Q3 2024 Allbirds Inc Earnings Call

In This Article:

Participants

Christine Greany; Investor Relations; Blueshirt Group LLC

Joe Vernachio; President, Chief Executive Officer, Company Secretary, Director; Allbirds Inc

Annie Mitchell; Chief Financial Officer; Allbirds Inc

Presentation

Operator

Good afternoon, ladies and gentlemen and welcome to the Allbirds third quarter, 2024 conference call, (Operator Instructions). Now, I would like to turn the call over to Christine Greany of The Blueshirt Group.

Christine Greany

Good afternoon, everyone. And thank you for joining us with me on the call. Today are Joe Vernachio, CEO 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 full year and Q4 guidance target impact and duration of external headwinds strategic transformation plan and related planned efforts go to market strategy, transitions to a distributor model in certain international markets, anticipated distributor model arrangements, expected profitability cost savings target, gross margin estimates, product plan, timelines and expectations, marketing strategy and investment, product and brand 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. Please also note that these forward-looking statements reflect our opinions only as of the date of this call and we undertake no obligation to revise any statements to reflect changes that occur after this call.
Please refer to our SEC filings including our quarterly report on Form 10-Q for the quarter ended June 30 2024 for a more detailed description of the risk factors that may affect our results. Also, during this call, we will discuss non-GAAP financial measures that adjust our GAAP results to eliminate the impact of certain items. These non-GAAP items should be used in addition to and not as a substitute for any GAAP results.
You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures to the extent reasonably available in today's earnings release.
Now I'll turn the call over to Joe to begin the formal remarks, Joe.

