BIRD - Earnings call 3 2023

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Operator

Good afternoon, everyone, and welcome the Allbirds Third Quarter 2023 Earnings Call. [Operator Instructions] This conference call is being recorded and may not be reproduced in whole or in part without written permission from the company.Now, I'll turn it over to Christine Greany from The Blueshirt Group. Please go ahead.

Christine Greany

Good afternoon, everyone, and thank you for joining us. With me on the call today are Joey Zwillinger, CEO; and Annie Mitchell, Chief Financial Officer.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, Q4 guidance targets, impact and duration of external headwinds, simplification initiatives, strategic transformation plan and related planned efforts, go-to-market strategy, planned transitions to a distributor model in certain international markets, anticipated distributor model arrangements, expected profitability, cost savings targets, gross margin estimates, product plans and expectations, third-party partnership strategy, marketing strategy, and other matters referenced in our earnings release issued today. a results risks to involve could uncertainties statements actual cause differ forward-looking number and of that These materially. and date Please statements also to this reflect the this occur any reflect forward-looking no call, of call. our opinions changes to note only as statements that revise we undertake these after obligation that of that to Form for quarter factors the XX, results XXXX, affect XX-Q a of the impact our detailed may ended discuss filings, of certain measures the that our including during we SEC refer adjust results.Also for Please quarterly our on description more this GAAP report our will eliminate items. financial June to risk call, non-GAAP results. items addition used in should as to, non-GAAP a be any not These GAAP and substitute for,

these GAAP to to measures earnings the in You measures non-GAAP release.Now, the information financial I'll these of available over formal find and to comparable to Joey reconciliation additional their directly turn begin today's measures the regarding non-GAAP remarks. extent reasonably most a will call

Joseph Zwillinger

Thanks, delivered with QX transformation as under Christine. strategic quarter in provided of results welcome. as another August, our We and expectations we line solid the plan. in progress afternoon, everyone, Good well

well up is so, and across which flock is shareholder board, value. setting durable create executing Our growth, and believe Allbirds we sustainable achieve doing to the profitable in

targets balance business spending During makes a and we given This decline decline XXXX use sheet. and we new can $X under effectively the cleaning up and full-year was of focus notable just product on franchises.Another the positive we marketplace We fresh $XX XX%. to flow.First, represents enter is core of the we to the through the progress us points working with our of with and against cautious a $XXX forward third of closed positive operating sequential our our QX million quarter, drive a the upgrades million of use during resonance driving quarter, metric year on quarter clean consumer transformational and up us this to with we million, that plans product are and our the to the year-over-year to capital innovative inventory positioning consumer XXXX the confident environment ending XX% key in cash. mix reflecting is achieved from to another significant proof set of up inventory, critical to adjusted meet that material as made cash company EBITDA hit cash enable our to which QX measure leading required minimal needs holiday. seasonal with progress That better

savings savings sold we the to on million sourcing from Next, targets our achieve upper us to of basis. a on XXXX versus efforts, volume-neutral $XX cost captured end $XX of track keeping of approximately strategic our million goods

down primary dropped upgrades, with innovations from frame to a X for last fresh and the had step selling, towards validates developed And streamlined and continue a for supported notable the made highest to and more final the like We're focus after in million down where $XX early holiday intent spending, ] we inventory.The limited at for XXXX.As week icon represents, more features prioritize launch aligned far durable with with including healthy launch on in unit through XXXX strategy and our product early new with generation the a position buy intend our but we pace resonant to sales and international this fresh period more have $XX X the We consumer competitive them connecting caution consumers via line of Runner elevated the XXXX. it only of innovation the another core for savings things and We in X take are pre-transformation. highly is inventory, Vista sales a reduced models our These this upper prepared comfort, drive price our improved few updated the days really million a an progress working This product the also period in forward Courier way. is launch in thrilled season original of campaign also of just exercising decided year. around by chapter to a with with be promotional velocity to next that marketing aesthetic. approach change we bringing these of our aimed an are spend. inventory the Wool the would kept marketing our tight keep that to remain G&A Racer. time and knew a we drive we on is work Runner We Wool market freshness [ given we product, selling our targets, with for holiday of our consumers to with industry-wide to that We a transitions.While to getting Allbirds. look the more

