What happened

Shares of Allbirds (BIRD -2.73%), which calls itself the maker of the world's most comfortable shoe, were taking a dive today after the company issued disappointing guidance in its second-quarter earnings report.

As of 12:18 p.m. ET, the stock was down 22.8%.

So what

Allbirds, known for its merino wool-based sneaker, said revenue in the quarter rose 15% to $78.2 million, ahead of estimates at $77.8 million. Growth was stronger in the U.S., up 21% to $59.3 million, and sales at its own brick-and-mortar stores more than doubled, rising 120%.

Adjusted for an $11.6 million write-down of first-generation apparel inventory, gross margin declined from 56.1% in the quarter a year ago to 51% as the company faced higher distribution and logistics costs, a mix shift away from international sales, and currency headwinds.  

Selling, general, and administrative expenses also soared, up from 42.7% of revenue to 53.4% as it opened seven new stores in the period and 19 additional stores in the last year. 

On the bottom line, the company posted an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $9.2 million, compared to a profit of $1.1 million a year ago, and its adjusted loss per share was $0.12, better than expectations at a per-share loss of $0.16.

The company also announced new simplification initiatives to reduce cost, including transitioning to an automated distribution center and laying off 8% of its global corporate workforce, which it announced last week. 

Now what

Though results in the quarter actually beat expectations, a guidance cut due to external headwinds and changing demand was what torched the stock. The company guided for adjusted net revenue of $304 million to $315 million for the year, down from a prior forecast of $335 million to $345 million, and it lowered adjusted EBITDA guidance from a loss of $21 million to $25 million to a loss of $37.5 million to $42.5 million.

Given the weaker view, the sell-off isn't a surprise for the growth stock. Allbirds is now down 70% from its $15 initial public offering price last November.