Allbirds shares tumble on Nasdaq after sales warning
Firm to shed staff as inflation worries well-heeled buyers
Allbirds, co-founded by Kiwi Tim Brown, took a dive on the Nasdaq despite posting second quarter results better than expected. But the sustainable footwear and activewear maker warned about a slowdown in consumer spending, slashed its forecast and said it was cutting 8 per cent of its workforce.
Allbirds shares were down 19.22 per cent in late Nasdaq trading.
The company reported revenue increased 15 per cent to US$78 million for the three months to June 30 and a net loss that widened to US$29.4M from last year’s US$7.6M. Both numbers were slightly ahead of expectations.
The San Francisco-based firm said it had noticed a decline in consumer spending towards the end of the quarter.
“Our data-rich business model allows us to quickly identify changes in consumer behaviour,” co-founder and CO-CEO Joey Zwillinger said.
“Our teams were quick to detect the broader slowdown in US consumer discretionary spending in the back half of June, and responded with agility.”
He said a restructure helped Allbirds dramatically slow the pace of corporate new hires and backfills for departing employees.
The company also reduced the global corporate workforce by about 8 per cent, Zwillinger added.
It would also reduce office space, and seek savings in logistics and distribution.
Zwillinger said on a conference call: “Since our May earnings call, persistently high inflation has started to take its toll on consumers. Across our industry, elevated inventory and promotional levels have begun to impact digital and retail traffic trends.”
He added: “Our customer tends to have higher-than-average income and hence there was a lag on the impact of inflation, but this trend became notable in the US.”
Allbirds lowered full-year revenue guidance to between US$305M and $315m from the previous $335m to $345m. And it is now guiding to an adjusted Ebitda loss of $3.7m to $42.5m, compared with a prior forecast for a loss of $25m to $21m.
The slowdown in consumer spending is a fresh problem for Allbirds, which was already facing the same pandemic logistical issues as its peers, plus a backlash from some American investors over so-called “woke capitalism”.
“I think some of the criticism of ESG [environmental and social governance] is, quite frankly, well-founded,” Brown told the Herald in June.
Some firms had problems with transparency, and how ESG was measured.
But he also saw the discussion as an opportunity to underline Allbirds’ ESG policies, which he said were clear and remained a selling point.
Boost for Rocket Lab
There was brighter news for another Nasdaq-listed business run by a Kiwi. Peter Beck’s Rocket Lab earned a positive write-up in the Wall Street Journal’s “Heard on the Street” column.
The paper praised Rocket Lab’s logistical and financial performance, and said it should benefit further from a rise in US defence and aerospace spending with Russia’s Soyuz off the table (Rocket Lab is now weighing the possibility of building three Neutron rockets in 2024 rather than one).
It said Rocket Lab revenue rose 124 per cent to US$41M in the first-quarter (with a pipeline of US$550M of orders), and says its “responsive launch” capability was genuine.
“Shortly after Russia’s invasion of Ukraine, satellite-intelligence firm Blacksky asked Rocket Lab for an orbit change just days before it was due to launch, in order to place its satellites more directly over the conflict zone. While changing such missions has traditionally taken months, Rocket Lab pulled it off in 45 days,” the Journal says.
So why have Rocket Lab’s shares been languishing? Yesterday the stock closed flat at US$5.44 for a US$2.5B market cap. It listed in August last year at US$10.00.
The Journal said people looked down their noses at firms that went public via a special purpose acquisition corporation (a vehicle for reverse-listing).
It saw the Kiwi-american firm being unfairly lumped in with other aerospace companies that went public through SPACS, most of which were essentially pre-revenue. “When investors finally come around to discriminating between former SPACS, they may realize that Rocket Lab has long achieved escape velocity.”