Allbirds (BIRD) Q4 earnings 2022

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.

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. 

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.

What went wrong?

Transformation strategy

The company also made a series of changes to its executive leadership and board of directors. 

Chief Financial Officer Mike Bufano will be stepping down. Annie Mitchell, who previously worked at Gymshark and Adidas, will be taking his place. 

Allbirds also eliminated its chief commercial officer position and appointed former Nike executive Ann Freeman to its board. Eric Sprunk, the former COO of Nike, has also been appointed as a board advisor.

Allbirds outlined several focus areas it plans to drill down on in 2023. It also hired a chief transformation officer – former Juul Labs executive Jared Fix – to lead the charge. 

The company plans to reconnect with its core consumer by focusing specifically on the products those customers want and offering a more curated seasonal color offering that’s gender specific. 

It will also slow the pace of Allbirds store openings in the United States and continue to partner with wholesalers – such as REI, Nordstrom and Dick’s Sporting Goods – to enhance brand awareness and boost sales. 

In 2022, the company opened 19 new stores in the U.S. As of the end of December, Allbirds had 58 total stores – 42 in the U.S. and 16 abroad. In 2023, it plans to open just three new stores in the U.S. in locations for which it signed leases in early 2022. 

The company is also revisiting its go-to-market strategy in certain international markets and is considering moving towards a distributor model to reduce operating expenses and overall complexity. 

Its final area of focus will be enhancing gross and operating margins by transitioning to a single manufacturing partner in Vietnam. 

Read the full earnings release here.