- Earnings call transcript Q3 2022

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Allbirds Third Quarter 2020 Conference Call. [Operator Instructions].

Now I'd like to turn the call over to Katina Metzidakis, VP of Investor Relations and Business Development at Allbirds.

Katina Metzidakis

Good afternoon, everyone, and thank you for joining us. With me on the call today are Joe Zwillinger and Tim Brown, Allbirds' co-Founders And co-CEOs, and Mike Bufano, Allbirds' Chief Financial Officer.

including like today you the today. guidance that the referenced securities earnings I'd make we meaning our target, start, financial in initiatives federal statements our and of certain are laws, our impacts we to to and issued external that remind will of outlook, duration Before XXXX about headwinds, medium-term simplification statements release forward-looking matters within other actual results forward-looking uncertainties cause These involve that of a differ and risks to statements number materially. could Please forward-looking only also and reflect as to reflect statements of no call. call, this to revise undertake that this changes note these after our that any statements the opinions date we occur obligation of for detailed the a ended XXXX, to for of our may XX, description quarter refer SEC our the quarterly XX-Q Please September more risk including results. affect filings, factors the that report Form on call, the to during that results financial non-GAAP GAAP Also our items. impact will adjust we certain the measures eliminate discuss of used and should non-GAAP addition GAAP not for substitute in any These as a results. items be to noted, to call. which financial adjusted non-GAAP a to net when otherwise we speaking referring is revenue measure during will net today's revenue, Unless be

we referring active Active total the of period. preceding to are from last During also measured customers. the made the today's customers date number such defined X our as who unique purchase in will customers of have call, least be at XX-month period,

of a in GAAP will non-GAAP these measures You and available extent financial to reconciliation the reasonably release. today's these regarding their find additional directly to information measures measures earnings most comparable non-GAAP

the call formal I'll to Joey the begin turn Now over to remarks.

Joseph Zwillinger

introductions, the brand a headwinds of to pipeline to for economy on year products. off to this to and everyone. cutting-edge in addition sustainability century. the enable all our including we what which I'd continue a I it our industry. commemorate of and and program our we've in Allbirds a incredibly style I outlined the on critical it's apparel on to from culture third-party future proud commitments remain what not new defining today and And and objectives a the remain good by of passionate to all, track S-X loyal like you, brand principles deliver and materials full we deep global and anniversary could innovation, a footwear our afternoon, the our optimistic start into Katina, sustainability been. framework Despite been uncertainty, building channel a is of for more stands step IPO, circular built new conversation be it's a through X-year us tremendously lead moment about our launch Allbirds. and that taking rerun external year wins, our and of of say, team And the in Tim base. the Needless the fiercely our we customer for, Thank of

data changes into thanks Back to the platform, I direct as signals. relationship to sophisticated we customers our to digging on a context in with it. our of we bit Before see early I quarter, environment provide in demand the and believe were consumer identify QX, want

of the and China. while in increased that to insights, I diagnosis external am entered Since work QX we EBITDA prepared environment. to choppiness net playing share and we adjusted certain and goals. in quarter we and addition for we the is great our third spoke, guidance to our market delivering taking the Thanks our team, as Our from exceeded are revenue of out worsening the expected, these in demand environment, with market proud coupled report some sustainability FX last lockdown headwinds extended target we seeing COVID on areas

our impact along high levels be backdrop expect to with and weaker negatively in Europe by a impacted worsening headwinds. We which persistent and will promotional FX business, inflation U.S. QX activity, consumer of

scenario we digested an fact, months, and by and taken cost the growth worsened the this and complex consumers. headwinds opportunity environment for our during beyond. also execute believe meaningful of We've structure processes consumer as coming fully in announced are XXXX EBITDA experience simplification the with operating in QX, market of optimize in initiatives a our in to best these while to which and preparing as are myriad positions for continue investing we streamline dynamics customer a In improvement adjusted full business against that continued impact

demand, outlook inventory us do on economy, These the costs. balance we to actions belief buy, Despite targeting sheet, to free right the from the our these to take a expect to the working holding a meaningful margin at to and that continue lower evergreen given XXXX do to we'll On high-quality in open as the last right quarter going capital our cautious up initiatives allowed something consumer tighten has points forward, things turns inventory were time. of took my nature increased the turns increase hold. validate we fully increased

expect since that a in strong to Despite holiday that, we XXXX. inventory, holiday the the environment most prepared have launching right marketing the with campaign. mix of season, and road we we've to great alongside promotional company the be Looking map a external ahead coupled we've product experienced

season our approach we to despite feel one, our plastic-free materials. product while invest point energizing this expanding of behind incredibly And X with product, first-of-its-kind our but all-important three, are head business. innovation our initiatives: proud external our performing key a and to prudently fleet; other taking with XXX% alternatives. from planning the continue and together, growing to bovine we This is I are leather, leather store international two, business, environment. more of scaling noisy leather, similarly a confident a our portfolio; of differentiation Taken growth into plant as recent we launch Starting we conservative

can customers of Allbirds. with Our an elevated select our on consumers provides weather called was first use product the pair with expanding which new the sneaker the silhouette plant style, occasions where a pacer,

We for also flow that our customers holiday to good we expect love. product have

Moving to stores.

