Mattress retailer Eve Sleep has issued a profit warning, after merger talks with Simba Sleep, first announced on 12 August, have collapsed.
The group’s board said it decided that now is “not the right time to pursue the potential merger” and that it was more appropriate to focus on its “Eve rebuild plan”. The board added it will continue to seek further “acquisitive growth opportunities”, in addition to its focus on driving organic growth, in order to support its focus on a “path to profitability”.
It comes after the group announced that overall trading has been “more challenging than previously anticipated”, owing to the “uncertain” economic outlook and “continuing” low levels of consumer confidence.
It said the economic backdrop, combined with “heavy discounting” and promotional activity from its competitors, has led the board to conclude that 2019 revenues are now likely to be in the range of £25m-£27m.
James Sturrock, CEO of Eve Sleep, said: “We have continued to make progress with our rebuild strategy and have taken action to reduce our cost base, including a significant reduction in administrative expenses compared to 2018 along with a refocused and reduced marketing investment strategy removing inefficient activity.”
He added: “The opportunity to create a leading sleep wellness brand remains undiminished and I am confident that eve’s rebuild strategy, centred around a differentiated brand positioning, expanded product range, lower friction customer experience, combined with increasing brand awareness sets out a clear path to building a profitable business, which delivers for shareholders.
“We will continue to examine ways of accelerating eve’s rebuild strategy and the move to profitability, through organic and inorganic growth.”