Eve Sleep: does it live up to the hype?

9th Jan '18 by Andrew L

12 comments 4841 reads

This is not a detailed discussion of Eve Sleep's investment case. I just wanted to share my mattress buying experiences and the relevance to Eve. Eve Sleep is capitalized at £175m and generated first half revenue in 2017 of £11.5m. This is a growth story with revenue in the first 11 months of 2017 up 130% on a year ago. The group had net cash of £37.2m at June 2017 and made a statutory loss of £9.1m in the first half of 2017. Neil Woodford is a major investor in Eve I believe.

Eve Sleep is one of the online mattress companies selling foam mattresses (without springs) and which typically have memory foam. They can be delivered rolled up in a box which helps to lower costs versus normal spring mattress delivery. These types of mattresses are different to spring mattresses in that you tend to fall deeply into them if you put pressure on only one area. There are a host of companies such as Simba, Casper etc. Made.com has also launched its own version called The One. The online only companies offer very generous trial and free return periods to entice customers.

I am a bit sceptical of this whole area as it appears to be a classic case of growth without profitability. It will remain fiercely competitive with very high marketing costs. Eve Sleep has made much of getting into a German department store. However, Simba is in John Lewis and I am not sure this is a game changer. I went up and down Tottenham Court Road over a few days and popped into John Lewis three times to speak to sales people and try the mattresses. Not one of the John Lewis people tried to sell me the Simba mattress and they seemed sceptical about it. The overall mattress buying experience is painful!!!!!!!

I didn't find the foam mattresses revolutionary in any form really. They have disadvantages with memory foam overheating in summer. The reviews for these products seem to be manipulated. Department store retailers I spoke to were very sceptical of the hype. One store noted that a lot of their customers came from Eve (i.e. people who had returned the Eve mattress).

I can see why people want a new way of doing things. The mattress industry appears to be full of pushy sales people.…

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Tortoise investor

9th Jan '18

One of the issues is there is strong competition. See a previous post I wrote: https://www.stockopedia.com/content/ipo-alert-eve-sleep-185583/?comment=8#8

Damian Cannon

I bought an Eve mattress a year or so ago while our loft was being converted and we had to relocate our bedroom. The ordering and delivery process was excellent and I found the mattress to be fine (although it did smell a bit when first unwrapped). However my wife absolutely hated it and so we returned it after a couple of months (and it had served its purpose). This bit of the process was also very easy.

In the end, after much looking around, we splashed out on a Vispring and - wow - it's possibly the best mattress that I've ever slept on. It's just like being in a nice hotel. Also my wife absolutely loves it so that's a plus!

Damian

Andrew L

Thanks Paraic84 - I completely missed that as I just looked at previous discussion posts mentioning Eve and that didn't come up. I guess it was posted before the IPO so couldn't link to Eve's shares. If there was a way for Stockopedia to put it in the discussion posts for Eve that would be useful. Otherwise people will miss pre-IPO research.

Damian, Thanks for that. Your experience underlines the point that the Eve type mattresses are not a universal panacea. Many people I think do hate them and I am one of them. I have no doubt that the company is efficient and markets itself well. The return policy is very generous too. However, to afford the return policy the mattresses aren't really very cheap.

I think Eve and the other mattress in a box companies are a good innovation and will suit some people. They do make mattress buying easy and without the worry of buying a bad mattress as you can simply return it after 100 days or so.

The marketing hype is completely over the top for some of these companies though i.e. the world's best mattress. I should probably have tried out the Eve mattress myself but it didn't seem worth the hassle. I am not sure that there is really one mattress for everyone. However, I could have been taken in by the patter of the mattress salespeople.

Good luck to Eve but the investment case doesn't really stack up to me. Paul I think also pointed out that as a 10-year purchase (the time between buying mattresses) there isn't really any recurrent revenue. So they constantly have to market to get new customers.

JohnEustace

Ikea have some Which Best Buy mattresses at much more competitive prices. They sell them rolled up to take away if you have a big enough vehicle and they offer a 90 day trial. These days they stock UK mattress sizes as well as continental.
It’s between them and John Lewis for me. I can’t really see that there’s a huge need for the “online disrupters”.