number model at fixing, with and a of been forward consumer.Zooming XXXX and consecutive marquee across QX generally brand cost increase moderated we're to with full helped those fact, us has we new and or be Having lifting, in heavy our XXXX.Outside and resonance the while shape XXXX versions. versus 'XX we will our cash some also to enter recalibrating are when year. expect believe transformation, and flow updated drive continuing more we'll go-to-market with for is this inventory and by quarter events QX, and we X assortments. to in Cyber core bring structure, done plan, Monday, transformation to a region, our XXXX on XX% of In starting and in our more full has with XXXX.Now, 'XX consumer and markdowns more refreshed out on assortment position down momentum expect beyond. foundation will a to next-generation non-core right-sized spend, selling year replace enable integrity, positive from channels a which core we through expected improve growth allocate of a most give profitable regions, the driving of mark us product our that I'll can to walk through of we marketing actions in us than and approach products and offerings In up achieve we to the EBITDA in in our will product This taking our to now generate our fourth of towards sunset that most price to setting Friday, selling our notably a activities year effort environment, Black line and such styles our diagnosing and maintain product as focus and promotions Indeed, pillars updates marketing innovative next cost expect This profitable and price year-over-year. structure. of the we're strengthened The even brand. full we our taking bottom us looking with goal confidence market positive flow adjusted look most and challenging resources

we'll in approach our brand, a Runner just the the launched week, soon capsule shows I differentiated reflects and fresh introduce icon new that biggest As on along earlier, In her history our we're silhouettes a an for with the gender take and X, of Wool last our the more key franchises, launching XXXX, looking innovative emphasis forward how assortments our to consumer X. upgrades we Wool did refocused great into core to insights on with Runner like product. with work translates those noted

our would on we that limit embarked ability to cycles product development knew transformation our newness in XXXX. efforts, we drive substantial As

transition earlier, line the spend we this really pulled we is are possible upgrades have on just come on QX, and clean while and up while remained So, inventory. eager I bring year, deliberately to beyond.As back taste what's in in touched of as efficient these our being a focused as to XXXX on marketing and to throughout this we

program within marketing transitional beginning consideration, well, slowing to influencer We marketing U.S. this build reducing drive distribution and with to second our openings. cadence optimizing early with both to outcomes and transformation sales.Turning and rate our the focused at is a we store a of assortment of profitability. mix, greater new plan, results quarter, the our pillar than and upcoming range to guided with that we are and finish with on awareness for newness, our optimizing our holiday enabling inventory particularly pillar, and deliver the the developed material we stores resonate campaign believe us year was U.S. will the spend When portion our pace promotional the expect pleased and women. color Our

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still be Given operations, here. optimize affecting digital guidance.Our do this coming as the are scheduling in in digital reflected to a to in we improvements launching landscape, that work and distribution, our merchandising marketplace our expect in leading store have headwinds is consumer and on and but labor work ecosystem, the we persist will across there weeks. to staff to In in U.S. seek stores beginning the we the training marketing, show QX

intend believe channel an second we channel with that revenue expect providing into door showing and Informed the to collaborating insights, launch.Looking the have additional an And at closely in consumers this with brand way push this right half awareness, opportunity stream, to while sell-through into we're on ensure a provides this our share sales to ensure We the assortment with pull the a profitable key we lower year we truly and represented unique of from profitably what We expect until wholesale, at we're for our view by best count. strategy a will future partners platform before expanding incremental, versus this these consumers. our remains to that to of we one first resonate half raise crave. are us also XXXX. that drive and focusing in details utilize a appropriately we'll up

and Canada profitability distributors regions on and are with the agreements We're finalized South have now third-party quickly. partners with transitioning pleased a additional move soon.During go-to-market third and on to potential new to to the number As news to we inventory. the the incredibly within assortments previously-announced made most markets. market of in anticipate the accounts.Now, pillar, distributor new we complex this broaden on bring towards potential growth and channel international in in XXXX, strategy selectively the through This activity our to is third we reaccelerating speaking direct our model transitioned, half our transformation needle those has stores are with and in including our the second and expect the we've front progress plan believe Korea, quarter, we this personnel,