Joe Vernachio

Good afternoon and thank you for joining Q3 was another solid quarter for us with strong execution across our teams with results that matched our expectations. We're pleased with our sustained progress and confident in the steps we're taking to advance the business. We're gearing up for a faster pace of change in the coming quarters, especially when it comes to product and marketing today. I'll recap the quarter and share updates on what's ahead starting with the highlights from Q3.
We recently launched two new products, The Tree Glider performance inspired shoot and the lounger lift, a slip on designed for women to support the Tree Glider launch. We enlisted Wellness expert Melissa Wood - Tepperberg, founder of Melissa Wood Health for an in person event in our New York Soho Store. This activation created engaging social content and positive media coverage helping us reach a wider audience.
The lounger lift was a top pick on the today's shows. Trend report highlighted as a must buy for the holiday season. We're thrilled with the strong consumer response to these launches which reinforces our confidence that our upcoming product set for release in the second half of 2025 will drive future growth as part of our ongoing efforts to optimize our store fleet for profitability.
We completed two additional closures, one in Q3 and another shortly after the quarter ended. This brings our total US store closures in 2024 to [50] as part of the international distributor strategy. We secured two additional agreements, one in Q3 and another in early October. These new distributors will help us expand awareness and reach in strategic markets covering six countries in Latin America and six countries across mainland Europe, both beginning in mid 2025.
And lastly, our operational and financial rigor enable us to achieve strong gross margin, performance, reduce costs and continue to carefully manage inventory levels. This quarter, we are operating with a strengthened foundation and an improved cost structure resulting from our transformation work.
We're now in the next phase of our journey. Our renewed emphasis on making great product telling great stories and providing customers with an engaging shopping experience is propelling the brand forward and positioning us to achieve growth and profitability.
Let's start with product. We're returning to our roots as a modern lifestyle footwear brand. Refocusing on our core tenets of comfort and versatility that have always defined us. Our future product lineup brings a new level of modern sophistication that pays homage to our origin story of comfort and sustainability.
This next generation offering will begin to hit the market in the second half of 2025. In the meantime, we're keeping things fresh with new silhouettes, materials and colours. It's gratifying to see customers responding positively to our latest releases.
As mentioned, this includes tree runner, go, tree, glider lounger lift and canvas paper. We've also brought back the tree topper by popular demand. And next week, we're launching the lounger renewal. Many of these introductions have been strong performers demonstrating that we are delivering the newness customers want from Albert.
Additionally, we will be introducing Corduroy to our best selling runner franchise, rolling out more rugged versions of our water repellent collections. Later this sequence turning to marketing, it is clear to us that now is the right time to begin reintroducing the Alberts brand by telling great stories to both loyal customers and new audiences.
We're on a mission to reinforce our aspirational brand position and rebuild our cultural relevance with a strong lineup of products set to launch in mid 2025. We're beginning to thoughtfully lean into fresh marketing initiatives under our All Birds by nature brand narrative.
We're already seeing positive engagement from our campaigns. We expect to build on this momentum in the coming months soon. We will be launching a top of funnel strategy to increase brand awareness by partnering with OBB media and its branded content division folded to build a premium digital content series. OBB is well known for creating some of the most successful marketing campaigns in recent history. A great example is Cold As Ball a series they created with Kevin Hart in partnership with Old Spice.
Our primary focus will be long form video content which is emerging as a highly effective strategy for breaking through in today's attention economy. We believe our by nature messaging will enable us to convey our values around betterment and celebrate our roots. While the video format will help us build deeper and more meaningful connections.
More specifically, we will be building a premium digital content series surrounding the Albridge brand with inspirational people, ideas and storytelling. To lead this effort. We have brought on acclaimed producer Kristen Wong to act as our showrunner for our series. Kristen's work on shorts and TV. Specials includes Dave Chappelle and Disney.
We are preparing to start production with featured partners. Soon, we also have a series of middle funnel initiatives and pr activations planned some of which are already underway in October. It was announced that Albert will become the inaugural footwear partner to Uber Eats Climate Collection. This is a curated selection of ecofriendly brands that will be available for delivery on the app.
This collaboration will enable us to tap into their user base to increase awareness, making it easier for people to discover all birds. When we overlaid, Uber eats users with our store locations. The overlap was significant in California, New York and Illinois alone. There are 19 million Uber eats users within delivery distance of our stores.
We are teaming up with Marriott envoy on a sweepstakes with cross channel activations including email paid and influencers. This is a highly visible campaign for us providing our brand with exposure to Marriott's customer base.
Later this month, we'll be celebrating our most comfortable products with a special media and influencer event in New York ahead of the holiday season. As we bring fresh updated products to market and amplify our marketing. It is essential that we provide our customers with an engaging shopping experience across all brand touch points to that end.
We're planning improvements to both our e-commerce site and stores in the US that will begin in mid 2025 and take shape throughout the second half of next year, our e-commerce site will be reimagined to make navigation easier to ensure that our storytelling and the overall shopping experience are aligned to our new product architecture and marketing message.
And our Alber store will improve the shopping experience through new product displays, sharper storytelling and other enhancements. Everything from seating and store, navigation to flooring and display tables. Looking just ahead to the upcoming holiday season. We believe our 2024 product launches and marketing initiatives position us to capture consumer attention.
We recognize that shoppers will be looking for value and we're planning for relevant promotional moments throughout the season. Black Friday and Cyber Monday will be the most significant. Importantly, we are well positioned from an inventory perspective and expect our overall promotional activity to be below last year's levels.
We are confident in our plans and how they're coming together. We're passionate about where we're going as a brand footwear is a long game with product cycles taking up to 18 months, but our revitalization is well underway. We're just coming off our fall holiday 2025 sales meeting, which we believe was a resounding success.
This was the first outside look at the new product architecture we've been talking to you about and the feedback from our external partners was tremendously positive. It's great to receive this validation of the product offerings we're planning to bring to market in the coming months. We're working swiftly making big moves in a short period of time, in fact, from a product and marketing standpoint.
We've never been sharper alongside our work on these critical focus areas. We're also staying committed to the foundational aspects of the business. We've made significant progress on cost of goods, expenses, inventory and cash. You can expect to see continued discipline in these areas since day one, sustainability has been at the heart of our brand.
Our latest sustainability report reveals a 22% reduction in our per unit carbon footprint. Just last week, our Moonshot zero, the world's first net zero carbon shoot set to launch early next year, earned a spot on Time Magazine's list of best inventions in 2024. True to our core values. We remain committed to making a positive impact on the planet as we work toward both profitability and further carbon reduction.
It's incredibly gratifying to see the hard work and dedication of our teams across the organization. Everyone is aligned, working with speed and diligence toward a shared goal. This unity gives us tremendous confidence in our direction. We appreciate the continued support of our shareholders and remain focused on advancing our core strategies while staying committed to creating long term value for all our stakeholders.
Now, I'll turn the call over to Annie to discuss the financials.