Allbirds, Inc. reported a net loss in the second quarter, which ended June 30, as sales declined by 26.8 percent.

Second Quarter 2024 Overview

  • Second quarter net revenue decreased 26.8 percent to $51.6 million versus a year ago, within the company’s guidance range.
  • Second quarter gross margin improved 770 basis points to 50.5 percent versus a year ago.
  • Second quarter net loss of $19.1 million, or $0.12 per basic and diluted share.
  • Second quarter adjusted EBITDA loss of $13.7 million, above the company’s guidance range.
  • Inventory at quarter end of $53.7 million, representing a decrease of 42 percent versus a year ago.
  • As of June 30, 2024, the company had $87.2 million of cash and cash equivalents and no outstanding borrowings under its $50.0 million revolving credit facility.
  • Entered into distributor agreements for two new regions, Benelux and Scandinavia.
  • Completed transitions to a distributor model in Japan and Australasia.
  • Subsequent to the quarter’s end, the company announced distribution and licensing agreements and transitioned to an additional region, China.

“We are pleased to report another quarter of operational and financial progress,” said company CEO Joe Vernachio. “After 18 months of strong execution against our strategic transformation plan, we are entering the next phase of our journey and prioritizing three main focus areas: Making Great Product, Telling Compelling Stories and Providing Customers with an Engaging Shopping Experience.”

Vernachio added, “As we focus on reigniting our product and brand, we are encouraged by the strong consumer response to our recent new offerings; this makes us confident that our fresh, updated products coming to market beginning next year will build on that momentum. We believe the combination of elevated product, storytelling and customer experience in the coming quarters will position the business to return to top line growth in 2025 and enable us to build long-term shareholder value.”

Second Quarter Operating Results
In the second quarter of 2024, net revenue decreased 26.8 percent to $51.6 million compared to $70.5 million in the second quarter of 2023. The year-over-year decrease is primarily attributable to lower unit sales, partially offset by higher average selling prices within its direct business, international distributor transitions, and planned retail store closures.

Gross profit totaled $26.1 million compared to $30.1 million in the second quarter of 2023, and gross margin improved 770 basis points to 50.5 percent compared to 42.8 percent in the second quarter of 2023. The decline in gross profit is primarily due to the decrease in units sold, and the improvement in gross margin is mainly due to lower freight and duty costs per unit, and a decrease in inventory write-downs resulting from a healthier inventory composition versus a year ago.

SG&A was $33.6 million, or 65.0 percent of net revenue, compared to $46.2 million, or 65.6 percent of net revenue in the second quarter of 2023. The decrease is primarily attributable to decreased personnel expenses, occupancy costs, and stock-based compensation.

Marketing expense totaled $11.7 million, or 22.8 percent of net revenue, compared to $12.5 million, or 17.8 percent of net revenue in the second quarter of 2023, driven by decreased digital advertising spend.

Restructuring expense totaled $1.0 million, or 1.8 percent of net revenue, compared to $1.0 million, or 1.5 percent of net revenue, in the second quarter of 2023. It was relatively flat compared to the prior year and related to the execution of its strategic transformation plan announced in March 2023.

In the second quarter of 2024, net loss was $19.1 million compared to $28.9 million in the second quarter of 2023, and net loss margin was 37.1 percent compared to 41.1 percent in the second quarter of 2023.

In the second quarter of 2024, adjusted EBITDA was a loss of $13.7 million, a 24.9 percent improvement compared to a loss of $18.3 million in the second quarter of 2023, and adjusted EBITDA margin1 declined to (26.6) percent compared to (25.9) percent in the second quarter of 2023.

Six-Month Operating Results
Net revenue in the first half of 2024 decreased 27.2 percent to $90.9 million compared to $124.8 million in the first half of 2023. The year-over-year decrease is primarily attributable to lower unit sales within its direct business, international distributor transitions and planned retail store closures.

