Allbirds co-founder Tim Brown at his Auckland City store. Photo / Dean Purcell
Allbirds co-founder Tim Brown at his Auckland City store. Photo / Dean Purcell
Allbirds shares dived to a new low of US$0.80 in post-market trading after it reported more red ink and another big contraction in revenue for its third quarter, and forecast a challenging Christmas quarter.
The firm, co-founded by ex-All Whites captain Tim Brown and made famous for its shoes madefrom NZ Merino wool, is now a long way from the US$26.03 high it hit shortly after its November 2021 debut on the Nasdaq.
The company revealed this morning it suffered a net loss of US$31 million ($52.4m) in the three months to September 30. In the year-ago quarter, it lost US$25.1m.
Revenue was US$57.2m - an 8.7 per cent fall on the June quarter, and 21.2 per cent lower than the year-ago period, amid discounting and a shift from direct operations to a third-party distributor model for international sales.
Adjusted Ebitda was a loss of US$19.0m, compared to a loss of US$14.8m in the third quarter of 2022.
The firm has now lost a cumulative US$95.7m in the first nine months of 2023, compared to $76.5m in the first nine months of 2022.
Allbirds co-founder Tim Brown at his Auckland City store. Photo / Dean Purcell
Today’s result included US$1.2m in restructuring costs.
One of the few bright spots was that the firm burned through less cash - US$5.4m, compared to US$17.5m in the year-ago period, thanks to an ongoing restructure. Allbirds finished the quarter with $132.5m of cash from the year-ago US$180m.
Allbirds forecast its December quarter revenue would be US$66m to US$72m, or 15 per cent to 22 per cent lower than the Christmas period last year.
It said its quarterly adjusted Ebitda loss would be between US$23m and US$26m.
Perfect storm
Chief executive and co-founder Joey Zwillinger will front to analysts today. Brown stepped down as co-CEO in May. He now serves as chief innovation officer.
Allbirds has faced a perfect storm of problems over the past 18 months, from the tangible - a post-lockdown fall in online retails, and recession-wary consumers - to less tangible.The Wall Street Journal has twice this year gone to town on the firm, claiming its sneakers are no longer the “it” shoe with former fans in Silicon Valley and Hollywood, with Hoka and On deemed the new hot footwear brands.
The paper also said Allbirds had also been dogged by complaints regarding quality and grizzles about the durability and weather-resistance of its product.
A foray into activewear had largely failed, with most of the clothing line canned.
In some quarters in the US - particularly Republican politicians pressuring state-run funds - there has also been a degree of backlash against ESG stocks.
A spokeswoman for Allbrids told the Herald in January the firm’s products were now bought by a wide range of buyers - some 40 per cent of whom were repeat customers.
As for durability, “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 Allbirds spokeswoman said.
“However, as with all footwear, product lifespan varies from person to person based on gait, use case and a variety of other factors.
“With that in mind, we also believe in constant improvement and are always innovating our processes and materials to deliver the very best for our consumers.”
Back to the future
Last week, Allbirds announced an updated version of its original shoe, the Wool Runner.
It hopes the refocus on its core product will help its bid to turn around its fortunes.
Allbirds also recently announced it has signed letters of intent with distributor partners in Japan, South Korea and Australia and New Zealand as part of its restructuring.
The firm halted its own retail rollout in March. It’s new “go-to-market” plan (that is, reach customers) is shifting to a third-party model, at least in international markets.
The same month, Allbrids said it was moving footwear production to a new manufacturing partner in Vietnam.
“We ripped the band-aid off and went through a big transformation program in March,” co-CEO Zwillinger told a trade publication Footwear News shortly before today’s results.
“When we enter 2024, we’ll have that recalibrated product assortment, less discounted product driving higher full price sell through and we’ll put marketing in a more prominent position to then enjoy the benefits of all the cost reduction that we did in 2023.”
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.