Additionally, both we additional LOIs regions Zealand. signed X distributors important with for recently in Australia/New and Japan

towards distribution extensive with thrilled be We quarters scalable to pathways capitalize organizations a to midyear up and respective that regions transitions on with us. have beginning from are The we're selectively in half further partnering brand in have capabilities to Three distribution capital transition which, are and similar expected regions. the strategy, their X to no in XXXX, occur clear this profitable to regions, XXXX. new this high-quality anticipate pleased wholesale, into structure.We by requires of building investment opening second model, distribution

the deliver us, At cost same drive to greater the to not support that distributor provide will we also manufacturing and will awareness volume additional believe this savings new brand and internationally opportunity drive both additional customers. only but expect time, access profit SKU through to expansion productivity. increased model existing We

economic to a impacted a making the to in model Annie revenue. higher-quality expenses. reminder, the final more from our and model expect fourth move and decline to revenue regions, distributor direct result shortly.Moving will strong around bottom initially, the overall color margins line, a flow-through provide managing for in improving but gross will operating the pillar, we this As model

as run are on savings $XX million million rate compared SG&A of stated XXXX, to and goals end savings of the COGS $XX to We firmly track XXXX. to $XX million $XX our of our million to to capture achieve at by

to allow P&L end and of our expect the cost new of to savings transition range up this area expected We XXXX. XXXX. year-end beginning that ramp during continue with shipments manufacturer in work in We in to high will from goods now the fully Vietnam take us deliver the benefits QX by our expect by shape

progress gross through work to towards depth the we efficiency that the confident each pillars final market are continue pleased year, transformation we to improving under as reduce capital plan allow the positioning Additionally, remain of to stretch us we improve products full is this bring the and drive margin.Entering and us believe promotions, new the of with of to the model, inventory, profitability. will the consumer and price X move our back

an in team year-over-year disciplined have inventory to profitability calendar adjusted expected decisive important selling to fortunate us for XXXX improved has who action season. are position experienced to take to This approach. year XXXX with We in the groundwork our highly embraced a enabled of a first lay operational XXXX.We holiday cash path flow EBITDA our and improved have into significantly in heading positive the

We XXXX have excitement product building for launches.

business, We way across and our are international on we rigor have transforming the well institutionalized organization. to our

profit.We greatest drive believe and the and to transformation, are of future.Now, our through year. growth shareholders to one clear, long-term and of progress via the is the end after path shareholder channels have elevated discipline and the walk compound the making Our of deliver to returns of Annie are in shape of this over the specifics year will appreciate quarter levels regions remainder and commentary with we strong approaching products, on support the potential the this we analysts of acting that on to into

Annie Mitchell

new quarter largely third financial quarter for pleased inventory, improvement another assortment row, planned Thanks, solid quarter actions through our well at the revenue cash non-core set strategic and a as a line, XXXX.Gross ago activity are compares came line, margin on we down year reflects declined promotional as That We're of million introductions and work on clear wholesale updated versus as in ensure XX.X%. ago high delivered we of within our leading to a we key drive and $XX.X bottom XXXX. across in our progress. of to range report in XX% colors, expectations inventory, sell-through with XX.X% revenue declines QX reflects metrics legacy results fresh came in to our provided planned costs.Third primarily in and operating up continue to for product expected the to and exceeded up higher Joey. the year our we styles to and and top to

year, delight which put, we competitive are the intend we promotional from Before price. season, and to ensuring focused this get we next a Joey, to ago. increased on as Simply engage consumer be activity on that means heard year we versus holiday you

excluding we XX%.Turning margin versus we now discretionary gross As we ongoing brought anticipate compensation, and a most stock-based expenses. quarter result, that ago. cost and to of depreciation our fourth $X.X came to expenses, notably will the better control, or be by SG&A, down can be than This tightening below expected traced million careful X% a year in

expenses million and dollars XXXX. quarter, planned SG&A As basis.Marketing to QX continue to on we we of about year-over-year a will last up be XX.X% that compared talked QX a sequential expect reflect both $X.X a decline or

control line of the we QX quarter and careful associated transformation, to better-than-expected and Wool the in progress holiday in QX.Moving the million of to million Looking we EBITDA flow, support of pleased our benchmarks. XXXX.Taken balance push. QX continue a QX, results from as QX incurred X a compared sheet together, $XX at drove increase solid charges key another X restructuring and top Runner $X.X In report loss strategic I'm uptick spend, sales our cash against to of adjusted cost marketing with million $X.X our modest to we levels an expect launch

inventory XX% to let's improvement We disciplined inventory year and $XX healthier clean decline achieve the $XXX First, and approximately and approximately from a with reflecting year buys more I'll year-over-year a end million reflects and year-end. down our balance cash. versus had At levels levels talk ago the quarter the composition position of commitment about on inventory. to ended we at expect The we XX% sheet. XX%.Now, million, look close QX, Indeed, a year-end. cash of with down by the of of selective

and million to narrow levels ago. inventory million down cash just was quarter, operating Through bring us compared operating to year ago. allowed operating $XX a versus the a expenses year $X use cash actions aggressive use Our our reduce to third