U.S. the reach new current including X the in retail still quarter, fleet XX% in which year-over-year. channel maturity. to store owned is our revenue during ramp-up around opened Our taken that quarters X net has the It's to half grew note phase, We important nearly revenue historically stores X

that sales However, right ramp is headwind. longer given the macro taking now

and stores the tool, Our marketing repeat customer ultimately allowing on acquisition valuable acquisition to omnichannel powerful penetration brand. best costs, to a remain expression lower gain leverage of customers us our the increase spend are of

That to we by be in and stores traffic across maintained up and Allbirds levels. purchase operating industry slow continue recover given Even The though that traffic sales to remain on correlates negatively majority we impressive stores retail. we above uplift score environment. NPS traffic, this to below choppy believe an of that omnichannel will consistent our an environment, believe the U.S. that in the the the said, levels what of continue we appears positively see we Wrapping timing in to see impacted be XX we of markets repeat the is which brand. unclear above with recovery a of e-com-only Our in overall for regions. recovery pre-COVID health

strong that third Turning expectations am we of early now happy sell-throughs. ahead report to with are to party. I our tracking

to our newest the other in Goods our aligns co-op of will be the fantastic members. nature experience and to to with action furthering that dedication transformational weeks, to making have partner, format beyond in way. better REI's and We beginning of of house million-plus our which also retail coming as power the customer In Sporting recent XX to added enter I'm apparel format doors partnership are belief their and climate stores core announce DSG's delivers company's in along will goal better QX. REI Dick's our products expand in thrilled DSG footwear X perfectly most sport to land banner. we pleased with public intend a a we

a to We each develop unique compelling approach and customers stories of partners. for with methodical marquee are our taking

Our we holiday have long have to potential we of to this At and the brand brand to of channel fantastic great activation ahead our Similar of a flagships. have party. just is of REI that was runway over about wonderful and in our strategy, strategy customer a heard as example at direct center third stage doors, XXX us retail that activation who currently in our the growth not acquisition third-party a awareness. believe yet third-party We is new our key products. tenet consumers meet increasing footprint use already Nordstrom is

of found overlap fact, our our third-party very customers In we brand opportunity runway a those for and providing and partners, fantastic have direct discovery. channel between little

to strategy quarter, we third-party the of same. noted take last journey and and but continuously In the the strategic goals shift, retail time As our financial stores. to volatility, achieve balance optimal significant we our owned destination evaluate looks channel the may a between we determine

across grow and products. deliberate growth channels, our our capital of as plan along and we third on our marketplace and between growth, forward balance including stores on top line to the continue look conscious efficiency. the party, providing we importantly, profitability will and I updates more upcoming digital, calls be As we for journey methodically

U.K., Though points Turning approximate this key as headwind FX. mentioned nearly international focused continue navigate demand geographies as Germany, Japan in X,XXX are we China. from primarily grew remain to we in quickly on last to macro an basis Canada, we confident our The environment. quarter, our international long-term year-over-year markets, the XX% choppy Revenues despite business. X and we

example despite in of environment in an are U.K. at experiencing being we strong this the Europe. As momentum overall the focus challenged work,

in positive Kings initial solid XX% During comps QX, in over by currency, saw we established our and stores local response London driven our Road in store. to Albert growth new

the brand to opened into sales. I the to today. remain Allbirds on increasing driving with turn time brand. I'll simultaneously us confident am with you we business. the that, is closing, for we Selfridges work and shop-in-shop, generation-defining are into of call proud Tim. to also it over taking doing which drive and can We a efficiency In be build Thank the awareness And

Timothy Brown

Joey, and afternoon, everyone. Thanks, good

the it at I'm XXXX our to highlight XX% XX%. footprint report world, product important while we what's never our in emphasize . published felt goals. actually proud more carbon our has and revenue by growing to XXXX, As in average sustainability that recently we We reduced by our sustainability look happening

