Allbirds, Which Produces Most of Its Shoes in Vietnam, Is Tightening Inventory and Adjusting Prices Amid Trump's Tariff Trade War
Allbirds has its sights set to the second half of 2025 as it expects new launches to bring in more customers and boost sales.
And according to Allbirds chief executive officer Joe Vernachio, not even Trump's tariff trade war can stop him from executing his plan.
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'While the current tariff landscape adds complexity, our team is well equipped to navigate these dynamic conditions, drawing on years of industry experience,' Vernachio said on the company's first quarter earnings call on Thursday evening.
The CEO added that while most of the company's manufacturing is based in Vietnam, Allbirds is 'proactively managing' potential cost of goods pressure through tighter inventory buys and ongoing evaluation of future price opportunities. At the same time, Allbirds' growing international distributor business helps mitigate exposure to U.S. tariff impacts, Vernachio noted.
Assuming a continuation of the 10 percent incremental tariff on Vietnam goods following the 90-day pause, the company said it still expects to deliver gross margin in the mid-40s for full year 2025.
Annie Mitchell, chief financial officer at Allbirds, elaborated on what the company is doing in terms of tariff mitigation.
'We've reduced our initial inventory purchases for fall '25 as well as our buy plans for spring '26, where we will have the flexibility to chase into goods as needed,' Mitchell told analysts on Thursday. 'Next, because the majority of our product offerings will be new starting this fall, we have the ability to go to market with modestly higher prices. Lastly, in addition to these factors, overperformance on the bottom line in Q1 provides us with added flexibility to navigate the current environment.'
Mitchell added that the company is expecting an influx of new product in the second half of the year, which was 'built and designed with higher margin targets.'
'We do not expect that [any] reduction in purchasing [power] really hinders our ability to grow because we believe in our plan,' the CFO added. 'We're excited about the product coming to market in late summer, supported by the marketing work that we've already done. And then as we will continue to watch the consumer, [we will] see how things continue to shake out, and we will have the opportunity to chase into spring/summer '26 product if needed.'
This comes as the San Francisco-based company reported on Thursday that its net revenue in the first quarter of fiscal 2025 decreased 18.3 percent to $32.1 million, compared to $39.3 million in the same time last year. There was also a net loss in Q1 of $21.9 million, compared to $27.3 million in the first quarter of 2024.
Earnings for Q1 were in line with Allbirds' expectations, however. For the first quarter, the company was expecting net revenues between $28 million to $33 million.
Looking ahead, Allbirds expects net revenue for fiscal 2025 to be between $175 million to $195 million. In the second quarter of 2025, the company expects net revenue between $36 million to $41 million.
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