Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Allbirds Inc (BIRD, Financial) achieved significant improvement in gross margin and narrowed its adjusted EBITDA loss, despite a 28% sales decline.
- The company is executing a strategic transformation plan aimed at regaining top-line momentum and positioning the brand for growth in 2025.
- Allbirds Inc (BIRD) has transitioned to a distributor model in international markets like Canada and South Korea, enhancing local marketplace expertise and wholesale capabilities.
- The company reported a healthy inventory position and a solid balance sheet with $102 million in cash and cash equivalents and no outstanding borrowings.
- Allbirds Inc (BIRD) saw positive consumer feedback and robust initial conversion rates for its new product launches, indicating effective product and brand strategy.
Negative Points
- Allbirds Inc (BIRD) experienced a 28% decline in sales, reflecting lower overall demand levels and strategic decisions impacting revenue.
- The company plans to close 10 to 15 underperforming US store locations in 2024, which could impact short-term revenue and incur one-time cash charges.
- Despite transitioning to a distributor model internationally, there is a significant revenue impact expected from these changes.
- Allbirds Inc (BIRD) is facing headwinds from necessary strategic actions, including store closures and distributor transitions, which may affect top-line growth.
- The company's full-year guidance anticipates a continued decline in revenue, with a headwind of $32 million to $37 million related to strategic actions.
Q & A Highlights
Q: Can you discuss the early success of the Tree Runner Go and its impact on your icon strategy?
A: Joe Vernachio, CEO of Allbirds, highlighted the Tree Runner Go as a crucial part of their icon strategy, noting its success in attracting new customers without cannibalizing existing products. This success is seen as a validation of their strategy to enhance and expand their product franchises.
Q: How will marketing support for new products be adjusted in the latter half of the year?
A: Annie Mitchell, CFO of Allbirds, mentioned that while overall marketing spend will be down year-over-year, there will be targeted increases in the second half of the year to support new product launches and drive brand awareness.
Q: What are the key performance indicators (KPIs) you are focusing on during this transformation phase?
A: Joe Vernachio stated that a primary KPI is the company's return to full-price selling, which has shown encouraging results since January, particularly with the launch of new products like the Tree Runner Go.
Q: What gives you confidence in the revenue guidance for the upcoming quarters, considering the current trends?
A: Annie Mitchell explained that while they expect similar year-over-year growth in Q2 and Q3 as in Q1, they anticipate an uptick in Q4 due to new product introductions and increased marketing efforts.
Q: Could you provide details on the expected capital expenditures for the year?
A: Annie Mitchell indicated that capital expenditures would be minimal for the remainder of the year due to a halt in new store openings, with spending levels similar to those in Q1.
Q: How do you envision the cost structure adjusting as you shift more towards a wholesale model?
A: Annie Mitchell discussed ongoing efforts to rightsize the cost structure, anticipating lower operating expenses due to workforce reductions, store closures, and reduced operational costs in international markets transitioning to distributor models.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