to in footprint XX% framework. signed introducing X to lighter and facilities. XXXX, it this unnecessary through XXXX. have regenerative consumers. X% Zealand way New install brands We've XXX their that Marina agriculture, key have brand we agriculture, we XXXX for X promise representing our which work and the progress renewable our reducing renewable energized globe, Zealand's the introduced environmental follow. others support of procured regenerative on goal low standard to date, materials other our at renewable this a XXX% our with to manufacturers near made half was human, groundbreaking meeting at sources by a long-term to focusing in nature proud committing removing responsible energy, partners And Rx carbon are the energies, and renewable make In ZQ footprint towards we its helped solar XXXX to midsole of [indiscernible], manufacturing Supplier in the a In banner New of To with continuously by done Vietnam. are year animal set pave drive plan, from And to electricities walk In product and on-site XX% and U.S. components. by cut and industry teams across to already energy materials, in and on partnered farmland, new New carbon meet work improve have by outcomes. our Zealand nearly Our our for our we by growers up, periods: tangible to the regenerative for by

which this footprint X% In to significantly of XX% ocean XXXX quarter. addition, carbon than XX% we shipping our increased share XXXX lower year, by in shipping, to from has in a over

latest take These we're a the In encourage of addition benefits just ocean to our the sustainable to at of carbon conversation is. shipping our lower few a we signifies has margin. footprint, for of our are business I the carrying sustainable we sustainability lead many how look continue better model, real are essence gross report This more and all our to see to things in a up, the you footwear. the

liter part Turning QX vegan materials all like a agricultural exclusively and oils natural that big launched innovation for contains XXX% alternative a materials We was XXX% to is first-of-its-kind quarter and byproducts. plant plastic-free, this. leather, product.

weight lighter Canvas, and of make X We which also a worked launched hard Will that and growing materials suite materials, robust to Woven we up build.

we and we will into forward, comfort to to Moving offer. existing super and experiences expand natural franchises continue these product enhance our inject the new

Looking remain performance performance this happy both with across made meaningful footwear portfolio. product our broader portfolio, very we We lifestyle our progress have in quarter. and

as running recognized speaker flow Men's In for a Health just was XXXX. by fact, the top

style forward Lifestyle, see Fly as building limited available continue is We in We our the consumers. providing a supply shoe, lifestyle and performance use intentionally by limited the of plant media as in to launched leather, patent important for additional plant the consumer reaction. true new step [indiscernible] with repertoire encouraged and our franchise our are another which and broadens recruitment. In occasions we our supply,

will to forward. growing invest We moving in continue new franchise this

and strong Continued style which heart the as about collection, and well collection, work to comfort. core holiday volatility, play is run third holiday, all focused our sustainability for material offering role our the on combines innovation great campaign our our we conversation key innovation in our over we creation party. and weather repellent do getting of paramount and recently growth brand material pipeline best-selling the I'll closing, that, fluff at also excited to In supernatural turn support and leading as and perfect new products of launched into amidst Mike. missile water materials. our the With will which it focused are next of cold with be wool hard on from a space made performance as to continuing the product I'm launched on recently into our move including remain footwear phase supernatural going product

Michael Bufano

million, thanks excluding our teams the focusing my for like can Thanks, in by outcome what a we control. to the net to to led adding increased revenue impact good start afternoon, execution $XX Their on FX. controlling of XX% solid everyone. Adjusted to financial quarter. Tim, I'd when and XX%

FX. Let with and we Starting with XX% me break the growth U.S. XX% saw XX%, down for up when up the . balanced growth geographies, international drivers. adjusted

revenue at growth was and mix. third-party channels, significant of Looking a represented a driver mid-single-digit percent

an to continue party in third XXXX. be expect driver to We EBITDA-accretive growth

at good a QX, saw the brand customer roughly revenue a QX. deeper of granularity and was basis, provide I'd up growth active our In on business. customers with XX% value on lens, which active orders and and of trend through as in customers, increased Looking we year-over-year indication in order our and go to direct health view and the XX% our line increased QX average X%. business, some we like

customers, customer. steady digital We addition In to increases in active across in gains we seen strong per active growth have and saw customers spend in both retail.

the As you'd expect driver. with more stores in XXXX, retail bigger was

acquire build of medium important rates As are brand drive Joey us customers proof long business efficiently customers, customers an term. our strong LTV. increased growth existing indicator noted, that health our customer build consistent view our pillars brand repeat in of helping for and as awareness, We active stores a growth and durable the a point new omnichannel and

accretive in shipping were early international third-party sales increased QX our margin. initiatives. margin gross offset COVID-related away adjusted headwinds and mix our came Business An partially to from in business cost by gross modest expectations and on with ocean simplification segment a Moving at from XX.X%. benefit consistent increase

promotional previously experienced increase also partially strategic our price some the modest which discussed We pressure benefit activity, our of from increase. offset in of

continue believe competitive they to and to this we We to that need where environment meet respond customers are. highly

behave cohorts. have we to customers promotions through that to prior similarly continue Importantly, acquired

negative simplification some QX we SG&A and this from Again, and million. about Marketing lower initiatives digital really the basis QX. due into marketing $XX.X delivering in a shift increased efficiencies from good was tight QX. EBITDA Finally, feel to spend. sequentially spend result adjusted channels as tied of in our decreased year-over-year marketing to control both the our We well on benefited as We

