Reporting its first quarterly results as a public company, Allbirds said its revenues grew by 33 percent to $62.7 million in the three months ended Sept. 30, as compared to the same period a year ago, driven by a 42 percent increase in the U.S. to $47.7 million. Sales in the rest of the world were up by only 10 percent to $15.0 million due to Covid-related restrictions, the company said. The adjusted Ebitda margin remained negative, decreasing to 10.1 percent of sales from 8.1 percent, and the net loss nearly doubled to $13.8 million from $6.9 million.
Investors reacted by slashing the company’s share price by more than 10 percent when the Nasdaq stock exchange reopened after the announcement. At around $17, it still gives Allbirds a lofty stock market capitalization of around $2.5 billion, but it is a far cry from the $32 price that the sustainable footwear sneaker brand commanded just after its Nov. 3 IPO.
The quarterly revenues were 40 percent higher than in the same period of 2019. In the first nine months of this year, they rose by 29 percent year-on-year to $180.3 million, with gains of 26 percent in the U.S. and 37 percent in the rest of the world. For the full financial year, the company is guiding for a sales increase of between 23 and 24 percent to a range of $270 to $272 million, but it foresees continued losses in the short term. It expects to book negative Ebitda of $15 to $17 million for this year, including charges of $5 million related to its recent public offering.
Allbirds’ gross margin expanded by 1.2 percentage points to 54.1 percent in the latest quarter, thanks to lower product costs and a more favorable price and product mix, as the company sold more high-margin apparel, but this was partly offset by higher logistics costs. Operating expenses shot up by 64 percent due to the opening of four new retail stores and higher operating expenses for the ten new stores opened since a year ago, but the growth in the marketing spend was held at 5 percent year-on-year.
The quarterly sales increase was attributed in part to higher sales of higher-margin apparel, an increase of 13 percent in the average value of customers’ orders and a small price increase for core casual styles to $98 from $95 per pair. Indicating that the price increases didn’t affect the demand, the management said that customers were comfortable with higher price points for more technical performance styles.
In view of supply chain delays, the company has boosted its inventories by 64 percent since the start of this year to be prepared to respond to the demand for the holiday season. Cash and cash equivalents at the end of the quarter amounted to just $65.4 million, as the proceeds from the IPO had not yet flowed into the company.
Longer-term, Allbirds hopes to be able to generate a positive adjusted Ebitda margin in the mid- to high teens and a gross margins of more than 60 percent, while targeting annual growth of between 20 and 30 percent. The growth rate will be at the higher end of this range in 2022, the management indicated.
Going forward, the product assortment will be broadened, with apparel making up more than 10 percent of the revenues as is now the case, and the company wants to open hundreds of new stores. Two new points of sales have been opened so far during the fourth quarter, bringing the store fleet to 35 units, 23 of them located in the U.S.
The brand’s international expansion will focus on the digital channel, but the combination of own e-commerce and physical stores will continue to be the foundation of the company’s future growth. According to the management, omni-channel customers tend to buy 50 percent more than digital-only customers, and they are more likely to buy multiple items.
