Allbirds Losses Mount in Third Quarter
● The company continues to cut operating costs as it works to attain profitability.
Losses nearly doubled for Allbirds Inc. in the third quarter as the company continued to work to lower supply chain costs and streamline its corporate structure in hopes of reaching profitability.
After the close of the market on Tuesday, the San Francisco-based sustainable footwear and apparel brand said net losses were $25.2 million, compared to $13.8 million in the third quarter of 2021, and net loss margin was 35 percent, compared to 22 percent in the third quarter of 2021. The adjusted net loss was $22.4 million and adjusted net loss margin was 31 percent, the company said.
Net sales in the period increased 15.9 percent to $72.7 million from the corresponding period in the prior year and were up 53.8 percent compared to the third quarter of 2020. The company attributed the increase to a rise in the number of orders, “primarily driven by retail store sales, and an increase in average order value.”
The company opened six stores in the quarter, bringing its total to 38 in the U.S. In those physical units, sales were up 53 percent compared to 2021.
Despite the losses, Allbirds management remained upbeat.
“We delivered a strong quarter in what remains a highly dynamic operating environment,” said Joey Zwillinger, cofounder and co-chief executive officer. “Looking ahead to yearend and 2023, we continue to expect macro headwinds to persist but believe that our brand, our growth strategy, and simplification initiatives position us well to emerge strongly from this period. Thanks to the team's hard work, I remain confident in our ability to continue to execute into the holiday season and next year.”
Zwillinger added that November marks the one-year anniversary of the company's initial public offering and pointed to Allbirds' recently released sustainability report, which showed the brand was able to reduce its average product carbon footprint by 12 percent while growing net revenues by 27 percent in 2021.
“We remain on track to deliver on our goal to cut our already low per-product carbon footprint in half by 2025 and achieve near zero by 2030,” he said.
Last quarter Allbirds revealed a “simplification” strategy designed to “generate cost of revenue savings, streamline workflows, and lower operating costs.” Among the moves it is making are reducing logistics costs in the U.S. by transitioning to automated distribution centers and a dedicated returns processor; liquidating excess inventory; continuing to reduce carbon footprints and product costs, and reducing corporate headcount and office space to reflect the new hybrid working environment.
Mike Bufano, chief financial officer, said: “The investments we have made into our supply chain, coupled with our leaner infrastructure and strong cash balance, all position us to continue to grow the business and work toward improved profitability. I feel confident about how we are setting up our business for the future to become better operationally while continuing to deliver on our sustainability initiatives and create shareholder value.”
In the nine months, the net loss was $76.5 million compared to $34.9 million in the first nine months of 2021, and net loss margin was 35.8 percent compared to 19.4 percent in the first nine months of 2021. The adjusted net loss was $62.3 million and net loss margin was 29.2 percent.
Allbirds maintained its guidance for the fourth quarter and full year of adjusted net revenue of $92 million to $102 million, a range of negative 5 percent to plus 5 percent in the fourth quarter, and an adjusted earnings before interest, taxes, depreciation and amortization loss in the period of $8.5 million to $3.5 million. For the year, net revenue is expected to come in at $305 million to $315 million, representing growth in the range of 10 percent to 14 percent and an adjusted EBITDA loss of $42.5 million to $37.5 million.