// Eve Sleep breaks even for the first time during Q4 of its financial year
// It said it remained on track to slash losses
// After a period of decline, Eve Sleep shares jumped 20.5% at the news
Eve Sleep’s turnaround is starting to bear fruit after the online mattress retailer revealed it broke even for the first time during its fourth quarter and remained on track to cut losses.
Investors in Eve Sleep have also given the retailer a vote of confidence, sending shares soaring as it said it could continue to break even in 2020.
Shares had jumped 20.5 per cent, or 0.4p, to 2.35p by around 11am this morning, even as the business revealed that revenue had dropped by almost 19 per cent to £23.8 million.
It will come as welcome relief for investors who have seen the price of their shares plummet from 128.9p two years ago.
Eve Sleep embarked on a turnaround plan in September 2018 with the arrival of new chief executive James Sturrock, after seeing is share price nearly wiped out.
The online retailer had fallen into the trap of investing in growth and throwing money at areas that were not paying their way.
However, management said today that attempts to focus on long-term profitability were paying off.
“We are delivering on our priorities of reducing losses and stemming cash burn as we prioritise profitability over sales growth at any cost,” Sturrock said.
Eve Sleep said its marketing had become more efficient, while it was bringing higher quality traffic to its website.
The changes helped management break even at an operating level in the last four months of 2019, for the first time in the retailer’s history.
It reduced negative EBITDA to a loss of £10.8 million – a 43 per cent year-on-year drop – and it burnt through cash half as fast in 2019 as in 2018.
“We continue to create award-winning products … while removing unprofitable sales and marketing,” Sturrock said.
“We are well placed to make further significant progress in 2020, with a differentiated brand position, a broader product range than peers and ongoing improvements to the customer experience, supported by a lower cost base, a substantial cash balance and no debt.”
with PA Wires