as ended sheet. we're $XXX that to continuing the in is of makeup inventory, has about good end products the footwear. part evergreen accounted from that core Included million simplification Moving of to which our that of balance to for QX about is inventory compared the which was majority the million In-transit QX. up of with initiatives. X% vast of million of We inventory We liquidate inventory, the down slightly end-of-life $XXX come feel of but $X QX. X/X over

footwear have buy our backdrop a Tighter for buying, to improve expected foreseeable inventory improve is plan during titer we cash last call, year, believe our free in with structural due With flow than strategy growth and growth turns, initiatives revenue spending we more improved XXXX. position as reduce a mentioned is As mid-teens simplification ample demand initiatives core uncertain of the $XXX to this we slowdown begun million selective consumer on coupled inventory and levels to to the for promotional in QX and our ending more future. fund cash expect our SG&A turns. to

QX, announced have top the These and a while initiatives walk like cash updates provide leaving to delivering on Before last the path generation continue initiatives simplification to on update reach through growth provide would us I up each. initiatives targets. I'll and our set quarter. profitability an us on line to keeping

supply to our year, initiative impact in first full XXXX, of will partner. this commence production The carbon The but the is last centers expect to our chain I'm in will basis both cost week to the Later a through with P&L a early investing processor. run this in We we we costs returns in our our new rate also new flow dedicated and footprint. product we significantly reduce change U.S., XXXX. automated report decrease successfully landed on and pleased that to distribution just transitioned factory

QX, predictability see we in already would to have gross margin changes provided these together, expect on impact Taken XXXX. positive cost logistics a and greater for

up in free to to and critical organizational for resources initiative invest second The that are to SG&A generation. areas is our streamlining demand structure reducing continue

$X million XXXX to corporate track starting $XX of previously on in savings and million million on $XX $X SG&A basis XXXX. deliver million to the an annualized are to target in communicated We

Joey said nonrecurring we The end-of-life to million. on with liquidation are simplification now I'd to the earlier, any exclude initiatives. associated track expect third the thing simplification be which $XX guidance echo rest initiative to them time. to clear like expected. for million the our of To targets to Overall, onetime do with inventory, the is these it at proceeding to as nonrecurring the were right $XX costs associated that costs we of actions which the net and is to turn XXXX, with revenue us continue the right total is and what initiatives

Our remain -- XXXX to FX. revenue range annual $XXX up to XX% X% XXXX minus excluding target of to of This ranges XXXX, to guidance adjusted XX%, net million, X%. QX $XXX continue range We to when $XX a is XX% million, to QX unchanged. to we the which $XXX of expect XX% implies a of plus million impact compared versus million

in We to QX. at international expect and roughly the U.S. rates similar grow

gross profit margin to of profit, range midpoint $XXX.X adjusted we revenue and The to a For $XXX targets continue of XX.X%. million. an expect represent adjusted gross our of million gross

and highest on December viewing so we're our XX to expect now, in through few a of is what we're anticipated. I'd XX in in are especially In to thoughts we XXXX. we of alone update end These consumer have as than model projects continue few EBITDA consumer with to I impacting expecting share business doing now everyone million. we're openings finished business, year for of is to response. U.S. traffic the in from leading a year notably QX, the habits year total QX sales like season. By are that in accounting sales crosscurrents U.S. this EBITDA. historically quarter spending have the also negative volume adjusted expect additional pressure internationally. $XX.X XX% else all right and faster parsing QX full -- modestly far XX like QX XXXX, holiday and that over XX quarter, We and One will stores, the XX XX negative been to We the $XX.X the adjusted stores, net new of how November million the to spending open choppy, up a

about this the impact closer we what that high feel in different improvement for to an confident season. consumers and wait QX marketing inflation headlines fears best believe chain holiday This we that earlier holiday when campaign history. last targets creating recession and assume of is to is have supply is improvement because product and read they cautious be in of spending behavior versus company's quarter-to-date delays. started promotions We Our will because buy guidance believe our year we our our trends. need X-year more than as

are now and have environment. factor consumers in they meet to the We competitive right where

XX% our season XX%. marketing the sell-through enhanced industry an So channel, below That how communicated I'd retail strategy the could like in we later end plays broader Depending of better on to at this than season that XX% for quarter. to holiday QX full we the by call. XX% peers, much weeks calendar. Omicron the includes but the out, to everyone on lapping the remains promotional remind pressured we also that year were will begin price

$X factors a Finally, macro are we couple are quarter. we that quarter. we factored guidance million see year-over-year million, what FX the as the our several of look is current million last One, in now impact additional considering Indeed, to is negative to is the which QX continue We $X headwinds. than external estimate there worse FX increasingly at we

