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Dive Brief:

  • Allbirds last week laid off 23 employees, or 8% of its global corporate workforce, the DTC footwear company said by email on Wednesday.

  • The layoffs followed an evaluation of “roles and processes in each department, and in each market, to ensure our operating structure is set-up for the next phase of growth. In this process, we looked for ways to streamline workflows, reduce duplicative efforts, and put past learnings and operational insights into practice,” according to a brand spokesperson.

  • The company declined to provide specifics regarding severance, but said the decision was not “made lightly, and we are supporting impacted team members to give them a soft landing.”

Dive Insight:

Thanks to a wealthier customer base, Allbirds generally seems poised to weather the consumer hesitation induced by inflation, and analysts view its move into wholesale as a boon to sales. But the company has struggled to live up to its “disruption” promise and now faces steeper costs that are cutting into margins, according to William Blair analysts.

Like other DTC brands that once embraced the internet as their sole channel and cut out the wholesale “middle man,” the company has since opened stores and inked partnerships with retailers in hopes of growing sales and margins, and getting into the black.

The footwear brand has failed to notch a profit. In its most recent quarter, net revenue rose 26% year over year to $62.8 million, and grew 49% compared to 2020, while net loss widened by more than $8 million to $21.9 million. That’s a bleak backdrop for a company watching expenses rise.

William Blair analysts this week estimated a 510-basis point gross margin contraction on falling sales in China, higher logistics costs and foreign exchange headwinds. Those analysts also said they expect the brand’s SG&A expenses to rise more than 16 percentage points to 59% because it’s running more stores, although they said the stores, as effective customer acquisition tools, should mitigate marketing costs.

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