Allbirds – the wool-based footwear brand founded in New Zealand and now headquartered in San Francisco – says sales increased by 54 per cent year on year during the third quarter.

In a trading update for the three months to September 30, adjusted net sales increased 15.9 per cent to US$72.7 million, ahead of its financial guidance targets. The increase in revenue is driven by retail store sales and an upsurge in order value.

Due to simplification initiatives such as reducing logistics costs in the US and optimising inventory, the gross margin declined 44.8 per cent while gross profit totalled $32.5 million. Selling, general, and administrative expense was recorded at $45.4 million, or 62.5 per cent of net revenue

Joey Zwillinger, Allbirds’ co-founder and co-CEO, said the business delivered “a strong quarter” in a highly dynamic operating environment.

“Looking ahead to year-end and 2023, we continue to expect macro headwinds to persist but believe that our brand, our growth strategy, and simplification initiatives position us well to emerge strongly from this period.”

Neil Saunders, MD of GlobalData, described the sales growth as being “marginally better” compared to last quarter however the uplift in revenue is considerably at a “slower pace”.

“While Allbirds is not to blame for these dynamics, such a step down in growth is disappointing given that physical store numbers have doubled since last year – which gives Allbirds more customer exposure.”

With regional challenges at hand, Saunders believes the business has to improve its brand awareness in overseas markets which would help offset the poor sales environment and make foreign investments a worthwhile long-term stake.