China Given the the does due ripple our in is spending risk U.S. is lockdowns. not rates, volatility of COVID there fast in volatility and further spending to next to three, the consumer potential business months. we for X sound in further. headwinds see moderate consumer could there rolling And continue that effects Two,

to and share. coming in closing, continue actions, built results the chain, us with better structure Operator, take approach your In believe target a intense Thanks management, end the targets supply and a cash these on sustainability have create and on Q&A. for towards we business We our focus our line positioning Taken X about of medium-term deliver for increased our together, at feel shareholder we our future our operating ranges. environment, the time. to believe this please confident coupled while our of become create the initiatives we risk for tough processes, we is how value. operating operationally, these ability all guidance and factors leaner drive our lower and QX business are thoughtful profitability pillars stronger our to Through growth our infrastructure. and to position open really

Operator

[Operator Instructions].

Our comes Mark Baird. Altschwager first question from with

Unidentified Analyst

a the on This take performance year this paces you tonight. product shoe. around new the earlier is Amy different we Where are assortment in footwear pipeline? We've for side? few the you lifestyle the more the expect Mark in focusing performance directions internal not on seen Should with the see in flyer launch lifestyle category, development side the a now to on owning

Timothy Brown

the We're is really Thank continue overall, performance well all good of we stay the And our with focus space. that We launch again, build really feel remain -- the The that DASH making. the Swift about with the further offering performed that time and the even and technology plant the use of The the build material laser-focused we natural X/X and most pleased well running pace, products style the our material on really Flyer an also over introduces majority as days and feel the journey We'll original Yes. we'll still comfort form, really letter idea of the is the business, innovation lifestyle that the into about. that core in at excited product. across continues to on really, to expand in credibility franchise pushed excited platform about. performance. and question. entry-level case. early new or and Quarto new our perform recent there's continue franchise, of and that to for and of you that we're trust remains the with product our for supernatural that of focus a us

sustainability continue We for think a around consumer and purpose. natural there's the for trend in the white great our space category to materials that

and about come, to to road more excited really we're map lots product looking So really, in the 'XX forward

Unidentified Analyst

you this Great. own more to you're bit than on promotional a increased side then noticed is this cadence? coming your expect strategy? your We thinking you different react how Are what customers to off you file the gears, can just little And promotional switching a activity? talk ahead promotional about XX% past happen. Or seeing is of about bit

Joseph Zwillinger

early -- a that we is increase this Yes, you overall around significant signaled think environment anticipated stand thanks, really I in this promotion. industry, look we on certainly Joe. way. out We've I very think the the And that if it's

So it, the uptick perhaps the even result the competitive super promotional and this moment expecting the environment. alluded making that we're fact consumer to we're -- activity feeling and and slight of we're Mike meeting in for in a do promotional will as a sure

of meeting discounts are consumer about that we're making how approaching So terms the and to the of the of said, we're elevating good really they moment, nature being still the where best-in-class that we're a certain That degree. for premium meeting in terms I'll industry reiterate, promotions. the feel we in balance and

and of last the that, all quarterly about kind we what good it's pretty at to track generally call. feeling with all signaled you So on

Operator

comes next of with Lorraine . Bank question Hutchinson from America. The

Lorraine Hutchinson

your improvement about . EBITDA EBITDA in your targets setting of numbers quarter as last XXXX, simplification closer spoke for significant program You or around adjusted you up to for goals we you provide 'XX, getting bardrails can some

Michael Bufano

now. into that right fact next We'll on pretty get volatile part, call Yes. just demand the to QX environment really a it's Lorraine, that more thinking in Mike. the it's after

will that things that can good progress making the accretive. add we as well we're are The channel the and do think into control other material we feel have third-party million EBITDA as us the the savings especially iterated the margin side. the on that when well it, we're SG&A P&L we structural on direct really the XXXX in making when the the over, at we coming there. play still on middle, at that factor So for EBITDA $XX to we side, look gross like be we improvements, is look of we corporate the that X most that $XX world fact million of

around potentially So have That better expect to 'XX. much well. into exactly it can going as also that will and we handle of we in how we're how out once channel it play much a expand

So call. talking the to into and a detail more get more that we look on . forward when little about bit next 'XX we

Lorraine Hutchinson

And some just want marketing on the Joey? details I'll . further. ask improving on then follow-up. comments made maybe that, efficiency as you start for you a to Do around

Joseph Zwillinger

Yes. Sure.

