an improvement in trade in July, helped by the period of the month’s summer sales, followed by a milder August. French growth plans, of which marketing is only one element, are in their very early stages, with product and customer experience improvements coming in Q4, alongside the next tranche of marketing investments. . The management team remains confident in the longer term prospects of the French business and in the opportunity to reach the necessary scale, commensurate with profitability. For the two months of July and August, the Group’s turnover increased by 1% over one year on very solid comparisons and by 26% compared to the pre-Covid 2019 equivalents.
The company remains on track to meet the expectations of the Board of Directors for the previous year, as the strength of UK&I trading should compensate for any variability in the French market. Marketing investments, up £ 1.4million year-on-year in the first half of the year, were charged up front and are expected to remain broadly stable in the second half. First half cash outflows exceeded operating performance by around £ 1.2million, reflecting £ 0.9million for the timing of payments to HMRC and higher inventory levels, as well as £ 0.3 million for additional working capital movements. Net cash at the end of August rose to £ 5.9million from £ 5.2million at June 30, with cash outflows for the remaining four months of the year expected to be minimal.
Consolidated income statement and other comprehensive income
6 month period ended 30 6 month period ended 30 12 month period ended 31 June 2021 June 2020 December 2020 Note (Unaudited) (Unaudited) (Audited) GBPm GBPm GBPm Revenue 2 13.9 12.2 25.2 Cost of sales 2 (6.3) (5.4) (10.7) Gross profit 7.6 6.8 14.5 Distribution expenses 2 (1.9) (1.6) (3.5) Administrative expenses (8.0) (6.4) (13.2) Share-based payment charges - (0.1) (0.2) Operating loss (2.3) (1.3) (2.4) Net finance income - - - Loss before tax (2.3) (1.3) (2.4) Taxation - - 0.4 Loss for the period (2.3) (1.3) (2.0) Other comprehensive income Foreign currency differences from 0.1 (0.2) - overseas operations Total comprehensive loss for the (2.2) (1.5) (2.0) period Basic and diluted loss per share 3 (0.83p) (0.48p) (0.75p)
Consolidated statement of financial position
6 month period ended 30 6 month period ended 30 12 month period ended 31 June 2021 June 2020 December 2020 Note (Unaudited) (Unaudited) (Audited) GBPm GBPm GBPm Non-current assets Property, plant and equipment - 0.3 0.3 Intangible assets 0.5 0.4 0.4 0.5 0.7 0.7 Current assets Inventories 1.2 0.8 0.6 Trade and other receivables 1.6 1.7 1.9 Cash and cash equivalents 5.2 9.2 8.4 Current tax receivable - - 0.4 8.0 11.7 11.3 Total assets 8.5 12.4 12.0 Current liabilities Trade and other payables 2.7 4.3 4.0 Provisions 1.2 1.0 1.0 Lease liabilities < 12 months - 0.3 0.3 Total liabilities 3.9 5.6 5.3 Net assets 4.6 6.8 6.7 Equity attributable to the equity holders of the parent Share capital 0.3 0.3 0.3 Share premium 49.5 49.4 49.4
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September 23, 2021 02:00 ET (06:00 GMT)