Allbirds sales and profits have slipped amid its ongoing plan to streamline its business.
The sneaker seller’s sales dropped 21 percent year over year in the third quarter as it continues to discount items and sells fewer goods. Its losses on the basis of adjusted earnings before interest, taxes, depreciation and amortisation deepened to $19 million, from $15 million a year earlier.
The company’s restructuring efforts have included discontinuing some of its apparel offering, which didn’t gain the following it expected, to focus on core items like its classic wool runners. Its inventory levels have decreased by 37 percent, but it’s still leaning heavily on promotions, which dragged down gross margins to 44 percent from 45 percent a year prior.
Allbirds has also committed to opening fewer stores and partnered with distributors in Canada and South Korea for more cost-effective international expansion. Those deals closed in the third quarter, but the move to the distributor model in both regions will lead to steeper sales decline for the full year.
Still, the company had a better handle on spending. It lowered its cash use by 70 percent to $5 million, and slashed advertising spend by 20 percent. But the costs of the restructuring plan also went up 65 percent to $1.2 million in the third quarter.
Investors remain unconvinced on Allbirds’ turnaround plans. Its stock dropped more than 15 percent in after-hours trading. It now trades more than 90 percent lower than its IPO price.
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