Allbirds reported a net loss of nearly $29.4 million against a loss of $7.6 million for the second quarter ended June 30. The operating loss was $29.3 million versus a loss of $4.17 million. Total revenues increased 15 percent (18% currency-neutral) to $78.2 million from $67.9 million, with U.S. revenues up by 21 percent to $59.3 million year-over-year and relatively flat revenues outside the home market. The company, which has launched its third performance running shoe in the Tree Flyer, now generates an estimated 24 percent of net revenues from performance footwear. Period end inventories were up by 14.4 percent from year-end at $122 million, with the increase attributed to both extended lead times from ongoing supply chain disruptions and higher freight costs.
A large drop in second-quarter gross margin to 36.1 percent from 56.1 percent in the year-ago period was primarily related to a non-cash write-down of inventory related to first-generation apparel products, higher distribution center and logistics costs, a lower mix of international sales and currency impact that was partially offset by a favorable mix shift to physical retail, higher-margin products and improved pricing.
In adopting a conservative view of H2 demand, the company is taking a number of actions to lower operating costs, generate cost revenue savings and streamline workflows. Last week, the group announced that it would cut 23 jobs worldwide. It has also slowed the pace of corporate hires and backfills for departing employees and reduced its corporate office space to reflect a new hybrid working environment.
Other elements of its simplification initiatives, estimated to generate annualized SG&A savings of $13 to 15 million beginning in 2023, include reducing logistics costs in the U.S. by moving to automated distribution centers and a dedicated returns center. Additionally, Allbirds intends to scale its manufacturing base to reduce carbon footprints and product costs over time. The estimated non-recurring cost of the initiatives has been pegged at $18 to $24 million.
With new U.S. third-party distribution in the likes of Nordstrom and regional operator Scheels, the focus outside the home market will be restricted to China, Japan, the U.K., Germany and Canada. The brand, slated to launch in U.K.’s Selfridges shortly, says it continues to gain brand awareness among Brits, particularly the 25- to 34-year-old set, and is pleased with the early success generated through its partnership with Zalando in Germany.
Citing external headwinds and a dynamic demand environment, Allbirds announced FY22 guidance that includes 10 to 14 percent adjusted net revenue growth to a range of $305 to $315 million; an adjusted gross profit range of $150.0 to $157.5 million and an annual adjusted EBITDA loss of $37.5 to $42.5 million that includes $8 million in recurring public company costs.
The group ended Q2 with 46 stores, of which 14 were outside the U.S.
