Having already revealed plans to slow the pace of U.S. store openings and a movement to a distributor model in key international markets, Allbirds reported a Q1 net loss of $35,166,000 against a loss of $21,878,000 for the period ended March 31.
Operating expenses, which included more than $3.2 million in restructuring costs, rose by 9.3 percent to more than $57.4 million. Gross margin, hurt by lower average selling prices due to higher promotional activity, write-downs for prior generation product, and costs related to a sourcing transition to Vietnam, slid to 40.1 percent from 51.9 percent in the year-ago period. Period end inventory was down 6.3 percent year-over-year to $109.5 million.
First quarter revenues fell by 13.4 percent to $54,352,000 versus $62,763,000, but sales outside the U.S. rose by 6.5 percent in constant currency and were bolstered by strong momentum in Asia.
The company is aiming to generate $35 to $40 million in annualized cost savings, including $15 to $20 million in SG&A. The new factory partner in Vietnam is expected to deliver additional cost savings as 2023 progresses. And an already completed workforce reduction is forecast to provide $7 million in annualized savings in FY23.
On the store front, Allbirds currently has 40 full-price doors in the U.S. and three outlet locations. One store was opened in Q1 with plans for two more before the end of FY23. Internationally, the company is continuing to explore alternatives that include talks with potential distributor partners.
