London-listed Eve Sleep (AIM:EVE) told investors that it had broken even for the first time during the fourth quarter of 2019, remaining on track to cut losses.
The UK-based mattress business said it had made progress in 2019 to rebuild its strategy aimed at long-term profitability and cash generation over short-term growth despite falling revenues.
Interim results in September 2018 revealed that the group would implement a cost savings plan to refocus Eve’s online position on the core markets of UK, Ireland and France.
This morning's statement showed that revenues in core markets had fallen from £29.3m in 2018 to £23.8m, whilst EBITDA losses for the full year were slashed to about £10.8m from £19.2m in the comparative 2018 period.
The company recorded a 51% full year cash burn reduction to £10.3m from £20.9m in 2018 with total net funds of £8.1m at 31 December 2019.
The company revealed that its total net funds consisted of £7.8m net cash as well as £0.25m of Channel 4 advertising credits.
Shares in Eve Sleep reacted positively and were trading 20.51% at 2.35p on Tuesday afternoon.
Overall, these ‘significant’ cost reductions in Q4 of 2019 were an improvement from those in Q1-Q3 2019 and the group considers its Q4 performance as indicative of its 2020 prospects.
The retailer said a shift towards ‘more efficient’ marketing and ‘higher quality’ traffic as well as a more streamlined cost base had resulted in slashing company losses.
House broker finnCap reiterated Eve’s strategy as part of a longer-term transformation to differentiate its brand position within the growing “sleep wellness” market.
The broker also noted that Eve’s rebuild strategy was ‘a work-in-progress’ but that it anticipates that its efforts will be well received by investors.
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