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Allbirds (BIRD), an environmentally-conscious footwear startup, experienced a decline of over 14% Wednesday morning after the company’s latest earnings report.
Though the quarterly sales of $62.7 million (a 33% gain) slightly exceeded the FactSet consensus of $62.0 million, investors were evidently disappointed by the wider losses. Allbirds’ loss per share amounted to 25 cents, well above the consensus loss of 11 cents per share.
Despite experiencing large growth in revenue, the Silicon Valley startup’s high costs widened the loss to $13.8 million for the third quarter, from a loss of $7 million the previous year.
Allbirds debuted in early November, where it closed at $28.89 a share. Recently, the company has been expanding. The company opened two new locations in Cambridge, Massachusetts, and Oakbrook, Illinois, back in October, and now has over 30 locations throughout North America, Asia, and Europe.
“We are in the early phase of a ramp towards hundreds of potential locations in the future, with strong unit economics,” the company wrote in its prospectus for its IPO. “Based on our stores’ pre-COVID-19 performance, we believe our new stores will also be highly profitable, have attractive payback periods, serve as good capital investments, and be positioned well to take advantage of physical retail’s recovery from the pandemic.”
Higher levels of investment have been reflected in rising costs. Selling, general, and administrative expenses amounted to over half of the company’s revenue at 52.6% of revenue compared with 42.5% of revenue for Q3 of 2020.
Allbirds was founded in 2016 by Tim Brown, a former soccer player, and Joey Zwillinger, a biotech engineer. The startup raised over $7 million in investments from a funding round led by the venture capitalist company Maveron.
The New Zealand-American footwear company became well-known in the industry for developing the ‘Wool Runner’, a shoe made of fine merino wool and castor bean oil. Since then, Allbird has developed several other shoes in similar styles, all purportedly using environmentally-sourced materials and processes.