Eve Sleep PLC (LON:EVE) had a restless second half but while revenues continued to fall, the mattress maker said it been successful in cutting costs and underlying losses.
The AIM-listed company said it made “significant” cost reductions in the fourth quarter such that it has broken even at the operating level for the first time, with a positive margin contribution after all direct and marketing costs but before overheads.
READ: Eve tries to wake up sluggish revenues with high-energy "rebuild" plan
“Management considers that its trading in the last four months of the year is more indicative of its prospects for 2020,” Eve said in its year-end statement.
Revenues in core markets fell 19% to £23.8mln, with an underlying (EBITDA) loss of roughly £10.8mln that will be a 43% improvement on the £19.2mln loss seen the year before.
Management said full-year cash burn had been slashed 51% and overheads for the year have reduced by 27% with further run-rate savings in the fourth quarter.
This left net cash of £7.8mln at 31 December, with the company also having £0.25m of advertising credits with Channel 4.
“We are delivering on our priorities of reducing losses and stemming cash burn as we prioritise profitability over sales growth at any cost,” said chief executive James Sturrock.
“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.”
Eve shares, which had fallen more than 98% from above 125p in early 2018 to below 1.6p earlier this month, were up 12% to 2.2p on Tuesday morning.
"Despite another intensely competitive half year for the industry, today’s FY19 pre-close trading update demonstrates that EVE has continued to sequentially stabilise its results and to substantially reduce its cash burn, reflecting the early benefits of strategic, operational and structural changes implemented as part of EVE’s longer-term transformation to be a differentiated (“sleep wellness” positioning in the marketplace) and sustainably profitable premium brand within the growing category of mattresses and related sleep products," said a breathless house broker FinnCap.
"In short, whilst EVE’s rebuild strategy remains very much a work-in-progress, we believe this ‘steady-as-she goes’ progress should be well received by investors."
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