What happened
Shares of Allbirds (BIRD 0.55%) were moving higher today after the footwear company posted strong results in its second-quarter earnings report, topping estimates on the top and bottom lines.
As of 12:24 p.m. ET, the stock was up 25.5%.
So what
Allbirds continued to struggle in the quarter, but stock movements are all about performance relative to expectations, and the company did top expectations.
Revenue in the quarter fell 9.8% to $70.5 million, but that still beat expectations at $66.8 million. The company successfully controlled its inventory, which was down 24% to $92.8 million, its lowest level since Q2 2021, and gross margin improved from 36.1% to 42.8% as a result of lower inventory write-downs, but it continued to lose money.
Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss improved from $20.7 million to $18.3 million. On the bottom line, it posted a loss per share of $0.19, which compared to a per-share loss of $0.20 a year ago, and beat estimates at a loss of $0.22.
CEO Joey Zwillinger said: "We are pleased to report another quarter of solid progress against our strategic transformation plan. Most notably, we gained traction across key benchmarks, including reducing inventory levels, lowering operating cash use, and exercising cost control."
Now what
Looking ahead, the company said it was making progress on its strategic transformation plan, which includes optimizing its stores and slowing new openings, reigniting interest in its brand, and finding distribution partners in international markets.
Guidance for the third quarter indicated there won't be a quick turnaround for Allbirds. The company expects revenue of $56 million-$61 million, a decline of 16%-23% from a year ago, and an adjusted EBITDA loss of $20 million-$23 million.
Allbirds has fallen far enough that the stock can bounce on a report like this, but it still remains to be seen if this can be a viable business. Investors should tread lightly.