Allbirds' latest financial results are in, and its growing losses and slipping sales mark another disappointing quarter. While the numbers are somewhat better than forecasts, observers say it is hard to say just how and when it can turn those trends around.
First-quarter revenue fell 13.4% to $54.4 million, compared to $62.8 million in the first quarter of 2022. And its losses increased to $35.2 million, compared to $21.9 million in the prior-year period.
Allbirds also dialed down marketing budgets in the quarter, spending $11.5 million, compared to $13.8 million in the first quarter of 2022.
The falling sales are due to stepped-up promotional activity, a troubling sign that consumers are less willing to pay full price. It doesn't help that the leisure segment of the footwear business is also struggling, down 3% in the first quarter, according to the latest analysis from Circana.
There are bright spots, including M0.0NSHOT, its effort to make the world's first net-zero-carbon shoe. Still, the company expects to deliver more bad news next quarter, forecasting revenue between $64 million to $69 million. That represents a drop of 18% to 12%.
Allbirds also withheld any forecast for the full year, citing the uncertainty of its transformation plans and the hiccuping economy.
It hopes to reignite growth with a new brand strategy, opening fewer stores, optimizing those already open, and selectively expanding wholesale partnerships.
Current ads focus on its unique approach to sustainability, called “Better Than Natural, Super Natural.” The Allbirds creative team worked with Kamp Grizzly, a Portland-based ad agency. A spokesperson tells Marketing Daily the campaign is running on both streaming and linear TV. There are also video, paid social, podcast and affiliate components.
But the murky outlook of what's to come unsettles observers. "Ultimately, we see value in the brand and think re-prioritization of product development and marketing toward its core DNA can offer proof points to this thesis over time," writes Mark R. Altschwager, an analyst who follows the company for Baird. "However, more pieces need to come together for shares to gain traction in a skittish market."