Allbirds, Inc. posted a loss in the first quarter as sales skidded 27.6 percent; however, the manufacturer of eco-footwear reported revenues were in line and adjusted earnings above guidance and cited progress with its restructuring efforts. Allbirds reiterated its outlook for 2024.

First Quarter 2024 Overview

  • First quarter net revenue decreased 27.6 percent to $39.3 million versus a year ago, within the company’s guidance range.
  • First quarter gross margin improved 680 basis points to 46.9 percent versus a year ago.
  • First quarter net loss of $27.3 million, or $0.18 per basic and diluted share.
  • First quarter adjusted EBITDA loss of $20.9 million, above the company’s guidance range.
  • Inventory at quarter end of $60.6 million, representing a decrease of 45 percent versus a year ago.
  • As of March 31, 2024, the company had $102.1 million of cash and cash equivalents and no outstanding borrowings under its $50.0 million revolving credit facility.
  • Entered into distributor agreements for two new regions, the Gulf Countries and Southeast Asia.

“We are pleased to begin the year with solid progress under our strategic transformation plan,” said Joe Vernachio, chief executive officer. “The operational and financial rigor we’ve developed, and strong execution by our teams, enabled us to meet or exceed expectations on our key metrics.”

Vernachio added, “We are focusing on bringing a fresh, updated product offering to consumers, supported by effective storytelling. Our recent launches, including the Wool Runner 2 and Tree Runner Go, have met with strong consumer response, reaffirming our conviction that Allbirds is a beloved brand. Looking further ahead, as we continue to drive improvement in our cost structure and underlying operating model, we believe the business is on the right path to achieve long-term profitable growth and deliver shareholder value.”

First Quarter Operating Results
In the first quarter 2024, net revenue decreased 27.6 percent to $39.3 million compared to $54.4 million in the first quarter of 2023. The year-over-year decrease is primarily attributable to lower overall demand, as well as the impact of international distributor transitions and retail store closures.

Gross profit totaled $18.5 million compared to $21.8 million in the first quarter of 2023, and gross margin improved 680 basis points to 46.9 percent compared to 40.1 percent in the first quarter of 2023. The decline in gross profit is primarily due to a decrease in units sold, and the improvement in gross margin is primarily due to lower freight and product costs per unit, and a decrease in inventory write-downs resulting from a healthier inventory composition versus a year ago.

Selling, general, and administrative expense (SG&A) was $39.7 million, or 101.0 percent of net revenue, compared to $42.8 million, or 78.7 percent of net revenue in the first quarter of 2023. The decrease is primarily attributable to decreases in stock-based compensation, personnel expenses, and occupancy costs.

Marketing expense totaled $7.8 million, or 19.7 percent of net revenue, compared to $11.5 million, or 21.1 percent of net revenue, in the first quarter of 2023, driven by decreased digital advertising spend.

Restructuring expense totaled $0.8 million, or 2.0 percent of net revenue compared to $3.3 million, or 6.0 percent of net revenue, in the first quarter of 2023, primarily as a result of reduced expenses associated with execution of the strategic transformation plan announced in March 2023.

In the first quarter of 2024, net loss was $27.3 million compared to $35.2 million in the first quarter of 2023, and net loss margin was 69.5 percent compared to 64.7 percent in the first quarter of 2023.

In the first quarter of 2024, adjusted EBITDA was a loss of $20.9 million, a 3.6 percent improvement compared to a loss of $21.7 million in the first quarter of 2023, and adjusted EBITDA margin declined to (53.1) percent compared to (39.8) percent in the first quarter of 2023.

Strategic Transformation
In Q1 2024, Allbirds delivered a fifth consecutive quarter of operational and financial progress under its strategic transformation plan:

  • Reignite product and brand: Executing an icon-focused brand strategy to drive resonance with the consumer through fresh, innovative products, as well as more impactful storytelling and marketing.
  • Optimize U.S. distribution and retail store profitability: Closing certain underperforming Allbirds stores, driving traffic and conversion within its U.S. store portfolio and creating a balanced U.S. marketplace. In Q1, the company closed three U.S. retail stores and remains on track with its previously communicated plan to close 10-15 U.S. locations in 2024.
  • Evaluate transition of international go-to-market strategy: Transitioning to a distributor model in certain international markets to grow those regions in a cost- and capital-efficient manner. The company has completed the transition to a distributor model in Canada and South Korea, and remains on track to complete its previously announced transition to a distributor model in Australasia and Japan mid-year. During Q1, Allbirds signed definitive agreements with distributors in two new regions, the Gulf Countries and Southeast Asia.
  • Improve cost savings and capital efficiency: Tracking to achieve the cost of goods savings and SG&A savings previously outlined for 2025 and optimizing cash.

Balance Sheet Highlights
Allbirds ended the quarter with $102.1 million of cash and cash equivalents and no outstanding borrowings under its $50 million revolving credit facility. Inventories totaled $60.6 million, a decrease of 45 percent versus a year ago, reflecting fewer units of on hand inventory and a healthier overall composition.

2024 Financial Outlook
The company reiterated its full year 2024 guidance as follows:

  • Net revenue of $190 million to $210 million
  • U.S. net revenue of $150 million to $165 million, including a $7 million to $9 million impact resulting from anticipated store closures
  • International net revenue of $40 million to $45 million, including $25 million to $28 million of impact resulting from anticipated transitions to a distributor model in certain international markets
  • Gross margin of 42 percent to 45 percent
  • Adjusted EBITDA loss of $78 million to $63 million.

Allbirds reported the following guidance for the second quarter of 2024:

  • Net revenue of $48 million to $53 million
  • U.S. net revenue of $35 million to $37 million
  • International net revenue of $13 million to $16 million
  • Adjusted EBITDA loss of $20 million to $17 million

Image courtesy Allbirds