Dive Brief:
- Weeks after receiving a delisting warning from Nasdaq, Allbirds reported that revenue continued to plummet in Q1, declining nearly 28% to $39.3 million, according to a company press release. Net loss narrowed by 22%, to $27 million.
- New CEO Joe Vernachio, who took over from co-founder Joey Zwillinger in March, said on his first earnings call that “we know what needs to be done and we’re executing with urgency.”
- Vernachio said the retailer is on track with its planned store closures — which will amount to 10 to 15 this year — after closing three locations in the first quarter.
Dive Insight:
As Allbirds’ new leader looks to turn things around, the former chief operating officer highlighted a few areas the brand is focused on going forward.
Those include continued efforts to rightsize its cost structure, transitioning international markets to a distributor model, improving brand positioning and messaging, creating a more cohesive product strategy, building a balanced business across DTC and wholesale, and returning to full-price selling. Already, Allbirds’ recent shoe relaunches — which include the Wool Runner 2 and the Tree Runner Go — are bearing fruit. The Tree Runner Go, despite only launching last month, has seen “extremely positive” customer feedback so far, Vernachio said, though a return to full-price selling might be a harder sell.
“After a year of promotional activity, we recognize that this shift will create near-term impact to sales, but we know it’s the right decision for long-term health of the brand,” Vernachio said.
Allbirds is aiming for 2025 as a return to growth. But in the meantime, sales are expected to be down by about 25% in Q2, and a similar amount for the year as a whole.
“On the positive side, [fiscal year] guidance was reiterated, indicating that trends did at least not worsen in Q1,” Wedbush analysts led by Tom Nikic said in emailed comments. “However, visibility into a turnaround remains extremely low.”
As the DTC brand shutters its own stores, it’s now better positioned for wholesale, according to Vernachio. Allbirds intentionally pulled back on those channels last year to ensure it could offer compelling products before leaning back in. Selling through Amazon, which began in November, has been a success so far, the executive said.
“This is a profitable extension of our reach and allows Allbirds to meet our customers where they are,” Vernachio said.
With sales plummeting, Allbirds has refreshed several C-suite roles over the past year or so, including naming a new CFO last year, bringing on a Nike veteran as chief design officer and elevating a current employee to the role of chief marketer. Allbirds’ other co-founder, Tim Brown, stepped down from the co-CEO role and moved into a new position as chief innovation officer amid layoffs a year ago.
