Allbirds Shares Fall After It Outlines Cost Cutting Measures Including Layoffs and Reducing Office Space
Allbirds has announced measures to alleviate headwinds in the current macroeconomic environment after reporting results for its second quarter.
The footwear maker on Monday said it has implemented “Simplification Initiatives” to cut costs and generate revenue. These measures include “dramatically” slowing the pace of corporate new hires and replacements for employees who left as well as reducing its global corporate workforce by 8%, which the company carried out via layoffs last month.
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Other cost saving measures include reducing corporate office space to support a hybrid work model, transitioning to automated distribution centers, optimizing inventory, and scaling manufacturing to reduce costs and product carbon footprints. Allbirds co-founder and Co-CEO Joey Zwillinger, these initiatives are meant to “generate cost of goods savings, streamline workflows, and lower operating costs.”
Specifically, these measures are expected to generate annualized SG&A expense savings of between $13 million and $15 million, starting in 2023 and beyond. They also are expected to incur non-recurring costs of between $18 million and $24 million.
Allbirds shares were down more than 11% after markets closed on Monday.
The cost saving measures were announced as Allbirds reported its financial results for the second quarter, which included a net revenue growth of 15% to $78.2 million compared to 2021. In the U.S., net revenue grew 21% to $59.3 million compared to 2021. The company reported GAAP net loss of $29.4 million, or $0.20 per basic and diluted share, and adjusted net loss of $18.1 million, or $0.12 per basic and diluted share.
Zwillinger said his company in Q2 responded with agility to a “broader slowdown in U.S. consumer discretionary spending in the back half of June.” The company also took a hit to International sales, which were flat compared to last year due to COVID-19 restrictions in China, the war in Ukraine and weak foreign exchange rates.
The company lowered its outlook and expects adjusted net revenue of between $305 million and $315 million for fiscal year 2022, which would represent growth in the range of 10% to 14%. This comes after the company previously lowered its guidance after it reported Q1 results.
“We anticipate that the external headwinds pressuring consumer spending in the United States will persist in the back half of 2022,” said CFO Mike Bufano in a statement. “As a result, we continue to take a cautious outlook in our updated 2022 guidance targets.”
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