Allbirds said it is entering the next phase of its transformation journey after it reported results in line with expectations for the second quarter.
The San Francisco-based footwear company reported that Q2 revenues dropped 26.8 percent to $51.6 million, in line with its guidance. Net loss was $19.1 million, or 12 cents per basic and diluted share, which was also in line with guidance. The results beat the expectations of analysts surveyed by Yahoo Finance, who were looking for a loss of 17 cents per share and $50.51 million in revenues.
Allbirds said the sales decline was driven by lower unit sales, which was partially offset by higher average selling prices, international distributor changes and retail store closures.
“We are pleased to report another quarter of operational and financial progress,” said Allbirds chief executive officer Joe Vernachio, who assumed the CEO role in March after co-founder and former CEO Joey Zwillinger stepped down. “After 18 months of strong execution against our strategic transformation plan, we are entering the next phase of our journey.”
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After several quarters of falling sales, Allbirds announced a business turnaround plan in March 2023 centered on revamping product, optimizing U.S. distribution and store profitability, re-evaluating its international strategy and improving cost savings. The brand, which was also challenged by an unsuccessful push into the activewear space, said it would refocus on core styles like the Wool Runner.
Since then, Allbirds has closed 14 retail stores, transitioned to a distributor model for its international business, cut goods and operating costs, decreased inventory and narrowed operating cash use. The next phase of the transition, Vernachio said, will focus on bolstering three key areas: product, storytelling and shopping experience. The executive added that the consumer response to new Allbirds product has been encouraging thus far.
“This makes us confident that our fresh, updated products coming to market beginning next year will build on that momentum,” he said. “We believe the combination of elevated product, storytelling and customer experience in the coming quarters will position the business to return to top line growth in 2025 and enable us to build long-term shareholder value.”
Allbirds reaffirmed its 2024 sales guidance, which projects net revenues of between $190 million to $210 million, with U.S. net revenues of between $150 million to $165 million. The company raised its gross margin projection and now expects it to be between 43 percent to 46 percent. Allbirds tightened its adjusted EBITDA loss range and expects a loss of between $75 million and $63 million.
Q3 revenues are expected to be between $40 million to $43 million, with adjusted EBITDA loss of between $19 million and $16 million.
