Although sales continued to rise, so did its losses — and Wall Street wasn’t happy. But it was intrigued by the news that the company has plans to begin wholesaling later this year for the first time. In 2018, Allbirds partnered with Nordstrom for a successful pop-up shop, but that was only for a limited time.
On a call with analysts Wednesday afternoon, Joey Zwillinger, Allbirds’ cofounder and chief executive officer, said that beginning in the second quarter, the company will “selectively enter third-party” retailers. But he cautioned that while other retailers will also now carry the brand, it is not expected to lead to a huge jump in sales and will be only “modestly accretive” to the company’s business this year.
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He stressed this new strategy is “not about growing near-term sales, but building a brand.” The goal is to build awareness and credibility for the brand so “we’ll be showing up in the right places in front of the right consumers.” He declined to provide the names or number of potential retailers he is hoping to work with but said they “need to be very brand additive. We’re going to show up in premium locations where we will be meeting a lot of new people.”
The company will start wholesaling primarily in the U.S. as well as a small number of European retailers, with Asian stores in the plans for the future, Zwillinger said. He said the stores will not be given access to the full Allbirds assortment but select products most appropriate for their market segments. They will be limited in what they can sell on promotion to maintain Allbirds’ pricing integrity that it has maintained for the past five years, Zwillinger said.
On Wednesday, the buzzy San Francisco-based sustainable footwear and apparel brand reported a net loss of $10.4 million for the fourth quarter ended Dec. 31, up from a net loss of $9.4 million in the fourth quarter of 2020. Adjusted EBIDTA for the period showed a profit of $400,000, a 108 percent improvement compared to the fourth quarter of 2020.
Sales in the quarter jumped 23 percent to $97.2 million compared to $79.3 million in the fourth quarter of 2020 and were up 43 percent over the same period in 2019, marking Allbirds’ highest quarterly sales to date. The U.S. was the leader in terms of sales, with revenue increasing 25 percent to $76.9 million.
Even so, aftermarket trading saw the company’s stock fall more than 8 percent to $7.88. When the company went public last November, its stock first traded at $21.21.
“We are pleased to report a strong finish to 2021, with Q4 representing our largest revenue quarter on record, headlining financial performance ahead of our guidance targets,” said Zwillinger. “Our results reflect strong global demand for the Allbirds brand and best-in-class execution by our teams during a period of ongoing macro challenges.”
He cited strength in both retail and the digital channel across all regions and pointed to “a remarkable holiday season which included the two biggest sales days in company history.”
He said the plan for this year is to continue to add retail stores and increase the brand’s international presence, which are expected to “drive an accelerating topline growth rate in 2022, helping us march down the path toward durable growth and our medium-term profitability targets, while furthering our goal of combating climate change.” The plan is to add 16 to 17 stores this year, primarily in the U.S.
Turning to its sustainability message, Zwillinger said the company made “significant progress” last year on its Flight Plan, its internal goal to reduce product emissions by 50 percent by the end of 2025 and 95 percent by 2030. In 2021, he said, the company reduced its carbon footprint per unit by 14 percent compared to 2020.
For the year, Allbirds said the GAAP net was $45.4 million compared to net loss of $25.9 million for the full year 2020. But the adjusted EBITDA loss of $11.7 million was a 24 percent improvement on the $15.4 million loss for the full year 2020.
Net revenue for the year 2021 increased 27 percent to $277.5 million compared to $219.3 million for the full year 2020, and was up 43 percent compared to the full year 2019.
U.S. sales increased 26 percent to $209.8 million and international net revenue increased 29 percent to $67.7 million compared to the full year 2020 which Allbirds attributed to “strong consumer demand across geographies and channels, as well as new products.”
Its sales gain was driven by a 16 percent growth in its digital channel and a 112 percent jump in its retail stores. The company opened 13 new units last year to end the year with 35 stores.
Allbirds also issued guidance for the first quarter of 2022, saying it is projecting an adjusted EBIDTA loss of $11 million to $13 million on a sales gain of 21 to 25 percent to $60 million to $62 million. For the full year 2022, it expects an adjusted EBIDTA loss of between $9 million and $13 million and net revenue of $355 million to $365 million, a growth rate of 28 to 32 percent.