Revenue fell 27% from the year-ago $70.5m to US$51.6m.
“We are pleased to report another quarter of operational and financial progress,” said Joe Vernachio, who became Allbirds CEO in March.
“After 18 months of strong execution against our strategic transformation plan, we are entering the next phase of our journey.”
Adjusted ebitda loss was within the company’s guidance, narrowing to US$13.7m from the year-ago quarter’s US$18.3m.
Gross margin improved to 50.5% from the year-ago 42.8%, which the firm pinned on lower freight costs and a decrease in write-downs.
Write-downs totalled US$886,000 compared to the US$7.4m written off in the June 2023 quarter as Allbirds scaled back a foray into leggings and other activewear.
The firm finished the quarter with US$87m in cash and equivalents versus the year-ago US$140m.
Marginally brighter outlook
Allbirds now expected an adjusted ebitda loss of between US$63m and US$75m for the full year, slightly better than its prior guidance for a loss of between US$63m and US$78m.
The past year and-a-half had layoffs, store closures and a switch to a distributor as Allbirds has struggled to stem poor financial results blamed on pandemic disruption and recession.
The firm also had to grapple with what the Wall Street Journal called the loss of its “it” shoe status.
The paper also said some customers complained about durability and weather-resistance issues. An Allbirds spokeswoman told the Herald: “We stand by the high quality of our products and put each of our products through rigorous wear testing so that what arrives on consumers’ feet meets our own high standards.”
The Journal did not back down, instead splashing a second feature article, essaying what it saw as Allbirds drawbacks, on its home page.
Handover to regional partners continues
Allbirds said earlier this week it had appointed Shenzhen-based Belle Fashion Group as its “exclusive distributor and licensee in mainland China, Macau and Taiwan” as part of its ongoing shift away from its direct model. The shift is a core part of its restructure, designed to lower costs.
A Norway-based firm called The Future, which also distributes Vans and Calvin Klein, was named as Allbirds partner for Scandinavia, while specialist footwear distributor Authentic Brands will handle Belgium, the Netherlands and Luxembourg.
In March, Allbirds said Auckland and Gold Coast-based Compendium would become its distributor and “brand custodian” for Australasia “including our spiritual home of New Zealand”.
Its sole New Zealand store would remain, with closures focused in the US.
More traditional execs take charge
Allbirds co-founders and former co-CEOs Tim Brown (an ex-Wellington Phoenix and All Whites captain) and Joey Zwillinger (a biotech entrepreneur) remain directors.
Brown is also chief innovation officer. But a sweeping clean-out has installed executives from more traditional retail and activewear backgrounds.
New chief executive Vernachio is an ex-global operations vice-president for The North Face and previously had various roles at Nike.
In January, Allbirds named Kelly Olmstead (formerly brand activation VP for Adidas) as its new chief marketing officer and appointed a new chief design officer, Adrian Nyman - formerly Nike’s creative director for global retail.
Delisting threat remains
On April 9, Allbirds was issued a price non-compliance warning by the Nasdaq – triggered by its shares trading at under US$1 for 30 consecutive days.
The notice kicked off a process that could end in the Kiwi-American firm being delisted from the exchange.
The firm could avoid that fate if it manages to trade over a US$1 for a minimum 10 consecutive days or more over the next 180 days – that is, before September 30.
In certain circumstances, it can be granted a 180-day extension.
Its stock was trading at 63c as the delisting warning was issued. It has since bounced between 45c and 76c on thin volume. Today, the stock was up 5.2% to 61c, albeit again on light volume.
Clare Capital investment banker Alex Gordon told the Herald Allbirds could stave-off a delisting with a 2:1 share consolidation, as long as it met the Nasdaq’s minimum listing requirements (which include a modest US$1m market cap).
“If they did delist, which is the worst-case outcome, then we would expect it would involve some sort of take-private transaction where a private equity firm would fund buying the business then looking at options - more likely M&A than relisting the company,” Gordon said.
New gig
Last month, Brown took on a part-time side-hustle, becoming a venture partner with Auckland-based Icehouse Ventures, which invests in start-ups.
Icehouse CEO Robbie Paul said he was focused on Brown’s venture capital-raising success before Allbirds’ IPO.
He added, “The least useful adviser is someone who had a fairy-tale run”.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
