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Eve Sleep shares plummet as CEO departs following "strategic missteps"

The mattress maker said that despite trading outperforming the broader market, sales had fallen short of expectations
Eve mattress
Eve added that UK profitability would be delayed from the fourth quarter of 2018

Eve Sleep Plc (LON:EVE) saw its shares plummet in early trading Monday as it got rid of its chief executive officer following a series of "strategic missteps" by its management which saw sales fall below expectations.

The AIM-listed mattress maker said that despite trading outperforming the broader market, sales had fallen short of expectations with trading patterns experiencing greater volatility than originally expected.

READ: eve Sleep reports strong revenue, margin growth on quicker than expected retail roll-out, European expansion

The firm added that its management had made some “strategic missteps” by underestimating what was required to develop a meaningful footprint across continental Europe and losing focus on creating an “aspirational sleep brand” in its core markets.

As a result, eve said its chief executive officer, Jas Bagniewski, would step down with immediate effect, with chief financial officer Abid Ismail assuming responsibilities in the interim.

The group also said that due to volatile trading patterns and upcoming growth initiatives, the revenue shortfall in the first half was not expected to be recovered in the second half as non-core markets continued to drag on growth.

Eve said with this in mind UK profitability would be delayed from the fourth quarter of 2018, although the impact on earnings would be partially offset by cost savings.

In the same announcement, the group also said it had entered into a new partnership with Dreams, a UK bed retailer, which would see its eve mattress sold through Dreams’ stores and website.

Paul Pindar, chairman of eve Sleep, said: "We have fallen short of our own and the market's high expectations and as a result have taken the tough decision to make management change. Jas has, as one of the founders, been a driving force for this business and has much to be proud of…In tandem with the search for a new CEO we will with immediate effect be refocusing all of our efforts on strengthening the eve brand in our core markets.

He added: “While we do not anticipate a near term improvement in the external environment, we have a healthy net cash position, our trading continues to far outstrip that of the market and should be underpinned by Company growth initiatives including the Dreams partnership that we expect to benefit the traditionally stronger second half”.

Eve Sleep shares were down 64.4% at 24.5p.

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