Allbirds, Inc. CEO Joe Vernachio stepped into the company’s leadership role a year ago with a mission to rebuild the company for future growth and profitability.

“Over the past year, we’ve made real progress, strengthening our operating model, bringing together a team of experienced, talented and motivated people, and, most importantly, reigniting our product and marketing engine,” Vernachio told analysts during the company’s Q4 earnings conference call.

“We believe this puts us on a path to reclaim our place in the market while also strengthening our foundation for long-term success. With our new assortments starting to hit the market this fall, we expect to return to top-line growth for the fourth quarter of 2025,” continued Vernachio.

The CEO ticked off several highlights and progress made during the year.

  • “First, we laid the groundwork to strengthen our gross margin profile through two major initiatives: reducing our cost of goods with strategic sourcing and product development and focusing on full-price selling, which is critical for the long-term health of our brand.
  • “Next, we streamlined our cost structure, reducing our SG&A by over $20 million in full year 2024. We also reduced our U.S. store footprint, closing 15 locations. Since the start of this year, we’ve closed another five and will continue to take a strategic approach to improve the productivity of our store portfolio.
  • “Finally, we successfully transitioned to a distributor model in all our targeted international regions while expanding into new markets. With this shift, our international business is now set up for profitable, scalable growth.”

Vernachio said Allbirds wrapped up 2024 with another quarter of strong execution in Q4, saying that fourth-quarter results came in as expected on the top- and bottom-line.

“During this period, we took a focused approach by limiting new product introductions, making sure that our select launches aligned with our long-term strategy,” he continued. “As planned, we scaled back year-over-year marketing spend in Q4, prioritizing investment in lower-funnel tactics while setting the stage for top-of-funnel brand marketing in 2025.”

On the promotional side, Vernachio said the company stayed competitive during the holiday season, driving strong conversion on key days while reducing overall promotion days by nearly 20 percent compared to last year.

“Most importantly, we maintained financial discipline, putting us on a strong position heading into 2025 with the flexibility we need to execute our plans,” Vernachio said.

Fourth Quarter Summary
Net revenue for the fourth quarter decreased 22.4 percent to $55.9 million, at the mid-point of the company’s prior guidance. Allbirds said it reduced the number of days on promotion versus a year ago while remaining competitive during the holiday season. The Q4 sales decline was said to reflect international distributor transitions and retail store closures.

The full-year impact of these actions was just over $22 million.

Gross margin was 31.3 percent of net revenue in the fourth quarter, down 670 basis points from Q4 2023. Company CFO Annie Mitchell said the decline is traceable to several factors, most of which had an outsized margin impact due to the smaller sales base in the fourth quarter.

“The first impact is coming from inventory adjustments, which were isolated to Q4,” she began. “Next, although we lowered our year-over-year promotional levels, conversion on sale days was stronger than we anticipated. Third, we incurred incremental air freight. Lastly, we had our highest mix of international distributor sales to date. As a reminder, these sales carry a lower gross margin; however, they have a higher flow through to the bottom line.”

On the expenses line, Mitchell said the Allbirds teams did an “exceptional job” controlling costs throughout the year. Fourth quarter SG&A dollars, excluding stock-based compensation and depreciation and amortization, totaled $24 million, down 24 percent versus a year ago, driven by lower occupancy costs and personnel expenses.

“We closed one additional store in Q4, bringing the total number of U.S. closures to 15 in 2024,” she shared. “Subsequent to quarter-end, we closed another five retail doors. We are pleased with our progress on this front and will continue to opportunistically evaluate our fleet going forward.”

Fourth quarter marketing expenses totaled $12 million, or 22 percent of net revenue. “As planned, this was down 17 percent on a dollar basis compared to the prior year and reflects our strategic decision to hold back top-of-funnel spend until the first quarter of 2025. More on this shortly when I discuss our financial guidance,” Mitchell said.

Fourth quarter net loss was $25.7 million, or $3.23 per basic and diluted share.

Fourth quarter adjusted EBITDA was reported better than expectations, coming in approximately flat to last year at a loss of $19.2 million.

Balance Sheet and Cash Flow
The company said it remains in solid financial condition with cash and cash equivalents of $67 million and no outstanding borrowings under its $50 million revolver.

Allbirds, Inc. ended the year with inventory totaling $44.1 million down 24 percent versus a year ago, and allowed the company to enter 2025 with healthy overall levels.

Fourth quarter operating cash use of $11 million was approximately flat on a sequential basis.

“Given our inventory and cash balances, we are well positioned to execute against our plans. We expect improvement in operating cash use in 2025,” the CFO shared.

“From a working capital perspective, I would point out that consistent with prior years, we anticipate that Q1 will be our seasonal peak,” Mitchell noted. “That reflects the combination of normal course payables in our smallest sales quarter, as well as our strategic decision to invest in upper-funnel marketing ahead of our second-half product launches.”

Outlook
For full-year 2025, Allbirds expects the following:

  • Net revenue of $175 million to $195 million, which includes approximately $18 million to $23 million of negative impact associated with distributor transitions and store closures. Stripping out the impact of those structural changes, net sales are expected to grow approximately 10 percent at the mid-point versus 2024. Allbirds anticipates the impact will be spread roughly evenly across Q1 to Q3, with slightly less impact in Q4;
  • U.S. net revenue of $145 million to $160 million, and international net revenue of $30 million to $35 million; and
  • Adjusted EBITDA loss in the range of $65 million to $55 million.

For the first quarter, Allbirds expects:

  • Net revenue of $28 million to $33 million;
  • U.S. net revenue of $22 million to $25 million and International net revenue of $6 million to $8 million; and
  • Adjusted EBITDA loss of $28 million to $25 million.

Image courtesy Allbirds, Inc.