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Allbirds Shares Drop After Seeing a Hit to International Business in Q1

Allbirds shares are trading lower after the company said its international business took a hit from COVID-19 lockdowns and the conflict between Russia and Ukraine.

Allbirds co-founder and co-CEO Joey Zwillinger said in a statement that the company’s international business results for Q1 were impacted by conflict between Russia and Ukraine and COVID-19 restrictions in China, headwinds that will likely persist through 2022. International net revenue grew just 3% to $13.8 million compared to the first quarter of 2021.

Allbirds shares were down over 15% in after-market trading hours.

Overall, the eco-friendly brand’s Q1 net revenue grew 26% to $62.8 million compared to Q1 of 2021, beating predictions from analysts surveyed by Yahoo Finance, who expected to see $61.97 million in revenue this quarter. Allbirds’ gross profit in Q1 grew 26% to $32.6 million. GAAP net loss was $21.9 million, or $0.15 per basic and diluted share. Allbirds’ Q1 revenue results also beat guidance it had previously laid out in February.

Amid the sluggish international results, other retailers have reported similar headwinds in recent weeks. Just last week, Crocs, Under Armour and Adidas all reported headwinds to their businesses in China, largely as a result of extended lockdowns in the region. All three companies saw their shares fall late last week after their earnings reports, amid a broader dip in U.S. markets. Shares of Under Armour were down nearly 25% on Friday after the company revealed a net loss of $60 million in the quarter, partly as a result from problems in China.

However, Zwillinger added that Allbirds’ U.S. business “more than offset” the international headwinds.

Net revenue for Allbirds’ U.S. business grew 35% in Q1 to to $48.9 million. Sales in physical retail channels grew 129% and Allbirds opened four stores in the quarter. Allbirds has opened 17 stores since Q1 of 2021 and currently operates a total of 39 locations around the world.

Given recent headwinds, Zwillinger said Allbirds had adopted a “more conservative near-term outlook.” The company expects revenue growth between 21% and 24% in 2022, or between $335 million and $345 million. In Q2 of 2022, Allbirds expects net revenue between $75 million and $79 million, or growth between 10% and 16%.

“Looking at the second quarter and remainder of 2022, we anticipate that external headwinds will continue to impact our international business and as such, we are reflecting a more cautious outlook in our updated 2022 guidance targets,” said CFO Mike Bufano. “Our expectation that these external headwinds are transitory, coupled with the underlying strength of our model and strong execution by our teams, makes us confident in our ability to achieve our medium-term financial targets.”

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