Co-founder Tim Brown at Allbirds' Auckland store in May. Photo / Dean Purcell
Co-founder Tim Brown at Allbirds' Auckland store in May. Photo / Dean Purcell
Allbirds shares fell 10.4 per cent after the sustainable footwear maker reported a narrower loss, but was disappointed with a weaker-than-expected forecast.
The stock, which debuted on the Nasdaq at US$15.00 on November 5 last year, and closed its first day of trading at US$26.03, finished at US$2.52today - a post-IPO low.
The firm, co-founded by ex-All Whites captain Tim Brown, faces two challenges: consumers who are open to environmentally-friendly products, but are now slowing their spending as economies deteriorate around the world, and a backlash against so-called “woke capitalism” - and a possible Republican majority in the US House of Representatives. The party has threatened to pull state money from investment funds that they see as too activist in ESG (environmental and social governance).
Allbirds beat its own third-quarter guidance as it reported a net loss of US$25.2 million (against US$13.8m in its September quarter last year) on revenue that increased 16 per cent to US$72.7m.
But the firm maintained its full-year revenue guidance of US$305m-$315m (lowered from the earlier US$335-$345m with its second-quarter report) and an adjusted ebitda loss of US$37.5m - US$42.5m potential consumer slowdown.
Allbirds co-founder Tim Brown. Photo / Dean Purcell
But on a conference call with analysts, Brown’s co-founder and co-CEO, Joey Zwillinger warned of potentially tougher times ahead:
“We are seeing increased choppiness in the external environment, in addition to worsening FX headwinds and extended Covid lockdowns in certain areas of China. We expect Q4 to be negatively impacted by persistent inflation and high levels of promotional activity which will impact our US business, along with a weaker consumer backdrop in Europe,” Zwillinger said.
“In fact, we are preparing for a scenario in which consumer headwinds worsen in the coming coming months and as the full impact of these myriad market dynamics are fully digested by consumers.”
On the same call, Brown looked beyond the current economic headwinds to update on his company’s broader sustainability push for its footwear and activewear, which is made from NZ Merino wool and various recycled materials.
“In support of this long-term plan, we are proud to have made groundbreaking, tangible progress and set a new industry standard for others to follow,” the Kiwi entrepreneur said.
“We’ve done this by focusing on three key areas: regenerative agriculture, renewable materials, and responsible energy, which have helped make 2021 a banner year toward meeting our brand promise for consumers.
“In regenerative agriculture, we partnered with supplier New Zealand Merino and other brands to pave the way for regenerative wool in New Zealand through the ZQ framework.”
The ZQ Merino programme is an initiative to promote “ethical wool”. Its backers include Allbirds, the New Zealand Merino Company, Icebreaker and Smartwool.
“To date, nearly 500 growers have signed up, representing 15 per cent of New Zealand’s farmland, committing to work with nature to continuously improve human, animal, and environmental outcomes,” among others.
