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Eve Sleep posts wider losses but expects to be profitable in the UK this year
Eve Sleep said on Monday that it's aiming to be profitable in the UK this year, as it reported a widening of its losses in 2017.
In the year to the end of December 2017, the company's statutory loss before tax widened to £19m from £11.3m the year before, even as revenue jumped 132% to £27.7m, with revenue in the UK and Ireland up 109% and international sales up 174%.
Eve made an adjusted loss before interest, tax, depreciation and amortisation of £15.1m compared with an £11.3m loss in 2016 as it took a hit from increased spending on marketing, which rose a whopping 119% to £17.2m.
The group, which floated on AIM last May, said that trading for the current year has started strongly, with sales for the first six weeks 94% higher than the same period last year.
Chief executive officer Jas Bagniewski said: "In what is just our third year of operation we have more than doubled sales and driven substantial improvement in gross margins, whilst raising £35m of growth capital from our listing on AIM. Our progress was strong in H1, and accelerated further in H2, giving a full year growth rate of +132%. This step up in growth was evident in the UK and our international markets and was secured in tandem with a further and substantial improvement in marketing efficiency.
"We are building a sizeable business across Europe that we believe will continue to win market share from traditional operators as the £26bn sleep market continues to transition online. Our results to date demonstrate that we have a winnable customer proposition in both the UK and Continental Europe and have a management team that can execute. We are still targeting to achieve UK profitability at the end of 2018 and group profitability by the end of 2019."
Berenberg noted the surge in revenue and said the results were "good". The bank acknowledged that the online mattress space remains highly competitive, but said Eve's strong revenue growth reaffirms its view that the group can continue to capture market share from the traditional store-based peers, as well as from the highly fragmented tail through its superior customer offering.
"We also believe that revenue growth will continue to be supported by the international expansion as well as the ancillary product roll-out. As such, we forecast a circa 53% FY 2018-20 revenue compound annual growth rate."
Berenberg rates the stock at 'buy' with a 155p price target.
At 1340 GMT, the shares were down 1.2% to 126p.