Allbirds Posts Revenue Beat as Leadership Touts Transformation Plan
Revenues, while down, exceeded Allbirds' projections from the prior quarter.
Allbirds unveiled better-than-expected results on Tuesday while it continues to focus on transforming its business.
In the second quarter, the San Francisco-based footwear company said decreases in average selling prices, foreign exchange headwinds and a highly promotional environment were to blame for a sales decline during the period. Compared to the prior year, revenues dropped 9.8 percent to $70.5 million in Q2. Allbirds posted a net loss of $28.9 million, or 19 cents per basic and diluted share.
Allbirds has had trouble replicating the success of other emerging footwear brands, like On and Hoka. Its sustainability messaging, a central component of its brand identity, has failed to garner persisting strong demand among consumers, one analyst posited earlier this year.
Q2 revenues, while down, exceeded Allbirds’ projections from the prior quarter, when it expected net revenue between $64 million and $69 million in Q2. Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was a loss of $18.3 million, also ahead of Allbirds’ projections.
The news sent Allbirds shares rising slightly after the bell.
Inventories in the quarter were $92.8 million, a decrease of 24 percent compared with the prior year and the lowest level since Q2 of 2021.
Allbirds co-founder and CEO Joey Zwillinger said in a statement that the company’s Q2 results represented “solid progress” in the brand’s transformation plan, meant to jumpstart growth and improve capital efficiency and profitability.
The brand’s restructuring costs in the first half of 2023, including professional fees and severance payments, represented $4.3 million, or 3.4 percent, of net revenue.
“Most notably, we gained traction across key benchmarks, including reducing inventory levels, lowering operating cash use and exercising cost control,” Zwillinger said. “Our teams are laser focused on the four key pillars under our plan.”
Announced in March, Allbirds’ strategic plan centers on reigniting the product line, transitioning the footwear production to a new partner in Vietnam, moving toward a distributorship model in international markets and halting the brand’s retail rollout.
After Q2 closed, Allbirds signed non-binding letters of intent with distributor partners in Canada and South Korea. These deals are expected to close in the second half of the year.
Looking ahead, Allbirds expects net revenue of between $56 million and $61 million in Q3, which would represent a year-over-year decrease of between 23 percent and 16 percent. Adjusted EBITDA loss is expected to be between $23 million and $20 million. Allbirds did not immediately provide guidance for the full year.