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 cut its financial forecasts for the year on Monday and announced a number of cost-cutting efforts as the sustainable shoemaker posted a wider quarterly loss compared with a year earlier.
The company cited a slowdown in consumer spending toward the end of June and said it has “drastically” slowed the pace of new corporate hires and backfills from departing employees. It said it has cut its global corporate workforce by 8%, or 23 people.
Chief Financial Officer Mike Bufano said the retailer expects any external headwinds weighing on U.S. consumer spending to persist into the back half of 2022. “As a result, we continue to take a cautious outlook,” he said in a communicated
Allbirds shares fell more than 13% in after-hours trading on the news. Shares had fallen more than 60% year-to-date, as of Monday’s market close, bringing Allbirds’ market capitalization to about $842 million.
That’s how Allbirds are did in its second fiscal quarter compared to what analysts anticipated, according to 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 months 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 before Excluding one-time items, it lost 12 cents a share, better than the 16-cent loss analysts were looking for.
Revenue grew 15% to $78.2 million compared to $67.9 million a year earlier. That beat sales estimates of $77.8 million.
Allbirds reported both an increase in order numbers and average order value, which it said was partly due to price increases amid inflation. The company is best known for its wool loafers, but it also got into the apparel business during the pandemic and has been releasing a variety of shoes, including for running.
U.S. sales grew 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.
In recent weeks, retailers from Walmart to Gap have cut their expectations for future sales and profits as the companies try to gauge how consumers are responding to the highest inflation in 40 years. Businesses say lower-income households have been particularly hard-pressed by the higher prices and have begun to adjust their budgets for discretionary items, including clothing.
For the year, Allbirds is now calling for adjusted net income of $305 million to $315 million. It previously forecast net income of $335 million to $345 million.
It sees adjusted gross profit in the range of $150 million to $157.5 million, compared to previous guidance for gross profit of $170 million to $177.5 million.
And it expects an adjusted EBITDA loss of $42.5 million to $37.5 million, compared with a previous forecast of a loss of $25 million to $21 million.
Along with the slower pace of hiring, Allbirds said it will look to reduce logistics costs in the U.S. by transitioning to automated distribution centers and a dedicated returns processor. The company also hopes to accelerate the scaling of its in-house manufacturing base to reduce product costs over time.
Bufano said the changes are expected to save the company $13 million to $15 million annually starting in 2023.
“We will reinvest some of these savings to build brand momentum through product innovation, marketing, retail stores and third-party brand 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 at Nordstrom department stores. The retailer has also been opening brick-and-mortar stores to reach more consumers, ending the second quarter with 46 locations worldwide.