Following Eve Sleep’s downfall and acquisition by Bensons for Beds, former chief executive Cheryl Calverley gave Retail Week her take on what went wrong
Direct-to-consumer specialist mattress retailer Eve Sleep tumbled into administration last month after its quest to secure a buyer proved fruitless. Eve was bought out by Alteri-backed Bensons for Beds for just £600,000.
Like some peer companies such as fellow embattled ecommerce brand Made.com, Eve Sleep fell from grace as demand for home goods dropped off a cliff earlier this year amid the war in Ukraine and the cost-of-living crisis.
Former boss Cheryl Calverley told Retail Week that in the end, the retailer was just too small to survive as a public company.
“If I could wind the clock back, there are a couple of decisions I would have made differently,” she said.
“I would have taken the business private because it’s too small a business to be a public company.
“Public company costs are about half a million pounds, so if we had taken the business private maybe three years earlier, that would have been a million and a half saved, and the business would be solvent. That’s all we would have needed.”
“I would have taken the business private, because it’s too small a business to be a public company”
Eve Sleep floated on AIM in 2017 with a valuation of £140m and was eyeing a breakeven year in 2022 before the turn in the homewares boom.
“We had a whole journey all set to go as we came into 2022,” Calverley maintained
“Externally to the City, we put out 10% growth and a loss of £1.8m, but internally, we had a target of what we called ‘32 and zero’ – so 32% growth and breakeven for the year, which would put us at exit of the year on £4.5m cash, which would have been great, very high growth.
“The intention was to go for funding in the back half of the year, on the back of really strong performance, but pretty much as soon as Putin entered Ukraine, people just stopped buying high-priced products.”
In January and February 2022, off the back of the homewares boom, Eve Sleep plugged funding into hiring and marketing – which ultimately depleted its cash in the longer term.
“Marketing costs were going through the roof. The cost of doing business is inflating. Our supplier costs were going up and up, and then demand disappeared so we had this horrible squeeze,” Calverley explained.
“Our supplier costs were going up and up, and then demand disappeared”
“After six weeks of really poor numbers and everything going in the wrong direction, we sort of scrambled the jets, and we spent the next three or four months desperately trying to reshape the business, cutting all the costs, resourcing all of our product, changing all of our marketing strategy, really pulling back.”
Calverley pointed out that Eve Sleep had a number of parties interested in the business from January onwards, including private equity firms and “wealthy individuals”, but would not be drawn on names.
When no formal offers came through, Calverley said “it slowly dawned on us that they’re all just waiting for administration”.
When asked whether Bensons for Beds is the right fit for Eve Sleep, Calverley was positive.
“They’re a fabulous buyer. The business will survive and the business will be amazing.
“Eve needed to connect with a trade buyer, someone who could add it on to their own business without any overhead. Without overhead, the business is very profitable – it’s good £2m-£3m profit, so what Bensons can do, and do brilliantly, is they can just plug it straight into their own business with no incremental overhead costs, which will make it immediately cash generative for them.
“And I’ve every confidence that they will use that cash to reinvest back in the brand, and make sure the brand is bigger and stronger.”
Now it’s over to Bensons to put the spring back in Eve Sleep.
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