Mike Rawson

I switched from an Ikea mattress to Eve exactly a year ago, and there is no comparison. We are sleeping better than we ever have before, including through the summer.

I don't think their mattresses are a bargain, but I would argue that the demographic on Stockopedia is not the one that they are targeting. Whether they can expand beyond urban hipsters (like me!) to the provincial family market is another question.

I don't hold the stock, though since Xmas I wish I had bought it.

Mike, The quality of Ikea products does seem to be mixed. I bought some blinds from them which were pretty bad. I think there is that market for Eve and it is the younger demographic. However, it is also only people who are able to sleep in a fully foam mattress that will opt for Eve. It is definitely a different feel to a normal spring mattress. I should of tried the Eve mattress to get a good insight. However, the sales at traditional retailers were going to end in January so I didn't have time. There are some good reviews for Eve out there. Not sure why they went for yellow as a colour as that is pretty awful looking. The reviews essentially say that the Eve mattress offers the best of both worlds. so maybe it lives up to some of the hype.

https://sleepopolis.co.uk/mattress-reviews/eve-mattress-review/

Logic

I suppose to some extent it may vary depending on your preferences.

I found that mid-range IKEA bedframes and mattresses great, but some of the "fancier looking" beds in flats I have rented have been awful (and sometimes not). When staying with friends we actually ended up on the exact same IKEA bedframe and mattress, and my other half did comment that she wished more landlords would use them.. We since acquired a mattress topper to make our current flat's mattress a bit more bearable, and it has worked a charm. I should clarify that this is all according to my other half, I could sleep on a pile of rocks and during an earthquake and would probably report having slept comfortably without waking.

A friend ended up travelling a lot through work and was always put up in 5 star hotels by his employer, and became so accustomed to them that he ended up spending several thousand pounds getting a bed from the same manufacturers who provide them to those hotel chains. Affordable for some, apparently.

Eve, Simba, etc may be better able to convince people to replace their current mattresses (through advertising), but if you are furnishing a home and already going to IKEA, john lewish, etc I think it is a different matter.

Lloyd Garvey

I also now have an Eve mattress. Like you I found shopping for mattresses a pain. In the end we thought that with their 100 day free return we would give it a whirl.
Ordering was easy, and came exactly as promised.
So far great. Mattress is firm and supportive, and my partner who is always cold, likes the extra warmth (we will see in the summer)

On a side note isn't Neil Woodford an investor in Eve?

10th Jan '18

Thanks for the feedback. I think it is easy to think of companies in your own shoes. I can go down Tottenham Court Road and visit one of the country's largest John Lewis stores easily. However, many people will live in suburbia and the same thing would be a pain. Getting an Eve mattress may be a godsend to them. I would love it if the Eve mattress was the world's best mattress and suited to everyone. I remain somewhat sceptical though. If I had the time I would of done the 100 day trial. As demographics shift more people may move to the foam mattresses.

Maybe the mattress industry needs to be disrupted a bit? I have an old fashioned idea of a mattress as a bouncy thing with springs that you can have pillow fights on with children. You can't really do that with all foam mattresses as you just sink into them. I also tend to overheat when sleeping so maybe foam mattresses aren't for me.

Fegger

I shopped for a mattress last year and went to Warren Evans. I felt it was a better process to be able to try a selection on the spot and order to be delivered. Also I could have ordered frames etc if I had wanted. I think a lot of people would distrust foam due to possible overheating issues. I certainly didnt choose to buy a foam mattress.

I think this is a competitive market and Eve doesnt have that compelling USP to make it a winner. I would not invest.

2nd Jul '18

Turns out it doesn't live up to the hype! Too much competition. Share price off about 60% today. Shows what happens when a highly rated growth share goes wrong. The mattress sector is not necessarily open for disruption. Many people want to try the mattress out in a shop.

Eve Sleep: does it live up to the hype?

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Andrew L

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