Gross profit in the first half of 2024 totaled $44.5 million compared to $52.0 million in the first half of 2023, while gross margin improved to 49.0 percent in the first half of 2024 versus 41.6 percent in the same period a year ago. The decrease in gross profit is primarily due to the decrease in units sold, and the improvement in gross margin is primarily due to lower freight and duty costs per unit and a decrease in inventory write-downs resulting from a healthier inventory composition compared to a year ago.

SG&A in the first half of 2024 was $73.3 million, or 80.6 percent of net revenue, compared to $89.0 million, or 71.3 percent of net revenue, in the first half of 2023. The decrease was primarily attributable to decreases in personnel expenses, stock-based compensation, and occupancy costs.

Marketing expense in the first half of 2024 totaled $19.5 million, or 21.4 percent of net revenue, compared to $24.0 million, or 19.2 percent of net revenue, in the first half of 2023, driven by decreased digital advertising spend.

Restructuring expense in the first half of 2024 totaled $1.8 million, or 1.9 percent of net revenue, compared to $4.3 million, or 3.4 percent of net revenue, in the same period in 2023. The decline was primarily due to lower fees incurred related to executing its strategic transformation plan announced in March 2023.

Net loss in the first half of 2024 was $46.5 million compared to $64.1 million in the first half of 2023, and net loss margin was 51.1 percent compared to 51.4 percent in the first half of 2023.

Adjusted EBITDA loss in the first half of 2024 was $34.6 million compared to a loss of $39.9 million in the first half of 2023, and adjusted EBITDA margin declined to (38.1) percent compared to (32.0) percent for the first half of 2023.

Strategic Transformation Plan Review
Since announcing its strategic transformation plan in March 2023, the company has reset the business, positioning Allbirds for its next growth phase. Operating and financial accomplishments include:

  • Closing 14 U.S. stores as part of the company’s initiative to optimize U.S. distribution and retail store profitability;
  • Completing its transition from a direct model to a distributor model for its international business. Since the third quarter of 2023, the company has transitioned five regions and opened four new ones, positioning the business to achieve profitable and scalable growth internationally.
  • Began capturing the cost of goods and operating expense savings, driving improvement in gross margin and SG&A in 2024 compared to 2023.
  • Decreased inventory by over one-half in 2023 compared to 2022, driving improved working capital.
  • Narrowed operating cash use by $60 million, or 66 percent, in full year 2023 versus 2022.

Allbirds is now prioritizing three main focus areas designed to return to top-line growth in 2025 and build long-term shareholder value: Making Great Products, Telling Compelling Stories and Providing Customers with an Engaging Shopping Experience.

Balance Sheet Highlights
Allbirds ended the quarter with $87.2 million of cash and cash equivalents and no outstanding borrowings under its $50 million revolving credit facility. Inventories totaled $53.7 million, a decrease of 42 percent versus a year ago, reflecting fewer units of on-hand inventory and a healthier overall composition.

2024 Financial Outlook
The company is reiterating its full-year 2024 revenue guidance as follows:

  • Net revenue of $190 million to $210 million;
  • U.S. net revenue of $150 million to $165 million, including a $10 million to $12 million impact resulting from anticipated store closures; and
  • International net revenue of $40 million to $45 million, including $15 million to $18 million of impact resulting from transitions to a distributor model in certain international markets

The company is increasing its full-year 2024 gross margin guidance and tightening its full-year 2024 Adjusted EBITDA guidance range as follows:

  • Gross margin of 43 percent to 46 percent compared to prior guidance of 42 percent to 45 percent; and
  • Adjusted EBITDA loss of $75 million to $63 million compared to prior guidance for a loss of $78 million to $63 million.

The company is providing the following guidance for the third quarter of 2024:

  • Net revenue of $40 million to $43 million;
  • U.S. net revenue of $33 million to $35 million;
  • International net revenue of $7 million to $8 million; and
  • Adjusted EBITDA loss of $19 million to $16 million.

Image courtesy Allbirds