Allbirds (BIRD) 12 Mar 242023 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Allbirds Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your first speaker today, Christine Greany with The Blueshirt Group.

Good afternoon, everyone, and thank you for joining us. With me on the call today are Joey Zwillinger, CEO; Joe Vernachio, COO; 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 guidance targets, impact and duration of external headwinds, strategic transformation plan and related planned efforts, go-to-market strategy, planned transition to a distributor model in certain international markets, anticipated distributor model arrangements, expected profitability, cost savings targets, gross margin estimates, products, plan timelines and expectations, third-party partnership strategy, marketing strategy, and other matters referenced in our earnings release issued today.These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. statements SEC these date September reflect we of our obligation revise call.Please ended risk quarterly report that the as XXXX, opinions undertake note that factors of to results. the for a that including on refer the changes of filings, our this affect XX-Q any also forward-looking this Form our statements to only for no occur description may Please, our after reflect XX, to call, quarter more and detailed Also measures used during certain results the non-GAAP and any this call, be we results. a of addition in will to that discuss financial as items.These impact should for not GAAP adjust items to non-GAAP our substitute eliminate GAAP

non-GAAP these the to financial to I'll extent release.With regarding information turn measures non-GAAP a reasonably earnings call of measures additional Joey find most eventful over will their begin to reconciliation measures that, formal the comparable remarks. these directly GAAP the today's and in You to

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Turning to QX guidance.

of That through of transitioned model, Adjusted in operating million.As be we'll to to million includes be Korea. South guidance a guidance our range $XX and Canada million. $XX the $XX regions to revenue X expected in to and of is million with U.S. $XX of of range revenue million quarter, reminder, international First-quarter first distributor to to million. to million the $XX is revenue international million the the be loss $XX $XX already $X EBITDA expected

business of year.Looking least the we regions, adjusted new closures, the line, quarters about growth year of at in For year investments remains as and of X us basis expect the believe to fairly top-line for the time number actions look confident factors We full-year to well transformation activity North XXXX, model the call to make a growth work future our building your achieving afternoon we're to further improvements response XXXX you to on this top-line may feel the second will in introductions to this the open first to added as profitability ask EBITDA anticipated. take to taking perspective, there anticipated our to operating throughout we is consumer cash store reporting think position driving drive our XXXX.Now, positive transition timing of enabling years. you and the return in to to product appreciate longer as driven model, Star.The a with intend than We are needed that remain seasonally international QX.There consistent and in full-year half forward build your get operator X the comparisons marketing flow profitable to progress trends promotional including and to on in trend tough questions. the I'll the ahead,

of comes the with question first Stanley. line from Our Instructions] [Operator Alex Straton Morgan

the in to first to product Straton. transition. is even the on for This Callahan international question arrive just adjusting when closures Alex for What's for Katie that see My decline? the no half? is decline new Is driving surprise second sales waiting in store it

there the ramping products. new where coincide our and planning growth will happen from trends start and your voice introduction impacting again. will marketing closing did there to quarterly as new to Hi, as in the really Katie, hear ones retail up at some coming the the year numbers. to well compelling we are QX. X refreshed those doors of about the launch midyear.And a move the is with guidance, the to products later looking that this our of market, then as international into we you're be already Yes, new factors overall we it's are We happen that when of is talked The expect we're number nice XXXX.Additionally, investment of of be

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me. then one more And just for

there? they the behind any On the a trend or about U.S. in closures, think any there Like you're could or more ones are demographic suburban size store markets, specific closing? is or certain trend that we driving

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comes Our BTIG. next from of question with Stichter Janine line the

I want the wholesale to ask distribution. about

about mix. about look in talked needed the and just that reaccelerate What's that where plans it you there? And of should what long-term your think to and How timing maybe portion being you're magnitude? You are accounts us we in remind might larger like? go-forward what a

if over something go-forward. I'll yes, here, and to then start want Janine, this off you for I'll add Hi, Joe, the it kick to

