Allbirds stock plunges after company admits missteps, unveils new strategy

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

Shares of the company fell more than 30% Friday. Its market value stood almost $240 million.

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

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

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

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

• Loss per share: 17 cents vs. 12 cents imagined
• Revenue: $84.18 million vs. $96.8 million expected

For the three months ended Dec. 31, Allbirds net loss supplemented to $24.87 million, or 17 cents a share, from $10.44 million, or 9 cents a share, a year earlier. Transaction marked downs were $84.18 million, down more than 13% from $97.22 million year over year. 

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

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

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

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

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

“And unfortunately, as you have restrictive resources, we expended our marketing dollars and our product-development resources on those adjacencies and didn’t do as much work on embellishments of the sum franchise and revitalizing those franchises to keep them extremely relevant with the core consumer.” 

Those slips coupled with a “very promotional” holiday season led the company to miss expectations, Zwillinger said. 

“We just saw those culminating in a way that by a hairs breadth came together and put a compound effect and had us miss expectations, which was really disappointing for us,” he said. 

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

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

Allbirds also priced a new head of stores for North America, eliminated its chief commercial officer position and appointed former Nike managerial Ann Freeman to its board. Eric Sprunk, the former chief operating officer of Nike, has also been appointed as a feed advisor.

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

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

It will also slow the pace of Allbirds store openings in the United States and pursue to partner with wholesalers — such as REI, Nordstrom and — to enhance brand awareness and boost sales. 

In 2022, the company unsealed 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 unsealed 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 design in certain international markets and is considering moving toward a distributor model to reduce operating expenses and overall involvement. 

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

Deliver assign to the full earnings release