on while think of maturity I really it in before half our overall leverage the still about And is infant of the in still have its brick-and-mortar So we course, towards that, marketing. to of, mentioned, phase we're what part terms revenue path in of comes shift hitting continued we profitability. and as ramp-up and channel referring on target getting fleet from

of a good despite job as the to and our little that in a really P&L shift. it's through a our funnel making a to drive continue being balanced the ahead as nice that whole we've were IDFA throughout able of team to mix then we've to sure just media mix that invest fact really navigate on leverage the well continue challenges the brands. and through marketing we're and we and also of we're our bunch -- we optimizing And So it's done bit said before, both creative

Operator

Our with next Bob Drbul from Guggenheim Securities. question comes

Robert Drbul

questions. couple a of Just

fleet, you're in evaluations your guys volume terms brand that's But And sort that stores. you That have then unaided progress right store on stores, the would brand? itself, done markets? of be the talk of to or little any and/or seeing the more terms word awareness, On recent a use, making awareness, can some aided what more with more think helpful. mature of you the established stores just on in of you're if stores, you around there mature more older

Michael Bufano

environment Joey in Bob, as know. tough a I'll you to, well out alluded stores. the on start it's overall there retail,

forward. they can the So sort certainly role overall that they're really not stores the are of But of They to and same kind Corvid. way omnichannel LTV we pre-'XX our serving stores the drive experience that deliver right we customer help talked performing all drive about, of going awareness. those pretty were us offer best feel traffic the we up is for about brand they customer the now, are which how level back good

on Joe, So the want question. that's jump side. to the Tim retail brand in how it or you viewing do we're on

Timothy Brown

that directionally, a really just you It's in the which I'll specific we're is continues making on increase. is we that great a drive I really quarter-to-quarter don't progress, on it that. I'd really look line and Yes, metric at a it why we when that And But cities share Bob, general, retail stores, it not can time. we have lot. where tell basis all trend helps to reliable quick, say

on uptick in concentrations much drop to really when certain quantitative of to XXX with in focus but in as course, on that, we're region of actual And third-party you'd outlined we in significantly too nice of early doors we of us. in expect, cities. being So impact a . that -- for But we've doing consumers obviously, really our awareness kind the it infill on too this market of we the target play aided the stores, why bucket certain a in. the And that does job there. tell strategy

Operator

Edward comes with Sandler. question from Piper next Our Yruma

Edward Yruma

to on should incremental that continues about a you've variation the driven? first, was that gross SKUs, I how it you then from be you're wholesale, going the and about count the right if think to grow, assortment, EBITDA X%, sounds largely we the think innovate. medium-term given your margin positive think about SKU it that guess, pretty wholesale making And do impact, how editing expanded think sure and is implication. I I we growth should was understanding materially, it thinking How historically, to continue color as like model follow-up,

Joseph Zwillinger

pass on I'll then second one. questions. over to the and X on jump first it Mike the the for Thanks

increase Markdowns to is the you some consumer activity noted, way be to better some we as also with So count, seasonal to prudently. to more balance seasonally promotional that and of a being going those inevitability SKU then freshness put inventory for It's us. deliver relevant as very a little offerings bit the and that. a to managing of there's markdowns need an we drive

cycle certain we is site to and of markdown a to extent to stores. expect that retail all to our discounts expect normal positioning and navigate the brand within that So premium we our that's that in kind continue physical deliver, that

we're channel third-party approach can. show marquee and we that the to the building overall interact when that effectively we to of price be carefully, we're strategic keep marketplace account because much with trying really want smart clean up in we as and taking third managing to consumer is over why So we marketplace for very as we also very we're us across the maintain control to about kind this parties how which how as

Michael Bufano

second your third question take and parties. part I'll the there, on of

there. things of couple a Just

starting First, That's the bit the QX, we unique quarter. into a a of in stores, these these why that out some the of retail new we're with partners bit QX of right, there. load part as sales and Remember, called into in, because relationships for there's little

gross really that much X out pretty gross moved was In we the into stuff terms a this basis, on good line bit call our very the environment, coming of year-over-year about in were especially we the feel we it of a land the for the biggest wasn't little landed quarter. the of in gross of on things it felt laid drivers expectations margin quarter, like impact, margin the margin that where

better business. I QX gross on XXXX. implications on our the business model the third-party and direct of in That's we the again, And medium size objective margin I the that's lay we've target. ultimate that again, something ground response in call, on into take And been term, have we talked like out. the just we'll bit earlier, can we gross little question much our a the my sense on focused when margin about think a Your get

little to would time on differently probably we party, both. break third out So to over a visibility bit due

Operator

from comes Boss JPMorgan. question . next Matthew with Our

Matthew Boss

you could you that you the Joey, the for half quarter the cited? of the in improvement trends Maybe speak midpoint So the speak the choppier on in progressed? could third quarter, to revenues any at saw region projection the And flat opportunity for fourth demand for to that you as quarter? changes consumer by back elaborate on the

