Q2 2024 Allbirds Inc Earnings Call Transcript
Key Points
- Allbirds Inc (BIRD) reported strong execution and performance in line with expectations for Q2 2024.
- The company successfully transitioned to a distributor model in five targeted international regions, positioning for profitable and scalable growth.
- Significant cost of goods sold (COGS) savings were achieved through a shift to a new factory and material optimizations, driving long-term gross margin expansion.
- Inventory was cut by more than half, leading to improved working capital and a healthy balance sheet entering 2024.
- Positive consumer response to new product launches, such as the Wool Runner 2, Tree Runner Go, and Canvas Piper, indicating strong market demand.
- Q2 revenue of $52 million was primarily impacted by lower unit sales and the transition to a distributor model, resulting in a near-term headwind to sales.
- The closure of 14 underperforming US retail stores and the transition to international distributors reduced the top line and associated gross profit dollars.
- Freight costs remain a pressure point, although actively managed, they still pose a challenge.
- Marketing spend is expected to increase in the second half of 2024, which could impact short-term profitability.
- Q3 revenue guidance indicates a continued decline, with expected net revenue between $40 million and $43 million, reflecting the impact of store closures and international transitions.
Good afternoon, ladies and gentlemen, and welcome to the Allbirds' second quarter 2024 conference call. (Operator Instructions)
Now I would like to turn the call over to Christine Greany of The Blueshirt Group.
Good afternoon, everyone, and thank you for joining us. With me on the call today are Joe Vernachio, CEO, and Annie Mitchell, CFO.
Before we start, I'd like to remind you that we will make certain statements today that are forward-looking within the meaning of the federal securities laws, including statements about our financial outlook, including cash flow and adjusted EBITDA expectations, 2024 full year and Q3 guidance targets, impact and duration of external headwinds, strategic transformation plan and related planned efforts, go-to-market strategy, transitions to a distributor model in certain international markets, anticipated distributor model arrangements, expected profitability, cost savings targets, gross margin estimates, product plan timelines and expectations, marketing
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