Allbirds reported positive adjusted Ebitda of $0.4 million for the fourth quarter of 2021, compared with a loss of $5.3 million in the corresponding period of 2020, thanks to higher revenues combined with a reduction in marketing expenses from 29.8 percent to 19.1 percent of sales. The company attributed the decrease to increased marketing efficiency in its digital channels and a greater mix of physical retail.
Revenues rose by 22.6 percent to a quarterly record of $97.2 million, partly aided by an 80 percent boost to its inventories, and they were 43 percent higher than in the last quarter of 2019. The gross margin expanded by 0.45 percentage points to 50.2 percent due to sales of higher-margin products and a favorable channel and geographic mix, which offset higher logistics costs. After extraordinary items, the quarterly net loss widened by 11.6 percent to $10.44 million.
In the San Francisco-based company’s first earnings call since its stock market introduction in November, company executives told analysts that “consumer demand is shifting in our favor and that (trend) will accelerate growth and profitability.” They also promised that the sustainability-focused brand would test wholesale waters in 2022 and embrace a product strategy that focuses on technical upgrades, offering fewer styles from previous seasons.
Allbirds acquired over one million new customers in 2021 and saw more than 40 percent of customers make a purchase again. But the company clearly wants to bolster its 11 percent assisted brand awareness in its home U.S. market. The wholesale distribution strategy, which will focus on placement in premium locations and be modestly accretive in 2022, will likely focus on Allbirds products for entry-level runners. Executives confirmed that the distribution plan would be “slow and methodical” and largely focused on the U.S. Still, they declined to offer any nameplates where the brand might be available this year. The company has worked with Nordstrom in the past on two occasions.
For the full financial year ended Dec. 31, Allbirds’ adjusted Ebitda remained negative at $11.7 million, or a ratio of 4.2 percent of sales, but improved by 24 percent from the prior year’s loss with marketing expenses declining from 25.2 to 20.7 percent of sales. The gross margin rose by 1.45 percentage points to 52.9 percent. The net loss was up by 75 percent to $45.4 million from a loss of $25.9 million in 2020.
Annual revenues increased by 26.5 percent to $277.5 million, with U.S. sales rising by 26 percent and international revenues gaining 29 percent and representing 24 percent of the total turnover. China was the brand’s largest market outside the U.S.
Digital revenues, which accounted for 80 percent of the topline at $225 million, went up by 16 percent in 2021. Sales at the company’s growing number of physical retail stores accelerated by 112 percent to $52 million as it increased its door count by 13 to 35 locations. New U.S. retail locations were said to be averaging $3.5-4.5 million in gross sales.
The current 2022 outlook calls for a 28-32 percent increase in net revenues to $355-365 million, a gross margin of more or less 53.1 percent, and negative adjusted Ebitda of between $9 million and $13 million, including $8 million in public company costs. This would come after capital expenditures of more than $25 million, partly allocated for the opening of 16-17 additional stores - most of them in the U.S.
To compensate for increased costs, the company has planned to implement price increases this year that will contribute 1 to 3 percentage points to its 2022 net revenue growth. The company noted that an estimated 97 percent of its products were sold at full price in 2021.
Allbirds is promising to lower the carbon footprint of its ten largest product offerings by 6 percent this year, after a 14 percent reduction of 14 percent last year in its carbon footprint per unit.