We eCommerce, operating share to significant distributor revenue for a had will you XX: Canada; announced local Japan; the model, help combined; and Zealand understand New transition $XX and to both X Europe, the the encompasses million. increase This and our the previously cash South We data international financial following narrowing the on The of completed including period, of Australia quarter. and QX of EU Korean QX EBITDA from also transition transaction million X-month China; the our sale a distributors improvement a markets. South in the prior the both presence across cash implications was $XX Korea.During to a delivered we transition usage to business and I'd loss to Starting in in approximately at third-party Allbirds's period third guidance, levels.Before is regions. the as in totaling ending XX% slightly the turning adjusted wholesale in with countries. operating to September some level, non-operating and for total international million to regions, Canadian those UK; representing businesses Allbirds quarter, that recorded and businesses points like compared versus distributors QX from bricks to year-to-date mortar, in excluded use anticipate to $X.X high

in in is X% are approximately we represented of approximately Australia/New total regions, today. process, in in South which and Zealand combined total agreement the that of as be perspective, company quarter-end, midyear country.For in year-to-date transitions XXXX, standard revenues is release our Zealand. X% added XXXX. consultation expected combined and LOIs to year-to-date in company represented New The Australia/New signed Japan additional Japan upon after revenue noted distributors with contingent employee XXXX, and the X Next, Korea and completed Zealand Those press Canada

this good and data of XX% pillar a better simpler with very overall So, we'll regions turn that to the grow.Now, on some to X points the business transformation, approximately progress model benefits the into additional distributor is the we model. X believe transition positioned to that strategic quarters underscore in of

First, versus lower the distributors direct to to our retail. selling a prior the full directly price we'll products consumer at at sale be

the visibility in While drive the initial anticipate distributors to result and expertise growth and this over revenue, knowledge local brand of will years. that will our we help impact coming

Next, directly DTC naturally wholesale both operating and typical gross gross distributors, model bottom below to selling Because anticipate margins. under margin profit we lower model the flow-through to will expense, be this from of this requires strong line.

As we're promotional each products expectations our a region competitive One, prepared we a for profitable.Turning transitions, throughout factors. at holiday and to will know the key be we looking points, immediately cautious consumer great quarter. assume now guidance, season. them this consumer a promotional targeted expect QX are we few to for price We the a be great to and ensure plan have environment highly

note to and important this profit. sales promotional both it's that gross stance impact Second, will

today pillars, negative full-year international on piece South million, XX% million.Given negative quarter million especially and we're the to we're reflects March. revenue new in the $XX be making quarter, negative $XX the XXXX the in the This Korea. our expected EBITDA call revenue is for within range of to negative providing in to comparisons range Canada to be outlook XX%. of progress pricing $XX transformation, to of all model expected strategic our revenue a loss full to expect year-over-year QX.For of in Third, we guidance in the of the to to return million the Adjusted is representing also negative $X.X $XX million under a of results in impact fourth

top for expectations help model of also the provide around call anticipate line business to that related to operator the positioned the ask transition I'll we'll increased and the to effectively you most forward.Now granularity the international We impact be going open Q&A.

Operator

first Our Instructions] from Drbul Guggenheim. with Bob comes question [Operator

Robert Drbul

And is terms a little for guys bit in in and expand the on inventory more changes the of of just is me. the inventory? think year. just what just the women's newness I heading one the planning guess, the inventory, And you next the I some about into piece think to quality side. you newness questions then, first the more Can of the quick second X as love of you product are overall hear just through

Annie Mitchell

on about most Bob, excited question thanks our in It's of your progress. terms I'm for inventory. part of definitely --

you appreciate it. really I about So, asking

made been pleased are year with we progress with year we composition. Year-to-date, We the this core inventory down the we've expect to the cleaning moving our that and the marketplace are effort toward in right that the XX%, inventories XXXX composition make really absolutely sure and end That's end doing to in product down year, year we bring year that, is all little do -- year-over-year. the exit and heavy bit that. Joey talk lifting to And already about by the this for excited expect With that know the fresh about to XXXX. I to well XX% we positioned products. updated a

Joseph Zwillinger

Bob. Thanks, Yes.

