Allbirds has posted sales decline and losses in the second fiscal quarter, a set of results that an analyst described as “all too familiar” for the footwear brand.
The company’s net revenue for the quarter ended June 30 fell 23.1 per cent to $39.7 million, which management said was in the high range of their expectations.
Gross margin declined 980 basis points to 40.7 per cent, while net loss was $15 million compared to $19.1 million in the year-ago period.
“The latest results from Allbirds are another chapter in a now all too familiar story: Sales are down, losses remain, and the brand continues to struggle for relevance,” commented Neil Saunders, MD of GlobalData.
He said the sales decline was a “calamitous drop by any standards”, but a particularly perturbing one for Allbirds as it comes off the back of a 26.8 per cent decrease in the prior year. Sales have halved since the same quarter in 2022, which gives the impression of a company that is in constant retreat, he added.
Saunders noted that the declines were partly due to closures of stores and unprofitable distribution, but even after adjusting for those actions, the numbers are still demonstrative of a brand that is not resonating with consumers.
“In our view, the core offer does not cut through and, in a crowded footwear market, it means that Allbirds is increasingly overlooked.
“Even among fans of Allbirds – and there are some – the current lineup is too dull and samey and gives few reasons to make additional purchases other than replacing worn-out items,” he elaborated.
In response, the company has been working on a new, refreshed range for fall. While details are thin on the ground, the analyst believes this is the type of action that needs to be taken to reset the brand.
“If the fall collections are solid, there is a faint case to be made that the business could be nearing a bottom. The pace of decline is becoming more predictable, and with store closures anniversary-ing out, there is a possibility that revenue could nudge into modest growth in the back half of the year,” he stated.
For the first half, net revenue decreased 21 per cent to $71.8 million, while net loss went down from $46.5 million last year to $37.4 million.
The company has lowered its guidance for the full year, expecting net revenue of $165 million to $180 million compared to the previous $175 million to $195 million. Last year, sales were down 25.3 per cent to $189.8 million.
