Sustainable footwear and clothing brand Allbirds has posted wider third-quarter losses and warned of “choppy” trading conditions in the run-up to Christmas. The company said net losses increased to $25.2 million from $13.8 million a year ago, and net loss margin increased to 35 percent from 22 percent. Operating losses widened to $25.5 million from $11.8 million. There was a 15.9 percent increase in net sales to $72.7 million, boosted by larger order numbers in retail store sales.
Gross profit fell to $32.5 million compared to $33.9 million. Gross margin declined to 44.8 percent compared to 54.1 percent, reflecting restructure and logistics costs and the impact of foreign exchange headwinds.
Inventory rose 3 percent to $127 million, including around $5 million of end-of-life products that Allbirds is continuing to liquidate as part of its “simplification” strategy unveiled last quarter to cut U.S. logistics costs by moving to automated distribution centers and opening a dedicated returns depot.
“So far in the quarter, consumer spending habits and traffic have been notably choppy, especially in the U.S. Our read is that the impact of high inflation and recession fears are creating more cautious behavior, and we believe consumers will buy closer to need as they wait for promotions this holiday season,” said CFO Mike Bufano. Co-CEO Joey Zwillinger added that worsening forex headwinds and extended Covid lockdowns in China were also impacting the outlook. He forecast the fourth quarter would be hit by inflation and high levels of promotional activity, which will impact its U.S. business, along with a weaker consumer backdrop in Europe and worsening forex rates. Zwillinger said international revenues grew nearly 11 percent and reiterated Allbirds’ focus on the U.K., Germany, Canada, Japan and China. He said the company was experiencing strong momentum in the U.K., where it opened its Selfridges store, despite the overall environment being challenged in Europe.
For the nine months to September 30, the net loss was $76.5 million compared to $34.9 million, and the net loss margin was 35.8 percent compared to 19.4 percent.
Looking forward, Allbirds maintained guidance for the fourth quarter and full year of adjusted net revenue of $92 million to $102 million and adjusted Ebitda loss of $8.5 million to $3.5 million. Annual net revenue is expected to come in at $305 million to $315 million, representing growth of 10 to 14 percent and an adjusted Ebitda loss of $42.5 million to $37.5 million.
The company opened six stores in the quarter, bringing its total to 38 in the U.S.