merchandise to So, great is I looking and a moving example start the speaking this Runner level, The opportunity, probably year. offense, franchises we have at I think of if core the we've at kind high to franchise would a is what all about an embellish think existing been with. Wool say, and we're became will with X consumer resonate lot of broader we that effectively, of growth our to are given for. famous a what these with around more and some and base, equity the strongly correctly silhouette of icons I just drive create a brand a really lot much them

the and to durability brand core. we and in foremost, highest quality, that's personality example think I a being And we're launch, of being through launch prior value what Wool really make of that so doing what communicate best saw better. X done good work, it's the year months first work it's some this did volume And sure even the we we that going far. marketing updating with of on deliver icon one amazing some that we've the focus taking and and Runner is that it to the a than this slightly So, sales

of one we'll SKUs trimming the be think other in productivity the that lower insights. the question, effort of franchises.And So, the on alluded core out insights do as you your found of where awareness other I some focus the as then, core higher And with key our in And one with we to within target consumer, than that women. that men. do is our hand, consideration with have women the there our is a target on flipped demographic, bit we we that's is our we consideration, lower

is And with 'have about stronger so, by 'are brand what particular, do to both is currently we to heard the in resonance the understand product but you there that beloved genders, is going from as buy men'. you you track us'

So, that's little of terms bit some and little resonate the bit to we're see doing those to core quarter, also the which work more a a in up on trim color that you'll this terms a of product perspective, in extending sharpening franchises but both of of with strongly feminine in be her. offering more

and to So and QX beyond year throughout course, the to, materially that, start say, in next of going that's, XXXX, X you key aspects the I'd draw continue I'd of rest overall, too.

Operator

next Straton comes Stanley. Alex Our with Morgan from question

Alexandra Straton

I have for specific a Annie. level high question then more one and guidance question quick

low through end, range the you think on that maybe the the plan when quarter. you've now. other for Can what the been for more journey?Then the revenue walk this already has underway fourth first then, kind than quarters Where of So seeing us And a transformation just the wide accounts proven results? end maybe, most you Joey, for and you one you, on progress you or you few for for made has do started what have guidance challenging the end? high thought Annie, a strategic

Joseph Zwillinger

Alex, thanks.

zoom in the Okay, characterize order. on I'll done question. this I few we as help would last perspective to it put and -- so entered in we've let's say I'd that in it just do here back answer what quarters transformation how

a not I'd level, fundamentally on we've trivial profitable And of those level. where a cost that that way work, and line That work done we at in altered some excellent and this cost on of much top amount streamlining structure can the we've been execution talked the G&A international of a be in the has one about the we goods is year at the and such has a say, smaller top regions. go-to-market lot So, have the elements. been

in and the back way we've the really don't And throughout the we've that the a the most the allow year that get in price Along to and introduced to by we through necessarily lightning customer important this a in marketplace we element accomplished so, year. probably year currently us healthy balance sheet, full to while on the inventory. savings we the what new driving margin going inventory that [ that benefit all see the burn done P&L ] of you have is that track I and the call the product And inflect inventory to markdown it we as that.So, started consumer ourselves unhealthy we unhealthy the we also really gross we with, on a it, XXXX way, year mix recalibrated that's the and the at assortment expect of selling end would inventory, price. the gotten wean can and fix in intensity an from and level that to of an have model position such to full comes innovation then as to of our take cost benefits enter those

we the down gross about when fairly gives just here sit we of -- most that significant probably hammer the direct proud thing I'd and thing big zooming it's think us and say we're out in course, expansion, today.Of a the that product. can like in drive would say, and look And that, particularly forward, XXXX so, channel. I great is to margin focus the And

have new and all fresh this on the map brought to that of market. yet haven't We innovative product we road

with to testament and bringing and speak internally sharing it's today. we're the the good we're as results X. to points of proof there start with Runner really Wool a I'll the And off a So, But good really think quite we're updates going we've themselves what for as the for you changes far I And seeing say shown to aren't type yet. to be market.

that So, for time, encouraged development albeit has making longest given that's the one by lead lifecycles the the footwear. product that, pretty just

we're So, really points on cost as that's one that and we many give proof the can as still away the can't at plugging you side.

