Bosses at mattress seller Eve Sleep are hunting for a new owner to take the company private, as it warned that it will miss revenue targets this year.
The business said it needs new funding to push into the “wider sleep wellness space”.
It is looking for a new owner, or a major new investor, the board said.
“Having delivered a third consecutive year of growth in revenues and marketing contribution in our core UK & Ireland business in 2021, and cognisant of current trading conditions, the board now wishes to accelerate Eve’s push into the wider sleep wellness space,” it said in a statement to shareholders on Monday.
“In order to deliver our objective of creating the first digital sleep wellness retailer, the board considers that Eve would benefit from additional investment.”
Bosses said they were in talks with a US investor that was interested – at least for a while – in making a bid to take the company private.
But discussions later lapsed, and the investor is no longer interested.
The board has now decided to launch a formal sale process, but warned that there might not be any good offers by the end.
If Eve Sleep finds a buyer it will mark the end of a torrid five years as a listed company.
When the business first started selling shares on the London Stock Exchange, they were worth a little over 100p each. But, after an initial boost, the bottom soon fell out for investors.
Today each share is worth less than 2p.
Eve said sales were down 15% in the UK and Ireland in the five months to the end of May compared with a year ago. In France sales were down 3% over the same period.
It said this was ahead of the wider industry, which has seen drops of 29% and 37% in the two markets.
The business said poor consumer confidence and high inflation will eat into its performance this year.
Shares dropped 9% after the announcement.
“Based on the first five months of trading, and its expectation that the cost-of-living crisis is set to continue for some time, the board does not now expect to meet its previous revenue expectations for the current year, with additional promotional activity also having an impact on gross margins,” Eve said.
Chief executive Cheryl Calverley said: “Eve has the opportunity to become the first digital sleep wellness retailer given our award-winning mattress ranges, strong brand and suite of wellness products, including our new CBD sub-brand ‘Well Slept’ in the on-trend and rapidly growing global sleep economy.
“However, in order to fully achieve this long-term potential, particularly in the face of weakening consumer confidence, there is a need for additional investment.
“Recent inbound investor interest has led the board to conclude that the optimum way to build shareholder value and realise the opportunity in sleep wellness is to launch a strategic review to secure either a new owner or a major strategic investment partner.”