Retail

Fresh blow for Neil Woodford as mattress maker reports losses


Neil Woodford was dealt another blow when a mattress maker the fallen star fund manager backs warned of trading for the second time this year and scrapped merger talks with a rival.

Eve Sleep, in which Woodford’s fund holds a 31% stake, said business was worse than expected because of low consumer confidence and competitors slashing prices. The company also said it had ended discussions with Simba, another mattress maker, about a joint venture.

Revenue this year will be in the range of £25m-£27m, Eve said. Investors were expecting annual revenue of about £34m before the company posted a profit warning in July without giving a revised figure at the time.

Eve said: “Overall trading has been more challenging than previously anticipated owing to the uncertain economic outlook and continuing low levels of consumer confidence. The board of Eve has decided that now is not the right time to pursue the potential merger and that it is more appropriate to focus on the eve rebuild plan.”

The AIM-traded company’s shares, valued at £13 less than two years ago, fell 33% to 3.3p, bringing the company’s value to £8.2m.

Eve, founded in 2014, and Simba are part of a new wave of mattress companies that let customers shop online for a bed in a box – the mattress is squashed flat for delivery – often for a lot less than those on sale in traditional showrooms.

For a while the companies thrived as established bed retailers such as Feather & Black and Warren Evans went bust. But uncertainty around Brexit and a slowing economy have depressed sales, triggering a war for mattress buyers as other brands cut prices and pumped up marketing spending.

Despite reported losses, Eve’s rapid sales growth caught the eye of Woodford when he was Britain’s most celebrated stock-picker. Woodford backed the company before its 2017 flotation, which valued it at £140m.

Eve’s lack of success will be a disappointment forWoodford, whose flagship investment fund is frozen to withdrawals until December. He is trying to wash his hands of bets on small listed companies and private businesses in favour of shares in big publicly traded companies.

Woodford’s failed investments include Provident Financial, the doorstep lender that came close to collapse in 2017; Purplebricks, the online estate agent whose shares have halved in the past year; and Eddie Stobart, the logistics company whose shares are suspended while it investigates an overstatement of profit.

Purplebricks said on Friday that Woodford had cut his stake in the company from 19.25% to 17.64% – down from 29% in June. The company, which Woodford argued would shake up the market for property sales by cutting out traditional estate agents, ousted its founder and chief executive Michael Bruce in May and admitted it had expanded too quickly.



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