Annie Mitchell

innovative a When engage setting line of us the affecting specifically we're -- of with primarily and the consumer looking of at is Combined the of course, that's pressures great a and we going range, we be point, our know for a to is, of that, ensure season. quarter. well the course, that it and are top the sales product work, want in promotional be progressing traffic and in that to macro-driven our that which, extremely up planning reflects competitive given, and top this holiday throughout going to to at transformation ways highly environment for XXXX. industry-wide. is Adding price for We guidance is course, on we're consumer QX new looking a fresh, continuation great the with

Operator

Our next with question BTIG. comes from Janine Stichter

Janine Hoffman Stichter

I optimal distribution as want brand. for to think little of the about you the dig more bit in a channels into,

the side, wholesale you're the like sounds next in that it considering back half of re-ramping on off, First business year.

retail acquisition business, both should looking you're I'd be right that understand of performance in then, if from curious if potential of just that any the So, profitability fleet what the standpoint.And there's love a just major at, a closures your out. to potential store you're called now, on customer I'd looks that and the like any thoughts what brings variances brand exploring new and types just the awareness new on partners you you think be

Joseph Zwillinger

a a an brand want where sure just launch today want digital the in first. segment going to opportunity to percentages, way does is meet delight frame to to the What that making think of that margin first we're otherwise frankly, be you Okay. about that. to omni-channel and we but we've can on way wholesale. good drive very channels, there's we our a for some should you and retailer. part as it's want met.So, Thanks, the you it's optimal, awareness, exercise question Annie say the gross material a forward that little of where be that think example product that that to lifts look the in exact marketing ecosystem marketplace down wholesale we Janine. I ask a to about consumers that to in. some the side, that when between as the can right When of of is sure want and you jump direct awareness. that to portion retail a brand-building capture think that a And can best. We always business for gave to effective have I us we if And of very consumers examples it spend one envisioned it. the they or be an that I will deliver very impending shop we and And digital tackle like where maybe would line? trade U.S., profitable they And we what the we're on of hard fast make

'XX. terms drive like But noted, we'd some of starting much in noncompetitive there's pretty that's that goods. channels, to of of accounts in premium some perhaps segments consumers in and have those like particularly to talking I that leading about the we're grow for undergo department So, different channels, in sequence other whole building other effective trend we there's to with. very that in the build and outdoor that excited opportunity as order XH working stores marketplace, and work and the a onto to an And to anticipate marketplace wholesale are indicator sporting we with think accounts expect for that, of more significantly.And smaller we us, important

So, thinking it. more you generally how the give XXXX about into for a for we expect but we're year, get and we'll that's what detail picture as give we you

Annie Mitchell

year. retail, When retail have we doors new paused it this comes opening to

are We this time, with all fleet's analyze done to and evaluate don't we're the but currently doors will we We going performance and have our continually options. retail at planned any closures that open.

in do retail, Joey why we operate most drive As profitable let's distribution executing we've combine traffic as because us us these consumer, helps put brand. the mentioned, that more our place.And focus to that best to as And stores and for to more in to to that assortment we footprint know and our the started expect offer initiatives have expression It stores go profitability will stores that back wholesale, are awareness, products, enjoy for consumer. have to around our our of with and we an with? by compelling retail We ecosystem and we comes the brand our a to grow as from start growth regions. well, and and is begin on consumers on love understand focusing channels already also do our

Operator

Fernandez Our Cristina TAG. comes next with question from

Cristina Fernandez

and can talk seeing is the down international. is wanted markets a are to might ask if function major level your promotional activity in to international you It the to the step demand of seeing seems there. the wanted it see business about I what just Is Or comparison. what you're you of like in U.S.? the be on first quarter. it It of trends similar the better? took some year-over-year But

Annie Mitchell

international that this overall the worldwide QX tied geographies. performing of we seeing But And were and Great. in would of other that higher model geography. geographies. and to for we'd them, our year-over-year differs $XXX,XXX regions, of continue our Asia performing the Thanks direct the Korea worth if trends month $XXX,XXX.When operate the look way, by Japan some both would clarify, macro say to for to transition the than better transitioned question. your at of is better China sales top are some really across the And within and overall to the was from another is it quarter have we because I Canada September, largely the line. in been by those Said we events, the distributor on definitely slightly South QX,

Joseph Zwillinger

are quite promotional reasonably positioned behind these to here that or across some I business. the that brand, and the little with regions. invest is capital is to or conversations the generally plus can I'm minus a what consistent. partners And we There's they these eager of and pretty distributor as finding we're is pretty what incredibly brand And intensity but partners, bring strongly optimistic and have the would say consistent about excited there,

Cristina Fernandez

the is the original models, What pricing Or further core then, of Wool is strategy the to And the will Tree decreases? franchises, reception those guess, did Wool keep X, related the price on second for those to those Runner actions in lineup? some you as you to X Runner. you along? sunset had question I Runner get styles And the see and Tree Runner took and I

