Eve Sleep explores potential sale and seeks investment

Direct to consumer sleep brand eve Sleep plc has launched a review to seek investment or explore a potential sale of the company.

After delivering a third consecutive year of growth in revenues and marketing contribution in its core UK and Ireland business in 2021, and cognisant of current trading conditions, eve says it now wishes to accelerate its push into the wider sleep wellness space: “In order to deliver our objective of creating the first digital sleep wellness retailer, the board considers that eve would benefit from additional investment.”

Eve said it had already considered investment from a US-based investor, which after discussions of making a preliminary offer, broke down with the party withdrawing its interest.

Following this, eve has since concluded that it will ‘explore all possible strategic and financing options for the business’, which includes either further external investment or a potential sale of the company.

Eve has initiated a formal sale process, which will ‘best facilitate engagement with potential partners and the assessment of any expressions of interest that may emerge’.

A statement read: “The Company intends to conduct a targeted process, focused on those parties who understand and value the full potential of the Company. The first phase of the process is expected to be based on public information and management interaction only and interested parties will be invited to submit non-binding indicative offers to finnCap on the Company’s behalf.

“The Company will undertake its own procedures so as to establish the credibility of any such parties and their commitment to the Company’s wider stakeholder group, after which finnCap may then provide selected interested parties with additional preliminary information on the Company, following which those parties may be invited to submit further proposals to the Company. Interested parties will be required, at the appropriate time, to enter into a non-disclosure agreement with the Company on terms satisfactory to the Board. Further announcements regarding timings for the FSP will be made when appropriate.”

Furthermore, eve issued an update on trading where over the five months to 29 May and against ‘challenging year-on-year comparatives’, eve’s direct to consumer sales orders in the UK & Ireland are down 15% and down 3% in France.

The retail partnership with DFS, which initially launched in March solely on the dfs.co.uk website, has been extended to cover some of the store estate and with an increased product range.

In May, eve launched its new CBD sub-brand ‘Well Slept’ with its own website, with the plan to enable selling into the Belgium market described as ‘on track to complete this month’.

Eve added that trading is also benefitting from the C4 sponsorship, which runs for 12 months from April 2022 on ‘late nights on 4.’

As a result of this recent progress, sales orders for the direct to consumer business for the last three weeks have grown 2% in the UK year-on-year, and 40% in France. At the Group level, eve has achieved year-on-year sales growth in each of the last three weeks.

Commenting on the update, eve added: “However, eve is, like all direct to consumer businesses, exposed to ongoing weaknesses in the economy, declining consumer confidence and rising inflation, both in the wider consumer landscape and in input prices. These headwinds are slowing eve’s progress toward its strategic and financial goals.

“Based on the first five months of trading, and its expectation that the cost of living crisis is set to continue for some time, the Board does not now expect to meet its previous revenue expectations for the current year, with additional promotional activity also having an impact on gross margins. This will have a consequential impact on the Company’s anticipated cash balances as the year progresses.”

Cheryl Calverley, CEO of eve, said: “eve has the opportunity to become the first digital sleep wellness retailer given our award winning mattress ranges, strong brand and suite of wellness products, including our new CBD sub-brand ‘Well Slept’ in the on trend and rapidly growing global sleep economy.

“However, in order to fully achieve this long term potential, particularly in the face of weakening consumer confidence, there is a need for additional investment.  Recent inbound investor interest has led the Board to conclude that the optimum way to build shareholder value and realise the opportunity in sleep wellness is to launch a strategic review to secure either a new owner or a major strategic investment partner.”

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