Liberation Day: 46% tariff for Vietnam
The tariffs announced by US President Donald Trump on ‘Liberation Day’ (April 2) initially looked like a disaster for the already beleaguered Allbirds, which has all of its manufacturing plants in Vietnam.
Trump said exports to the US from the southeast Asian country would be slapped with a 46% tariff, one of the highest rates as his trade adviser Peter Navarro called Vietnam “a colony of Communist China”.
But on April 9, as share markets tanked, Trump announced a “90-day” tariff “pause” for most countries, including Vietnam (China saw a hike) and a shift to a 10% “baseline tariff” for that period.
On a conference call this morning, chief financial officer Annie Mitchell said: “Assuming we do not see a material shift in the macroeconomic environment or broader consumer demand in the coming quarters, we believe we are positioned to return to top line growth in the fourth quarter of this year.”
She added: “From a tariff perspective, we have multiple levers we can pull to protect gross margin. (Gross margin fell slightly to 44.8% in the first quarter.)
“We continue to expect that we can deliver gross margin in the mid-40s for full year 2025. This assumes a continuation of the 10% incremental tariff on Vietnam goods following the 90-day pause.”
No given
An ongoing 10% tariff for Vietnam is not a given, however.
Trump welcomed Vietnam’s move to become one of the first countries to request talks after “Liberation Day” – but formal US-Vietnam negotiations only began on Wednesday this week.
And in the interim, Trump reacted angrily when Chinese President Xi Jinping visited Vietnam as part of a multi-country swing, calling Xi’s visit part of an attempt to “screw” the United States.
Asked when tariffs would start to impact Allbrids product, Mitchell said: “They’ll be a very minor impact in Q2 but it really starts to show up in Q3 and Q4 – and that has been contemplated in our guidance”
‘Choppy’
Elsewhere on the call, there were concessions that the new terrain could be unpredictable.
“Traffic and conversion across the consumer landscape have been reported as choppy since early April, and we’ve seen similar trends,” chief executive Joe Vernachio said.
“Near-term consumer behaviour is difficult to predict and supply chain disruptions may occur as the broader market adjusts to new tariffs.”
Waterproof shoes
Allbirds is also pinning its hopes on several new lines that will debut in the second half of the year, including “our first fully waterproof collection”.
There will also be a new collection called “Elevated”, which Vernachio described as ”shoes that bring sneaker-level comfort to more dressy and professional settings”.
He added: “At the other end of the spectrum, we’re responding to the rising desire for extreme comfort at home with a collection we are calling ‘Relaxed’.”
Full-year guidance
“We expect net revenue in the range of US$175m to US$195m, which includes approximately $18m to $23m of negative impact associated with our distributor transitions and store closures,” Mitchell said.
“For added perspective, we anticipate the impact will be spread roughly evenly across the first three quarters, with slightly less impact in Q4.
“Stripping out the impact of those structural changes, net sales are expected to grow approximately 10% at the midpoint versus 2024.
Full year adjusted ebitda loss is expected to be in the range of US$65m to US$55m. Allbirds made a full-year ebitdata loss of US$70m in 2024.
Conclave star a hit
Vernachio said a campaign featuring Stanley Tucci “has been a stand out” with “over 25 million Instagram views … and more than one million views on YouTube.”
The social media push features the 64-year-old star of the Oscar-nominated Conclave hosting a series of “dream dinner party” video vignettes that feature guests including Queer Eye presenter Tan France, Formula 1 driver Carlos Sainz and the Spice Girls’ Melanie C.
The company has faced something of a perfect storm. In 2023, the Wall Street Journal ran a front-page story saying Allbirds had fallen out of fashion with the Silicon Valley tech bros who helped fuel its initial rise. The paper also ran gripes about the durability of its footwear (which Allbirds pushed back against).
It was already reeling from supply chain problems caused by the pandemic. Then there were Amazon dupes, made by Amazon itself, plus the global economic slowdown.
Brown resigned as co-chief executive in 2023 but remains on the board.
The firm is now led by Vernachio, a former executive with The North Face.
Shares jump
Shares fell 0.04% to US$5.41 in the regular session but climbed 5.3% to US$5.70 in after-hours trading.
The pop is relative.
The stock hit an all-time high of US$574 (split-adjusted) shortly after listing on the Nasdaq in November 2021.
Last year, Allbirds carried out a 20:1 reverse split after a de-listing warning. The Nasdaq issued a compliance notice after the firm’s stock traded under US$1 for more than 30 consecutive days.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