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and push part right the that. big the up to do envisioned going very when we consumer fantastically we the for a our product the chunk want it's sure of do really when channel.And shelves, we showing on we're make We've we So, product sizable that it right forward. have think is always to the being business acceleration a that in

would the where we think be create did But could and channel want thing to not and headed. is make to worst that that resonate that put a we cautious consumers the we're didn't So, with messy strongly product in sure happen. marketplace.So, that's

are partners back there. in we are then about, just what who can support us great reaccelerate. channel working we mention And you you and So, making maybe that store Joe, cautious prudent sure moving we so forward. that in our to could had fairly we're and have closely pulled

this forward.We component described of into stores. for our our Wholesale believe Yes. in with our with see that strategy reintroduce next the retail for marquee you. quite year And a come weren't us overall, portfolio as retailer we knowing held brands should And we own you we'll to are later and Wholesale to own be working communication we strategy, products sure those product partners putting our very just and along our over overall online going last purposefully starting through Joey that is to back have.We on them, is Janine, really nice the we're sell-in inventory. to big all A a reinvigorate the had move to marketplace, make year the next think months fortunate to reasons of that got and balanced that in of retailers, with lot work U.S. icon opportunity be we the strategy, move marketplace series our product fortunate year. that with. to in own to to roadshow our significant and our directly would meet We have early We we've digital start

of comes Carden with line from William Dylan the Our next question Blair.

here. in the the the and boring out going distribution go start you're retail I'm curious to digital quarter, is if adjust some But breakout our maybe of thinking forward reporting of about models. ones to growth of wholesale like kind kind between Kind you're breaking how

year will going immediacy, the full modeling. and the for for separate. in and the as Dylan, be we our interim give guidance our this did We the international is we for going sharing the way to meaningful year, of understand no, not we for international segments changing shift U.S. to are that terms QX, that that we're information.For be the

So, for giving margin do those year, this anticipate guidance. we

yet. no, split terms our we to not quite change do In segment intend of reporting,

what Is not digital? wholesale? you're be you out providing breaking going mean? So, a to that Nor retail in

Yes.

offset model, despite up maybe margin, and missing but there? cadence margin promotion or sort gross I on And then year misheard the of on of the actually distributor that gross I've on the the sort with lower simply of the the be might associated the you, guide is because what kind

Yes.

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contribution a around international this that with coming we margin expect will virtually the improve line, marketing and the being and OpEx from However, decision strategic distributor X, the is bottom a overall XX% business.

here. sorry, million But if from apologies last midpoint again, the store was model sort misheard quickly. guide, The going closures, It you revenue of million then, $XX-$XX from million pretty and $XX-$XX loss And shift. one, I distributor can the tell of down mid-teens, sales, of digits. you growth midpoint missing would plus organic but sort guide mid-single a down those me? X I actually the something know is in there, I'm but suggest of $XXX-$XXX the guide

The Yes, international yes, to retail Dylan. and $XX-$XX to is of international We're is retail quickly. million million. a today. million across million $XX Yes, trying we lot $X made is retail That's of million. up do of it through $X messages total went definitely and $XX to

a double little think have there. I bit you there of had on counting So, that going is might

so, the right growth so then It's to way the mid-teens, organic down mid-single. that? And think is about

exactly Correct. right. That's

with Piper Sandler. Our comes next question Instructions] [Operator line of the Zvejnieks Abbie from

decision down? the then a one have for follow-up have on I you I And about Joey, SQ&A. can talk step the to

the proven transformation.And but about of situation to Sure. we years happy not We've X all a important year possibly is with a to albeit forward here.So, underscore with the that the into over And the it's I been we're moment, the opportunity the in this product invest around virtually ourselves driving various as but almost just to capable resources for and want methodical And the best team in to to myself have one. that process here. really place and to last get we're teams ago I joined exceptional that, in has progress, those one behind talking thought to fantastic. and I could phases that to necessarily as that, company in this have bring find leader we through get right throughout quite we and the Joe, decision have place, do, people.And exceptionally And handle do and the we incredibly predominantly we deliberate have best year suited we to Joe overall that retail leadership Joe to earnest is and when have to both a I go this storytelling. now fortunately, transformation think was growth. order be exceptional and work we he And have the in particular, personally was us transformation, being the bear this in at timing have fact helm. since in been And to have the an an now, around the work execution the

need this extremely absolutely that's about healthy. And back getting order return which We have think balance all phase, to place. And have sheet everything a have to in we in is we and A+ now we accomplish we an team next on offense. growth this

follow-up a you've on as that seen with yet? you some really just your I products product? recently? of the that out still SG&A any the but story maybe shoots And test mean performance on a the of know to connect didn't product more consumer, my new that some tubes this Or some like before Have is XXXX question. put green those you of you have launches, green newer seen of

a and let I'll add demonstrated to and speak No. already of advance And a I maybe color We Joe bit, that. some see it should think we've in little there.

