A woman walks past an Allbirds store in the Georgetown neighborhood of Washington, DC, on Tuesday, February 16, 2021.
Al Drago | Bloomberg | Getty Images
Allbirds on Monday cut its financial forecast for the year and announced a number of cost-cutting efforts after the sustainable shoe maker reported a wider quarterly loss than a year ago.
The company cited a slowdown in consumer spending toward the end of June and said it has slowed “dramatically” the pace of new corporate hires and backfills for departing employees. It said it has cut its global corporate workforce by about 8%, or 23 people.
Chief Financial Officer Mike Bufano said the retailer anticipates that any external headwinds that will put pressure on consumer spending in the United States will continue into the back half of 2022. “As a result, we continue to take a cautious view ,” he said in a statement.
Allbirds shares fell more than 13% in after-hours trading on the news. Shares were down more than 60% year-to-date as of Monday’s market close, pushing Allbirds’ market cap to about $842 million.
Here’s how Allbirds did in the fiscal second quarter compared to what analysts were expecting, based on Refinitiv estimates:
- Loss per share: 12 cents adjusted vs. 16 cents expected
- Revenue: $78.2 million vs. $77.8 million expected
Allbirds reported a net loss in the three-month period ended June 30 of $29.4 million, or 20 cents a share, compared with a loss of $7.6 million, or 14 cents a share, a year earlier. Excluding one-time items, it lost 12 cents a share, better than the 16 cent loss analysts were looking for.
Revenue rose 15% to $78.2 million compared to $67.9 million a year ago. That beat estimates for sales of $77.8 million.
Allbirds reported an increase in order numbers and average order value, which it said was partly due to higher prices amid inflation. The company is best known for its woolen slip-ons, but it also entered the apparel business during the pandemic and has launched a variety of shoes, including for running.
Sales in the United States rose 21% from year-ago levels, while it said international revenue was flat due to ongoing Covid-related restrictions in China and the war in Ukraine.
Retailers from Walmart to Gap in recent weeks have cut their expectations for future sales and profits as businesses try to gauge how consumers are responding to 40-year high inflation. The companies say lower-income households are particularly under pressure from higher prices and are starting to tighten their budgets for discretionary items, including clothing.
For this year, Allbirds is now looking for adjusted net income of between $305 million and $315 million. It previously forecast net income of $335 million to $345 million.
It sees adjusted gross profit coming in between $150 million and $157.5 million, compared to previous guidance for gross profit of $170 million to $177.5 million.
And it is projecting an adjusted EBITDA loss of $42.5 million to $37.5 million, compared with an earlier forecast of a loss of $25 million to $21 million.
Along with the slower pace of hiring, Allbirds said it will aim to cut logistics costs in the United States by moving to automated distribution centers and a dedicated returns processor. The company also hopes to accelerate the scaling of its proprietary manufacturing base to lower product costs over time.
Bufano said the changes are expected to save the company $13 million to $15 million on an annual basis starting in 2023.
“We will reinvest some of these savings in building brand momentum through product innovation, marketing, retail stores and third-party partnerships,” he said.
Allbirds, which went public at a valuation of more than $4 billion last November, recently signed a deal to sell its products in Nordstrom stores. The retailer also opened brick-and-mortar stores to reach more consumers, ending the second quarter with 46 locations worldwide.
