Allbirds, Inc. BIRD posted third-quarter 2024 results, wherein the bottom line outpaced the Zacks Consensus Estimate. Earnings were also above the year-ago quarterly number. However, the year-over-year decline in revenues was a disappointment.
The company recently transitioned to a distributor model in China, streamlining its operations for better market penetration. It entered into a new distributor agreement covering six key European countries, further extending its reach in mainland Europe. Following the quarter's end, Allbirds also secured a new distributor agreement for six countries across Latin America, signaling its commitment to strengthening its international presence.
The company’s efficient management of operations and finances contributed to strong gross margins, cost reductions and effective inventory control this quarter.
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Allbirds, Inc. Price, Consensus and EPS Surprise
Allbirds, Inc. Price, Consensus and EPS Surprise
Allbirds, Inc. price-consensus-eps-surprise-chart | Allbirds, Inc. Quote
A Closer Look at BIRD’s Q3 Results
Allbirds, a global lifestyle brand, posted a loss of $2.68 per share in the quarter under review. The reported figure was narrower than the Zacks Consensus Estimate of a loss of $3.13 per share. Also, the bottom line improved significantly from a loss of $4.15 per share reported in the year-earlier quarter.
Net sales of $42.9 million of this Zacks Rank #3 (Hold) company came almost in line with the consensus mark of $42 million but slumped 24.9% from $57.3 million reported in the prior-year quarter. The decline stemmed from lower unit sales, somewhat mitigated by higher average selling prices within direct business. Revenues were also impacted by international distributor transitions and planned closures of retail stores.
The company’s gross profit decreased 23.4% year over year to $19.1 million. The gross profit margin of 44.4% expanded 90 basis points (bps) from 43.5% reported in the year-ago quarter. The factors attributable to a stronger gross margin were lower freight, duty and warehouse costs per unit, along with fewer inventory write-downs resulting from a healthier inventory composition as compared to a year ago quarter.
Selling, general and administrative (SG&A) expenses were $31 million, down 28.9% from $43.5 million in the same quarter last year. This decline was due to reduced costs for personnel, depreciation and amortization, stock-based compensation and occupancy expenses.
Adjusted EBITDA loss was $16.2 million, compared with a loss of $19 million in the year-ago period.
BIRD’s Segmental Details
Geographically, net revenues in the United States were $32 million, a decrease of 26.6% from last year. In the International segment, net revenues were $10.9 million, down 19.3% year over year.
BIRD’s Financial Position
BIRD concluded the quarter with cash and cash equivalents of $78.6 million and stockholders' equity of $127.4 million.
Shares of the company have declined 11.6% in the past three months compared with the industry’s growth of 1.7%.
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What to Expect From Allbirds in Q4 & 2024?
Allbirds updated its guidance for 2024. The company now envisions net revenues to be in the range of $187-$193 million, down from the previous guidance of $190-$210 million. The U.S. net revenues are projected to be between $143 million and $147 million, including a $10-$12 million impact from expected store closures. International net revenues are expected to be in the band of $44-$46 million, which includes a $13-$16 million impact due to transitions to a distributor model in certain international markets.
For the full year, the company envisions adjusted EBITDA loss in the band of $75-$71 million compared with a loss of $75-$63 million expected earlier. BIRD anticipates a gross margin of 43-46%.
For the fourth quarter, BIRD anticipates net sales to be in the range of $53-$59 billion. The U.S. revenues are projected to be in the $45-$49 million band, while international revenues are expected to range between $8 million and $10 million. The company anticipates an adjusted EBITDA loss of $25-$21 million.
Stocks to Consider
We have highlighted three top-ranked stocks, namely, Abercrombie & Fitch Co. ANF, The Gap Inc. GAP and Deckers DECK.
Abercrombie & Fitch, a specialty retailer of premium, high-quality casual apparel, currently sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ANF has a trailing four-quarter average earnings surprise of 27.9%.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales and earnings indicates growth of 13% and 63.4%, respectively, from the year-ago figures.
Gap, a fashion retailer of apparel and accessories, currently has a Zacks Rank #2. GPS has a trailing four-quarter earnings surprise of 142.8%, on average.
The Zacks Consensus Estimate for Gap’s current financial-year sales and earnings per share suggests a rise of 0.5% and 31.5%, respectively, from the year-earlier levels.
Deckers, a footwear and accessories dealer, currently carries a Zacks Rank of 2. DECK delivered an average earnings surprise of 41.1% in the trailing four quarters.
The Zacks Consensus Estimate for Deckers’ current financial-year sales and earnings indicates growth of 13.7% and 12.1%, respectively, from the year-ago reported figures.
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