Yes.

life. I example to strategy probably is icon think the near-term Wool Runner the coming X of best our

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half? it more SG&A lesser second than you marketing Just first will mean grow half? talk the said marketing the you cadence in can second that half. one, will the a of some year-over-year just Or rate a at little piece, still bit Does the decline but in about reinvestment that

largely Great. related marketing, international yes, at the overall, down, When it will looking be to transition.

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refresh marketing on offering new the coming haven't of out, back we strength specific go-forward gain continue getting to the the hopefully go-to-market. should that that the you You deck, expect who switch can to a the that's opportunity timing we the the and what relative all really then related the sure in in the the to in in have.So, line organic help see timing and that of to decrease probably heard have starting weighting we're half, to kind that's some the out and some investment the just start international some and business, marketing.So, really showcasing product we this of accelerate. of and overall you we'll meet and lot time to drives the biggest Allbirds back and with want put the really we just consumers should opportunity up decline from of And transitions, even offense strength going coincide with product of there this of pencil on make of supplemental in yet, and

from question line comes Nikic of with the Wedbush. next Tom Our

in EBITDA guidance confidence that getting you you and were in adjusted still to cash confident positive [indiscernible]. mean, the There in adjusted in the XXXX. that On have free QX improvement EBITDA much still XXXX. for call, profitability you timeline flow mentioned isn't and I do

the savings to with and wrap a kind long So, timeline cost the pretty of upgrading but And head around business like since just trying stuff it of that. even my seems across, like profitability. bridge

to product it by North we Achieving do our believe profitability XXXX. store we're the business positioning ramp date and timing partial adjusted we'll up achieve EBITDA deliberate growth the over impact year from in due a supported work coming profitability new anticipate that to and we've year, continue the XXXX, take may this actions only long-term line happening we'll to and U.S. international full-year the and XXXX.But the growth, Star, marketing than top that into strategic course remain are setting this us to done initially we closures, taking the in see up year benefit is the does year.And in longer these We profitable drive communicated. online we of will and to transformation improvement, XXXX that our from as later

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they That we the we will these When strategic and go But the continue non-comp being to made is line. XXXX. bottom into comp impactful do actions we correct. impact will year-over-year, quarterly on be as are remember, because have positive

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Our next with the of from Telsey Advisory question Dana comes Telsey line Group.

new your the should is you the closing number And impact? and that what's about what's by And think have? see as that of you stores of As store cost right XX-XX, eliminating a impact result? base what revenue stores, the you the

overall based the closures. largely Thanks, this with million. of top a about half-year door line the to That $X Dana. back on average convention million year to $X is is The

in into non-comp some range again, million terms some Dana? QX to we have to closing believe $X line $X half-year a savings, continue change close into retail go positive partial year, we Again, approximately cost top Does some the that and the be impact million and these that's again, then have already a expect impact, this will convention. closed, QX. as to over help, the of of doors. this few will do a largely we XXXX.In to of from on that So, a And course

base Yes. And after from that stores have existing number of the terms stores? are retain go-forward looking in what's should you you that? of to the What

offering.We successful on number products new about Dana, thinking we disposal, and really a balance it's more on could weapons most DTC wholesale I again.I big of and the there's where that of stores who and customers robust our lot much a expands, including the revitalize think there been potentially a I just space at think channel. purchasing of those alongside start expect can introduced really for we are stores consumers as some important think relevance then Amazon, and we us our aware is our to we for because should our aspect put momentum has the with hard which of and white that exist.So, base need, need to to number we get us maintaining product have have building

should as maintain marketplace business in geographic-specific one itself do way. and balance be it purchase So, very going we number to balanced as see the of forward.And omnichannel and we decision momentum, to it's the be drive stores and we a a that scales right about reveal want great the and mostly going regain but develop, will

I'll closing Vernachio for now portion. Q&A Joe the remarks. turn concludes call to the This over back

time everyone, you, investors at with today. months. us you by I'm to opportunity the joining analysts personally Allbirds. I'm ahead energized our much. very and to the really and Thank for us And incredibly coming spend meet excited Thank get of in

call. Thank you participation. This today's your for concludes conference

may now have Everyone, a day. You disconnect. wonderful