Michael Bufano

holidays. through continue could That the

the reasonably what and call. we world. persist We've that seemed a shoots indications the the mentioned in their rolling that's seen story, really big lockdowns Early X as underpinned coming to reaction said of green notable there different some was spots COVID that consistent already. up in earlier longest show So the China on that the lighten with terms anywhere we on than U.K., festival in was in of consumer with bright by Double-XX. the

been to have yet. that eclipsed fully start good So

call has is in to on as think in continued period. the were consumer that year. would we And our we addressed starting some for say the which demand, probably U.S., in then the a that it's this early And So call, little outlook to there. I call -- into earlier said last pullback I largely see

where expectation, look that when a reasonably looking year Our outstanding, you look the versus things reporting last consistent. were of stack for lot they mix bit going the But couldn't now, with of right consumer inventory the trends. I get think where look they little into the in there's you X-year are at, the companies is at to a lot that look that you in if it's of at different if the this supply a kind the at year industry situation

on inflation, and in pretty the biggest up revenue 'XX, this outcome said upper more We are moment. we then product backloaded look our a end country. you medium-term at of the so were to in to their marketing than on Matt, are in second like expecting I have fast-drying in towards and in range, the below of about range XX% we're XX%, to feel really year, good consumers to flow And the effect, move driving the talk next last business targets, little place some of lower the the spending which that the the lockdowns and bit and business more if a little call meet the excluding your earlier bit our given that impact end of about on forward. the year a they of the we'll target And question just medium-term a war, be COVID we all going 'XX, drivers are lining

Operator

question comes from with Our next Jefferies. Helgans Ashley

Unidentified Analyst

It's Blake on for Ashley.

bit on seen more U.S. Just also believe the to slowdown you you the I expect I ask quarter-to-date in QX. you based some wanted versus know expectation there. said improvement some on said holiday a you've little consumer strategy.

period. could that if color the consumer confidence you on heard sure more you bit And to the correctly. And give what a Just QX. for there make of kind wanted gives just holiday I the in U.S. expectations more in little

Michael Bufano

it. do to Happy Blake. Yes,

historically sent far, shown way think by this call inboxes the that us of holiday the last best So really, has balance And up execution season. in holiday I quarter, holiday where meet know that's is few again, for have a during launched I a And nice have driving a e-mail execution terms well that. of people's right do for back confidence the activity. consumers of a strong week We lot we best we they in Joe that. are, this customers the we the of and of we folks both typically see kind marketing reason referenced X to have actually with from our response how reiterate, the on product now actually the right little and the the calendar, creative be to and promotional as haven't in now and pipeline really bit brand that then when a more a done like addition,

So getting that's confidence why in there. we have

In call. terms what a consumer, in we're again, on and little more have seeing U.S. the of adding covered in I the bit it Joe

closer marketing holiday. last it for a or little pent-up doing really personal lot right to over of promotional. get we're And feel demand, things sheets. foot gas year, product it that's important and lot closer real to of fluctuations the hanging here through a a a is now. like buying The sense folks prices was forward there's to And more now. need They're why pent-up holiday, Our balance with right best bit side are us put our really read the The are for people is in waiting recession people promotional inflation bit little impact are it until little everything our we the is on of real. a of the

Unidentified Analyst

you wanted to traffic adding mentioned that That like sounds make more It full store some And strategy. makes sense. great of you know ask progress, older of a making a haven't on that's recovery. I I lot stores those seen then the still stores

don't base is Just grown has that get consumer? recovery? there and direct into wanted now touch you maybe how the obviously, feel shifting because you're there growth some and wholesale is much deal to the so if e-comm to like in is -- there really, leeway so you full big traffic it Do given wholesale

Michael Bufano

Yes.

a X bit I'll there's kind the I a that team little of To this so side your of a that? anybody question per best-in-class I is pre-COVID. and the would want. and on of think levels productivity Joe kind take I of and of I print number. that strategy think stores getting important mean back how pre-COVID mean those activity side number bit, is I like pack the like are square to the little foot

stores and the to we'd sales are pretty even want to those are of maybe to about course, they mix this we comment role the stores you strong playing now get digital, about Where be the more overall very to of around those it. sales profitability again, feel back we get think were pre-'XX. levels about of love we bit question and at and a the levels owned pretty and together. part levels, are So that good do fantastic that if But good of retail there. on that would how third-party little part Joe, the coming

Joseph Zwillinger

Yes.

to to to increasingly engine going are needs system. And our what marketplace a fantastic as deliver product to it's I with very be we're building is -- customers fuel really think this smart of of thought that want. distribution all a products a

also the acquisition physical great They direct what doors buoy our of partners that's learn going may our drive retailer. consider digital new the back incremental X really customer may add translate And third for even as come with to transact our example, that just our we an they're brand. retail to expect, in just to to as we great to about channel. if going in not and is But They inside do doors. that we also channel. we our awareness So that buying brand expect walls, our would but direct party

fairly to physical of work this own forward. and going we with is think channel. expect our our digital direct that's how all their we and our with interaction stores how And similar about So channel this

all really to So in this hand work needs of glove.

have. And good, so taking to approach far, a we building the so methodical why and marketplace we're as that's

Operator

comes question next from Our . Alex with Gratton Morgan Stanley.