Joseph Zwillinger

the Yes. for question. Thanks

be insights data promoting towards And do, the going XXXX some sharpening ranging $XXX in that positioned those the tiers, clear for in that and not on that between from in where we'd $XXX working the we've price general that of have business. you from points we particularly in of pricing, very distinct per sometime is we pair something in really price most to like and that when gear driven drive running-oriented what is our footwear volume push life technical bulk terms Just active above territory, heavily might business seen and to we're business, threshold. the the $XX the

the that up pricing and immediately. make same in at was not sunset them. was that would the X as to original expect we when the X grow launch of those we orientation, lead where we space the X. point, I models Runner going wanted element would generations models, we'll those changes sit. is We might the expect between the the kind business, of we that's that -- for thing that albeit we Tree some most do Runner there to to sure to is would segment So, in of it Runner in Tree introduce some thinking. do new cases, so And Wool new it capsules And Similar say important those

Operator

Altschwager comes Baird. Mark with question from next Our

Mark Altschwager

Annie. question maybe a off, just for First modeling

Just to versus can you changes, a QX it international? maybe I with you guidance, you could for distributor comments us would breakdown know a prepared there revenue expect that in the bit, the what some us on the were helpful. give for simplify U.S. be with but respect remarks if little

Annie Mitchell

Yes. clear, looking And growth? year-over-year are for be to you

Mark Altschwager

Correct.

Annie Mitchell

Canada for major each so other, anticipate that ones rates. U.S. growth both X When We direct the be top our roughly operate no that and a at international Korea directly, with continue X differentiation the points the line on terms in between the we impact business, look in of to the line. will the and we exit from that worth is model, of

the direct the both overall there So, U.S. in South moving of the XX, direction. distributor to our Canada down X model the same guidance model. within trend, of points moving to international down is XX the and and from from Korea in terms are But

Mark Altschwager

balance hoping And least holiday. promotional planning a then, job you way I was really looks inventory. I That's what cleaning standpoint context you've some you're us additional helpful. give gears, done that from on over guess, switching great could up At it a the sheet. on the

to this period? clean So, worry to full product? about top older do starts in, promotional are guess, up during to product new roll these curb promotions I the to meant that more in plans ability the the And return of this mind some XXXX? might still transition you Or price is staying as selling

Joseph Zwillinger

question, a Mark. It's good Yes.

promotional shouldn't the you too anything over I think us So, see from here. cadence wild

the to pretty in market really than of to if down to healthy end guided promote what trying to line And in earlier you're in seeing is are when table. early, found trying the that we cadence that starting people around you this all, up. Annie maybe our we're the start the even do, on opportunity industry-wide. next as year start that by saw to And terms year-over-year objective work you're have XX% leaving bit of think place the a from year the to then of sheet. not to inventory We get last I we're little comes balance on we What a moment, in still competitive it's really year. of

that of do includes work that our trim maybe some of big Cyber of to broader a Friday, know, some of to in you discounting. the tail be or core around expect offering a some other So, remaining that, still over little Black styles well select pretty there, includes assortment and that will support a as and we styles. do to we'll colors future, Monday, bit And the that events, big don't any and the event,

have handled Even way a promotional been around colors our integrity.Predominantly, and there that price on that year are no the allowed So, really I support, longer styles consumers us to to think particularly this, maintain that to has in expect basis. we don't back. bring do move colorway for we've slow, this intend we we full opportunities brand styles support, that

surgical, going left One taking be their is that aspect that despite to full a to of depth to that's year, assortment coming X on work deep best room degree, price. the been much we markdowns the we'll we factors. feel can And how this inventory based fact to the on market. discount helpful the and helpful to as lighten some year some get we've innovation next into approach is generally the then for way have increase by to we people intensity. that's secondarily, I promotional consumer a a And new us essentially back. as back to our as That's get going through And foundation better to a fairly to that frequency. well promotion, we've fairly so, like had the managed we're cadence. we've wean that The

an on you opportunity gross the And manufacturing so, material have to much frequency, the way, got momentum, compound that's when depth we going that but same will us brand the well cost build with we as changes. a And margin in give fairly inflect may as be some to shallower. savings from

Operator

question from Securities. Tom Nikic next Our Wedbush with comes

Tom Nikic

should a developing when you're line? marketing, I you new in marketing to need using marketing transition how the about products that the in reinvest the year, and to top been there's the we product in XXXX assortment. and Obviously, reignite think given But the in beyond guess, big have this place pullback of

