Allbirds (BIRD) Q4 earnings 2022

On Mar 9, 2023

A woman walks past an Allbirds store in the Georgetown neighborhood of Washington, D.C., on Tuesday, Feb. 16, 2021.

Al Drago | Bloomberg | Getty Images

Footwear retailer Allbirds on Thursday unveiled a broad overhaul of its strategy and an executive shakeup after failing to post year-over-year quarterly sales growth for the first time in its history.

Shares of Allbirds plummeted during off-hours trading. As of Thursday’s close, shares of the company have fallen 3.5% so far this year to $2.36, giving it a market value of $352.5 million.

The retailer, which has been in the process of a broad brick-and-mortar expansion that it’s now winding down, was candid about its failures. The company is betting its new strategy will reignite growth, improve capital efficiency and drive profitability in the coming years.

“While we made important progress, the year came to a challenging close, with results below our expectations due to both execution and macro challenges,” Joey Zwillinger, Allbirds’ co-founder and co-CEO, said in a statement. “We need to improve performance.”

The company said its most recent quarter was hurt by a “disappointing” holiday season. Results fell short of Wall Street’s expectations on the top and bottom lines.

Here’s how Allbirds did in its fourth quarter compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

Loss per share: 17 cents, adjusted, vs. 12 cents expected
Revenue: $84.18 million vs. $96.8 million expected

The company’s reported net loss for the three-month period that ended Dec. 31 was $24.87 million, compared with a loss of $10.44 million a year earlier. Sales were $84.18 million, down more than 13% from $97.22 million a year earlier.

While full year net revenue increased by 7% to $297.77 million, Allbirds’ net losses in its first full year as a public company ballooned to $101.35 million, more than double the $45.37 million in losses it recorded in 2021.

Gross margins in the quarter decreased to 43.1% compared to 50.2% in the year ago period as selling, general and administrative expenses jumped to $41.6 million, compared to $36.7 million in the fourth quarter of 2021.

What went wrong?

The shoe maker said its poor performance can be attributed to a series of missteps, including its decision to shift away from its core consumer by introducing products that deviated form that base, including technical performance running products geared for elite athletes.

Following the successful launch of its Dasher running shoe, the company decided to penetrate deeper into the high performance category with products like the Flyer. But Allbirds’ customers just weren’t “ready for us to serve them in that area,” Zwillinger told CNBC in an interview Thursday.

“As we made those adjacent product development decisions, we unfortunately lost a bit of sight of what our core consumer fell in love with us for in the first place and what they continue to want from us,” Zwillinger said.

“And unfortunately,…