Alexandra Straton

Great. expect that was majority that just I that of? And of we composition there when Is other that kind of just clearing should that? to clear to talk access wondering, of the for. done wanted apparel? numbers to inventory and the you're adjusting aware about still any Or part with end-of-life is then more do I be you there be have you

Michael Bufano

on that an whether be out QX, really with balance overall with about it, this. majority to next First made far. added thus $XXX all pleased in. date, might has you clearing some majority progress we've of exact is through we're bleed doing maybe we're we've apparel. this happy . so give that Alex. can QX, an the happened Of that know stuff I far. we the QX now, if of $X We're there making don't done million sheet something seen the still Yes, end what the in on have like It's I marketplace team interesting in right time million year. progress in But good the and

Alexandra Straton

Great.

assess Okay. super expanding for give of us wondering I you if as just encouraging right it's what just are which follow-up is hear to Maybe that some on color you X partners to wholesale helpful. you're the your are was quick partnerships. kind looking guys ones you those how select enter. and you could That's ones

Joseph Zwillinger

is assortment that. that lean distribution premium do would trying that our it, smart and And pretty way expression We question. across We relative we resonant consumer. good really we're reasonably really start different to the very take that's partner partners show trying right of category rest channels. on differentiate think call brand move, a we is concentrated important the of some with still approach approach a with competitors. on can that X of those pretty chosen on in a also end I we've the having we it that taking for assortment we're in, and industry thanks unique with number a to here. as marquee retail to X a our very with of and up our concentrate partners keep that And our the narrow mean enough premium I we the particularly think to believe for Yes. X, maybe

our So partners, focused a a allow expression, couple and key in sell- focus the on brand indicate on and to strong then sell-through that great great partners great sell-through future of margins season. for driving

into to that's happy kind that's little and build the we're of certainly the round So -- taking, update next that we and bit we're year a QX more conversation. as get

Operator

Instructions]. [Operator

Our Carden William with next Dylan comes question Blair. from

Dylan Carden

and your calculations remains year. you and seen the carry with kind next you're of something this the some to of environment around retail kind that choppy in change cadence quickly. I guess, of that return the Just on expansion? making you've is here levels fact what volume long do And has the do year. some curious, kind pulling of guardrails forward focus stores I this of prepayment expect you've place? extent that awareness, particularly you year, reach you're openings some of the way from and to does think come seeing of expanding of kind if wholesale the not And a you're the that into sort have if

Michael Bufano

Yes. the Thanks question. for

we in as So phase. ramp-up still the mentioned, half are

maturity, fully get bit we're not noted little it's and we've quickly that still uncertainty across depressed obviously, a revenue just of there. the the So seeing clear industry, traffic that given the those how on

are consumer specific and right can taking on we about year for is And of anything -- going mix. greater But now. we again, alluded capital and call, in in of So give guidance part certainly efficiency into terms earlier to to the say in era channel not next of the top profitability the where an we're we line, thinking we're uncertainty not super what are the with drive focused of account of we're just really is but at. the to

into maybe this channel taking handle for kind is I that, end were consideration. the inside to Hat important at industry. I'll And say, just exceptional tough t. footprint were levels, very mix were of be in are even frankly, going of store something saying, for the All They to of we levels we're us pre-COVID that will we had.

of when to just So in stores that's that X heat markets today, of thing bit thinking other when the take little some those off pre-COVID ones. original of infill those consider a we some about versus have with particularly

to it's we of nascency as just overall thing the apples-to-apples, given mind another in about think So fleet. keep the

Dylan Carden

else there related as you is? guess was I mix And add far there marketing enough. Or sales quarter. a saw leverage Fair question. in nice how a that it's Is that The the predominantly? is as sustainable anything to

Michael Bufano

digital efficiency on side, the the bit little a and mix Alan. sales mostly It's Yes.

nothing notable really else there's So there.

Operator

I it this showing am at back now to time. for Joey no questions turn further to I'd remarks. closing like

Joseph Zwillinger

much end you soft at the choppy you the just thank of we very proud the thanks look the want of . in, forward giving And you how Guys, and at for I We're to efforts, given in. been. tuning team's Allbirds. to environment say all update year. here has another for to Thank all the tuning

Operator

concludes for in you program. today's your conference. the participation Thank This

may You now disconnect.

Allbirds (BIRD) 9 Nov 222022 Q3 Earnings call transcript