Allbirds(BIRD)2022-05-11 01:40Financial Data and Key Metrics - Net revenue growth of 26% compared to 2021 and 49% versus 2020, with adjusted EBITDA in line with expectations [8] - US business grew 35%, driven by digital-savvy omnichannel model and post-pandemic retail recovery [11] - International sales grew 3%, impacted by headwinds in consumer spending in the EU and China due to geopolitical and COVID-related factors [12] - Adjusted EBITDA for Q1 was negative 33 million, with gross margin at 51.9%, down 10 basis points year-over-year [47] - Inventory increased by 11% from year-end, with in-transit inventory up 15% [51] Business Line Performance - US retail grew over 150% year-over-year, driven by the opening of four new stores, including a flagship in Manhattan [35] - International growth slowed due to macro factors, with an estimated 20 million impact on full-year revenue [13][53] - The company launched new products, including the Tree Flyer, which has a 70% rebound rate and a 20% reduction in carbon footprint [22][23] - The collaboration with Adidas resulted in over 90% of inventory sold within three days [17] Market Performance - US market showed strong growth, with digital and physical retail performing well [9] - International markets, particularly China and the EU, faced demand headwinds due to COVID restrictions and geopolitical tensions [10][12] - The strengthening dollar in international markets, especially in Europe and Japan, created a drag on revenue [12] Strategic Direction and Industry Competition - The company's growth pillars include product innovation, expanding the store portfolio, and scaling the international business [15] - Allbirds is leveraging third-party partnerships, such as Zalando in Europe and Public Lands in the US, to increase brand awareness and drive growth [39][40] - The company is focused on sustainable innovation, with products like the Tree Flyer showcasing its commitment to reducing carbon footprint [22][23] - Allbirds' vertical retail model differentiates it from competitors, with over 99% of distribution conducted through this model [38] Management Commentary on Operating Environment and Future Outlook - Management expects strong top-line growth of 21% to 24% in 2022, within the medium-term revenue growth target of 20% to 30% [14] - The company is managing a cautious outlook due to transitory factors affecting the international business, including the Ukraine crisis and COVID restrictions in China [13][53] - Management remains confident in achieving medium-term targets, including gross margins north of 60% and adjusted EBITDA margins in the mid-to-high teens [62][63] Other Important Information - The company is navigating logistics and distribution center cost headwinds, with an estimated 450 to 500 basis points of impact over a two-year period [57] - Allbirds is focusing on responsible growth, balancing top-line and bottom-line performance, and managing SG&A spending to offset external headwinds [61][64] - The company is targeting breakeven adjusted EBITDA in the second half of 2022, driven by strong product pipeline, retail expansion, and third-party partnerships [60][61] Q&A Session Summary Question: Confidence in second-half reacceleration - Drivers include a strong product pipeline, more retail stores, and increased velocity in the omnichannel flywheel [66] Question: Impact of promotions and pricing - The company has not observed significant pushback on recent price increases, reflecting the strength of the brand and product quality [68][69] Question: Second-quarter guidance and international impact - The majority of the downward revision is due to international headwinds, particularly in China and Europe, with some signs of recovery in demand [72][73] Question: Inventory composition and supply chain impact - The company has moved footwear production out of China, with most production now in Vietnam and Korea, minimizing supply chain disruptions [76][77] Question: Long-term gross margin outlook - Management remains confident in achieving long-term gross margin targets, driven by growth in retail and international businesses, strong pricing power, and new higher-margin products [125][129] Question: Store growth and international expansion - The company plans to open 16 to 17 stores in 2022, heavily weighted towards the US, with a focus on dynamic and rightsized strategies for international markets [135][136]