Allbirds, Inc. Class A ((BIRD)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Allbirds, Inc. Class A painted a mixed picture of the company’s current standing and future outlook. While the company celebrated significant achievements such as cost reductions, successful international transitions, and a well-received marketing campaign, it also acknowledged challenges like an expected revenue decline in Q1 2025 and pressures on gross margins. Despite these hurdles, Allbirds remains optimistic about returning to growth in the latter part of 2025.
Reduced SG&A and Store Closures
Allbirds has taken decisive steps to streamline its cost structure, achieving a reduction in Selling, General and Administrative (SG&A) expenses by over $20 million in 2024. This was partly accomplished through the closure of 15 US stores, with plans for an additional five closures after year-end. These measures are aimed at enhancing operational efficiency and financial health.
Successful International Transition
The company has successfully transitioned to a distributor model in select international regions. This strategic move is expected to set up Allbirds’ international business for profitable and scalable growth, marking a significant milestone in its global expansion efforts.
Marketing Campaign Success
Allbirds launched a new brand campaign titled ‘Cards on the Table,’ featuring actor Stanley Tucci. The campaign has yielded positive initial results, achieving over 5 million organic social reach and a combined potential reach of over 1 billion through media coverage. This success underscores the effectiveness of Allbirds’ marketing strategies.
Gross Margin Improvements
The company anticipates year-over-year improvements in gross margins, projecting them to be in the mid-40% range for the full year 2025. This improvement is a positive indicator of Allbirds’ efforts to enhance profitability.
Strong Financial Position
Allbirds ended the year with a robust financial position, holding $67 million in cash and cash equivalents and no outstanding borrowings. This financial strength provides a solid foundation for future strategic initiatives.
Q1 2025 Sales Decline
The company has provided guidance indicating a 22% decline in net revenue for Q1 2025 at the midpoint compared to the prior year. This decline is attributed to structural changes and a challenging macroeconomic environment.
Pressure on Gross Margin in Q1
Allbirds expects notable pressure on its gross margin in Q1 2025 due to channel mix and product sunsetting. However, improvements are anticipated throughout the year, reflecting the company’s adaptive strategies.
Impact of Store Closures and Transitions
The company estimates a negative impact on net revenue ranging from $18 million to $23 million in 2025 due to international transitions and store closures. This impact underscores the challenges associated with strategic restructuring.
Forward-Looking Guidance
Looking ahead, Allbirds projects net revenue between $175 million and $195 million for 2025, with a return to top-line growth expected in Q4, driven by product and marketing initiatives. The company also anticipates a gross margin in the mid-40% range for the year. However, Q1 is expected to face notable pressure due to channel mix and product transitions. An adjusted EBITDA loss of $65 million to $55 million is forecasted, reflecting strategic investments in marketing and new product assortments.
In summary, the Allbirds earnings call highlighted a mix of achievements and challenges. While the company has made significant strides in cost reduction and international expansion, it faces headwinds in terms of revenue decline and gross margin pressure. Nevertheless, Allbirds remains optimistic about its growth prospects in the latter part of 2025, driven by strategic initiatives and a strong financial position.