A week after laying off 23 employees, Allbirds is implementing a company-wide cost-cutting plan.
Bay Area B Corp. posted second-quarter net revenues of $78.2 million, up 15.1%, on a net loss of $29.4 million. on monday.
in brief: Allbirds’ cost-saving measures, which the company calls a “simplification initiative,” will result in $13 million to $15 million in annual sales, general and administrative (SG&A) savings and “substantial” revenue cost savings from 2023 onwards. is expected to result in a reduction in future savings. The measures, which include laying off his 8% of the company’s global workforce, are designed to streamline the company’s operating structure and reduce carbon and supply chain costs.
Allbirds has dramatically slowed the pace of the company’s hiring of new employees and backfilling of departing employees to implement corporate rationalization, and has shrunk the company’s office space to reflect the new hybrid work environment. says that
B Corp also plans to reduce logistics costs within the United States by moving to automated fulfillment centers and dedicated returns processors. In addition, the company is taking steps to optimize inventory and accelerate the scaling of manufacturing sites to gradually reduce the carbon footprint and product costs of its products.
Allbirds Chief Financial Officer Mike Bufano said: “The more rapid expansion of our manufacturing network should begin to significantly reduce product costs by the second half of 2023. Collectively, these initiatives will help us achieve our medium-term target of 60% plus direct business and gross margins. We believe we are well on our way to achieving 2021 and 2022, compensating for some of the positions we lost due to Covid-related headwinds.
As part of these initiatives, Allbirds expects to incur one-time charges of $18 million to $24 million.
The adidas collaborators continue to expand their physical footprint, opening five stores in the U.S. and two more internationally during the quarter, bringing the total number of stores to 46 as of June 30. rice field. US store sales increased nearly 120% year-over-year during the quarter. In addition to wholesale partnerships with Nordstrom, Zalando and Public Lands, Allbirds products are now available at Midwest sporting goods chain Scheels.
Allbirds co-founder and co-CEO Joey Zwillinger says expanding third-party distribution is a “profitable” direct-channel marketing tool with increased sales and bottom-line profits in the medium term. says.
“In our view, Allbirds should pursue more partnerships to increase sales and increase brand awareness.” GlobalData Managing Director Neil Saunders wrote in a research note: “This cannot be achieved by building our own stores alone, as the expense of building a large network of stores is not justified by the revenue and involves a very large financial risk.”
Inventories totaled $122.3 million in the second quarter, up 14.4% from $106.8 million at the end of 2021 and up 3.2% compared to March 31, 2022. This is due to the impact of longer lead times due to ongoing supply chain disruptions and rising inbound transportation costs.
“This is good stock, mostly evergreen core footwear,” said Bufano. “In this dynamic demand environment, we will ramp up our core footwear purchases over the next few quarters, allowing us to calculate and buy new footwear styles. It is expected to lead to lower inventory levels and improved turns.”
Gross margin was 36.1%, down from 56.1% in the second quarter. Allbirds blamed his $11.6 million write-down on used apparel inventory, higher distribution center and logistics costs, a lower percentage of overseas sales, and unfavorable foreign exchange rates for his 20 percentage point decline. I believe there is. Mix shift to bricks-and-mortar stores and higher-margin products, and better pricing.
Excluding inventory write-downs, adjusted gross margin was 51%, compared to 56.1% in 2021.
Allbirds has significantly lowered its guidance from its historical outlook, lowering its previous revenue range of $335 million to $345 million to a new range of $305 million to $315 million, increasing its revenue from 10% to 14%. showed growth in the % range.
Once targeted for gross margins of $170 million to $177.5 million, with a midterm gross margin of 51.1%, the San Francisco-based company is now targeting gross margins of $150 million to $177.5 million. $57.5 million, with a midterm gross margin of 49.6%.
With expected adjusted EBITDA totaling initially of $25 million to -$21 million, Allbirds widened its loss band to $42.5 million to $37.5 million.
The company’s 6% carbon footprint reduction target for its top 10 products relative to its 2021 baseline remains unchanged.
Updated guidance “The deterioration in the external environment indicates that Allbirds is less than optimistic about its prospects,” Sanders said. “The slowdown means a number of factors, including lower consumer confidence in Europe, lower demand due to dramatic lockdowns in China, and unfavorable exchange rates, have meant growth has leveled off from international business. arose.It’s a pity, but it’s not perfect [unexpected] Considering Allbirds showed many of these issues during the last update. ”
Allbirds expects third quarter adjusted net revenues of $65 million to $70 million, representing growth of 4% to 12% compared to the third quarter of fiscal 2021. The footwear company projects an adjusted EBITDA loss of $17.5 million to $15.5 million.
The company ended the quarter with $207.3 million in cash and cash equivalents and $40 million available under a revolving credit agreement.
Net Income: Net revenue increased 15.1% to $78.2 million from $67.9 million in Q2 2021 and increased 55% compared to 2020.
US net revenues increased 21.3% to $59.3 million from $48.8 million a year ago.
International net revenues were $18.9 million, flat compared to $19.1 million in Q2 2021. This has been affected by external headwinds such as his Covid-19 restrictions in China, the crisis in Ukraine and unfavorable foreign exchange rates. There was an estimated negative impact of 945 bps.
Net income: Allbirds posted a net loss of $29.4 million, compared to a loss of $7.6 million in the second quarter of 2021.
Footwear sellers saw an adjusted net loss of $18.1 million. That equates to 12 cents a share, expanding from his $7.6 million adjusted loss a year ago.
Adjusted EBITDA for the second quarter of 2022 was a loss of $9.2 million, compared to a gain of $1.1 million for the quarter of 2021.
CEO’s view: “Apparel is about 10% of our business right now,” said Tim Brown, co-founder and co-CEO of Allbirds. Our focus relies heavily on footwear, and we’re very excited about our new material platform, our new lifestyle franchise, and the very exciting kind of things we’re offering in the next short period of time. But apparel really does play a role, and we know consumers want us to wear socks, underwear, classic t-shirts, and anything else that expresses supernatural comfort. And part of the strategy is to focus on that, shifting the first-generation apparel lineup from less than half evergreen to mostly evergreen.”