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Allbirds: Is This Bird A Canary?

Thomas Paulson
Aug 12, 2022
Allbirds: Is This Bird A Canary?

Allbirds reported weaker financial results, the write-down of apparel inventory, and a workforce reduction (8% at corporate headquarters) with the goal of preserving cash. In the second half of June, sales growth slowed, but management expects 3Q22 sales to increase between +4%-12%, mostly driven by average ticket. Management also cited "industry[wide] elevated inventory and promotional levels" adversely impacting digital and retail traffic trends. In order to hit its new sale targets, management has selected to increase Allbirds' promotional intensity in 2H22.

  • Adidas has also embedded an expectation for industry-wide promotions to increase in its 2H outlook. There are also indications that B2S promotions have been higher for Nike, Under Armour, Kohl’s, and Dick’s Sporting Goods.
  • Allbirds doesn’t report comparable store sales, but we calculate that store revenue per U.S. store was down 44% to $2.5M on an annualized basis (representing $804 in sales per square foot). The number of U.S. stores has more than doubled since 2Q21 to 32 locations, and we believe the per-store decline is largely due to the large number of new stores entering the denominator.
  • Allbirds added 5 U.S. locations during the quarter. Its store opening plans for the year remains 16-17 locations.
  • The company has $207M in cash, no debt, and more than $107M in lease liabilities. Inventory levels are high and inventory turnover slowed more to 0.9X. (For comparison, Revolve's inventory turns are 3X.)

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Thomas Paulson

Director of Research and Business Development, Placer.ai

Thomas Paulson spent 20 years as a Wall Street analyst and a member of asset management teams at AllianceBernstein and Cornerstone Capital, representing top-50 ownership positions including Target, Home Depot, Nike, Amazon, Google, and many more.

He brings consumer related expertise and knowledge of enterprises in retail, CPG, financial services, telecom, and entertainment.

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