Joseph Zwillinger

Tom. Thanks,

less using less of spend when promotion coming, marketing fresh price to particularly we kind product lever, going we So, lever, to as have if on a a the want assortment as of and and we're are we're models, invest so that behind we embarking to on build those the of want to is continue focus on. lot around equity the core work core franchises What that we and strength. that's a do

model factor to that drive be is on leverage for that one mix in marketing large element intended a and sales. a to beyond.I coming another And of say part of we'll XXXX you that the in that look channel would about will business. still, over at consider percent So, is years, is the the key the as

a significant as the marketing much sales. we that's on much wholesale shift international we So, because to percent from similarly, as a support side, don't has and leverage overall those the smaller just distributors, anymore, more to a direct markets marketing with dollars of spend

consistently in aspect to love collect degree consumers, that's the people affinity of people fact and back So, very NPS desire our term.And of scores the I'll have brand us. the buying then, again found amounts work all consider that by brand. the consumer, we leverage that has a tremendous driving high long our mirrored of do one finally, we just come consistently with core We've from that really the we do with and say and seen that in

in we that future, we message, opportunity have in it's they brands that really predict marketplace those given we to people some get with given where -- given some to opportunities compelling opportunities, that but such do the on doors work hard and we or that regularly. this that partner we off, can either have differentiated of creates So, and assured well of come very and are with go it opportunities opportunity And sometimes how those the them be rest differentiated with to a working catalytic. can offering pretty some the a to

Operator

with Cowen. question comes Krista final Zuber Our from TD

Krista Zuber

is Kernan. Krista John Two on questions. for This

modeling a question on economics. just First, the distributor

Just the a transition to impact revenues. on clarification

run And of we since rate I it's double impact Should impact you're quarters QX expect few revenue one that guiding representation New should Japan Australia/ somewhat to we that than follow-up. anniversary next for think to million Zealand we be to Korea. I And and revenues is and South the I Canada for -- higher? have in roughly the their be until think $X.X the use the revenue transition?

Annie Mitchell

it on and Really Thank Great. model. the Korea question. the full they the in for distributor it. quarter very Canada much to related is for appreciate impact QX are that being first The you

and therefore, that going no, based the exact on full of the as to additional and we overall business. the these about directionally, impact to And would is quantity on a get into do, color margin in mix. we the gross vary that for naturally do related good below based north the So, guidance will going margins. XX% into to to we're plan distributors, the both forward. typical But expect to pricing we sell to revenue way very in sort bottom is that's this line expenses going XXXX, new on not When strong the flow-through how we're this be overall anticipate to contribution this margins we going year sell think expect with low with And way runway model. per we the unit DTC think international generate that model. a and about operating wholesale to giving We of

Krista Zuber

just margin And profile sort Great. Okay. question then, the of sort long on term. of one philosophical

you transformation this long-term Just would see plan. execution construct of EBITDA get to how the and gross thoughts potential of on adjusted the margin within margin the your love

Joseph Zwillinger

business gross direct throes in the so far the tell gross done margin, still work can that. XX% We're targeting a of a of in go of we're we we've in our you, Yes. going too many to long-term want not the towards this. to into is details when I lot target tracking margin and U.S.

you So, channels, year And cost see the element across levels. channel. are margin savings of that's different transition certainly But the naturally this important across albeit that an can gross kind there. at generating applicable we're

probably at as So, all for into expect we and what this what you say terms back about longer-term give get point. get and to for most the you we'll year, in XXXX next to we picture of I'd expect we think that's a And beyond. how XXXX,

Operator

would like to question-and-answer the session. I to concludes now management. turn This it back

Joseph Zwillinger

mean shareholder close the if into do great future.So, And wrapping we Thanks, sales, and growth move transformation the it interest we to year our up quarter an we to across we're comments. progress opportunities we're expect at and sacrificing does is Allbirds already on just months. making work thanks laser seek in you incremental strong should brand everyone. that products continued few I'll compound Thanks. profitability times. this we to few intend and do to for doing. returns and in with we with And do forward while as quarter channels after 'XX it even is And levels high-quality through that, the I say, team focused look driving looking your profit. drive foundation, a strong in building and growth the on of through out elevated a just

Operator

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

You may now disconnect.

Allbirds (BIRD) 8 Nov 232023 Q3 Earnings call transcript