Allbirds co-founder Tim Brown listed the company in the United States.
- Allbirds Q2 loss widened to US$29.4m
- Forecast bigger full-year loss
- Plans cost cutting as discretionary spending slows
Allbirds, the pioneering woollen shoe company co-founded by Kiwi Tim Brown, says it is “dramatically” slowing the pace of new hires and cutting back it workforce by 8% as its losses widen.
The San Francisco-based company reported a loss of US$29.4 million (NZ$45.8m) in the three months to June 30, from US$7.6m in the same quarter last year, according to documents filed in the United States, where it is listed on the Nasdaq. Its shares dropped 13% in after-hours trading.
Allbirds is trying to reduce its expenses as higher living costs hurt discretionary consumer spending. The company’s costs have been increasing as it branches out beyond its initial sustainable footwear offering and into clothing, and expands its physical store network to complement its online business.
“We anticipate that the external headwinds pressuring consumer spending in the United States will persist in the back half of 2022,” Allbirds chief financial officer Mike Bufano said in a statement.
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“In this operating environment, we are focused on controlling what we can control and have implemented a series of simplification initiatives focused on automating and expanding our supply chain and streamlining our operating structure.”
Rising inflation will see household disposable income in Britain fall by 1.75% this year, the Bank of England has warned.
Allbirds expects the measures to save an annual US$13m to US$15m from 2023, some of which will be reinvested to grow sales, although it will result in one-time costs of US$18m to US$24m.
“We are confident that these investments in the customer, coupled with our simplification initiatives, will help us navigate this consumer slowdown and position us for accelerated profitable growth when the headwinds pass,” he said.
The company pulled back its forecasts for the full-year.
It now expects annual revenue before one-time items of US$305m to US$315m, down from its estimate of US$335m to US$345m published with its first-quarter result.
The company is also expecting a bigger operating loss of US$43.5m to US$37.5m, compared with its previous forecast of US$25m to US$21m.
The result was released after-hours in the US, and the company’s shares tumbled to US$4.91 from their closing price of US$5.67. The shares have shed two thirds of their value so far this year. They were sold in an initial public offering at US$15 each ahead of the company’s listing in November last year.
Allbirds reported a 15% increase in second quarter revenue to US$78.2m, as it raised prices and shoppers increasing the size of their orders. US revenue lifted 21% to US$59.3m, while international revenue slid 0.7% to US$18.9m due to Covid-related restrictions in China, the war in Ukraine and unfavourable exchange rates.
Its selling, general and admin expenses jumped 44% to US$41.7m after Allbirds opened seven new stores and had to cover operational expenses for 19 extra stores compared with the year earlier. Its marketing costs rose 19% to US$15.8m as it spent more in its digital channels.
The company aims to grow sales by expanding its range of footwear and apparel. It wrote down the value of some of its new clothing products by US$11.6m in the latest quarter.