Allbirds has booked a double-digit decline in sales for the third quarter, which an analyst described as “another set of dismal results”.
The footwear and apparel brand saw net sales plunge 24.9 per cent to $43 million for the quarter ended September 30.
According to GlobalData MD Neil Saunders, while the decrease was within the company’s guidance and marginally better than the second quarter, it still came off the back of a 21.1 per cent decline in the prior year. On a two-year basis, sales have slumped by 40.8 per cent.
“Given the string of punchy declines across the past year, Allbirds is giving off the impression of a brand in a spiral of decline,” Saunders continued.
Some of the reduction was due to planned store closures and pullbacks in unprofitable distribution, but a large chunk of deterioration was attributed to the brand’s failure to make its products resonate with consumers, the analyst explained.
In the US, revenue dipped 26.6 per cent amid 14 store closures so far this year. While many of those outlets were loss-making or not optimized for success, part of the decline was due to Allbirds losing market share to other footwear labels, Saunders stated.
“Bluntly, we still do not see the company’s focus on sustainability – which is at the heart of its proposition – as anywhere near powerful enough to cut through with shoppers who are more interested in aspects like design, style and fit,” he added.
International revenue was down 19.3 per cent, with 12 stores shuttered since the beginning of the year.
On the bottom line, Allbirds managed to narrow its net loss to $21.2 million, but Saunders believes the company still has a long road ahead before moving into the black.
Overall, Saunders said the company has made some progress in becoming more disciplined and structured, with a shift to distributor model across many international markets and some advancement in manufacturing efficiency.
“All these things point to the fact that Allbirds now has better leadership – but the acid test will be the production of better results, and these will not come for some time,” he said.
The company has lowered its guidance for the full year, now expecting net revenue to be in the range of $187-193 million and adjusted EBITDA loss of $75-$71 million.
