Q1 2025 Allbirds Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to all parts first quarter 2025 earnings Conference call.
All participants have been placed in a listen only mode.
Speaker Change: After management prepared remarks, there will be a question and answer session at which time instructions will follow I would like now to turn the conference over to Christine Greenie Investor Relations. Please go ahead.
Speaker Change: Good afternoon, everyone and thank you for joining US with me on the call today are Joe <unk>, <unk>, CEO and Andy Mitchell CFO. During this call, we will be making comments of a forward looking nature.
Speaker Change: <unk> results may differ materially from those expressed or implied as a result of various risks and uncertainties.
Speaker Change: For more information about these risks, please review the company's SEC violence, including section titled Risk Factors in our Report on Form 10K.
Speaker Change: For the year ending December 31, 2024, for a more detailed description of the risk factors that may affect our results.
Speaker Change: These forward-looking statements are based on information as of May 8th, 2025, and except as required by law, we assume no application to publicly update or revise our forward-looking
Speaker Change: Additionally, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with CAHP.
Speaker Change: A reconciliation of our non-GAAP measure to the most directly comparable GAAP measures can be found to the extent reasonably available in today's earnings release.
Speaker Change: Now I would like to turn the call over to Joe to begin the formal remark. Joe? Good afternoon everyone. Thanks for joining us today.
Speaker Change: We're pleased to report another quarter of progress on our path to growth and profitability.
Speaker Change: Our first quarter results were in line with our expectations on the top line and exceeded guidance on the bottom line.
as we move through 2025.
The foundational work we've done over the past year.
including reducing our retail footprint.
Transitioning International Markets to a Distributor Model
Speaker Change: Rightsizing Inventory, and Lowering Costs, is now coming together with our efforts in product, marketing, and customer experience.
Speaker Change: Together we believe these work streams will build momentum toward a meaningful inflection point in the back half of the year.
Speaker Change: Our refreshed product line will begin reaching the market in late summer and is expected to support our anticipated return to top line growth in the fourth quarter. Early reads on our product and marketing initiatives gives us confidence that we're on the right path.
Speaker Change: While our teams remain focused on executing our 2025 plans, we're also navigating an evolving macro environment driven by shifting global trade policies. Annie and I will speak to that more directly in just a few minutes.
Speaker Change: Before we get to that, I'll walk you through updates on each of our three key focus areas, making great product, telling great stories, and creating an engaging shopping experience.
Speaker Change: First, product is our most important growth driver. The product engine is now fully staffed, sharply focused and operating at a high level.
Speaker Change: When the first results of our work reached the market in the back half of the year, you'll see a mix of reintroduced icons, refreshed favorites, and entirely new categories that position us for long-term growth.
Speaker Change: Our fall lineup is the strongest and most diverse we've ever assembled.
Speaker Change: It spans casual, elevated, and relaxed silhouettes, brought to life with modern design, unique materials and the signature Allbirds comfort our customers expect from us.
Speaker Change: Callouts include updates on our runner franchise and the debut of the cruiser, a new court-inspired silhouette made from recycled wool and offered in nearly 20 colors.
Speaker Change: Next will be the introduction of a new subcategory called Remix.
Speaker Change: Products that feature materials made with ingredients otherwise destined for landfill. It's a strong expression of our ongoing commitment to sustainability delivered to versatile design for everyday wear.
Speaker Change: Another first for Allbirds is a fully waterproof collection that looks amazing. We've designed a beautiful, versatile and functional collection of shoes our customers have been asking for.
Speaker Change: We're also planning to introduce two new collections that we believe represent significant long-term growth opportunities.
Speaker Change: The first is what we're calling elevated. Shoes that bring sneaker level comfort to more dressy and professional settings.
Speaker Change: Through carefully considered silhouettes, materials, and color choices, we're tapping into a clear and growing trend that will be represented in sneakers for men and flats for women.
Speaker Change: 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, with styles that feel so great around the house that you can't help but wear them around town.
Speaker Change: This introductory collection will be distinctly allbirds in aesthetic and material.
Speaker Change: We're deeply committed to bringing new product to market because we believe it's essential to unlocking growth. Early validation in our Q1 results reinforces our conviction that when we deliver what our customer wants, it can drive meaningful and sustained momentum.
Speaker Change: The recent example is the Canvas Piper, a subtle variation on a silhouette we introduced last year, which quickly became one of our top sellers. Its success underscores the demand for clean, versatile, everyday sneakers.
Speaker Change: As well, our new utility pack, a more rugged functional design, has performed well right out of the gate.
Speaker Change: Even with a relatively light flow of new launches, the percentage of sales from new products has grown steadily rising from the high single digits in January to over 20% in March.
Speaker Change: We look forward to introducing a broad range of new assortments to consumers this fall and believe that they can be a meaningful driver of growth for our business.
Speaker Change: With all the new products coming, it is important that we keep a sharp eye on our inventory. We've taken steps to optimize our inventory position ahead of our upcoming launches.
Speaker Change: Initial buys have been conservative, and we're maintaining a discipline approach to inventory management given the current macro environment.
Speaker Change: This posture allows us the flexibility to read consumer signals in real time and we need to areas of momentum as we move through Q3 and Q4.
Speaker Change: Earlier this year, we began reintroducing the Allbirds brand, through a mix of brand building, traditional and performance marketing. At the top of the funnel, our cards on the table series hosted by Stanley Chuchy has been a standout.
Speaker Change: When we spoke to you on our year-end earnings call, the series had just launched. Since then, it has generated over 25 million Instagram views, including 15 million unique viewers, and more than 1 million views on YouTube.
Speaker Change: On social, collaborative posts with partners like Stanley Tucci, Rolling Stone, and Carla Sands have outperformed benchmarks generating up to 100 times our average reach.
Speaker Change: This early success confirms the power of storytelling and the cultural resonance of the diverse voices featured. Just as importantly, they reflect allbirds' core values and help re-anchor the brand with purpose and relevance.
Speaker Change: Building on that momentum, we're increasing the volume and range of content to support our hero products and seasonal launches in the month ahead.
Speaker Change: Dylan Still, under the Allbirds by Nature banner, our messaging will reinforce four key attributes, comfort, style, quality and sustainability.
Speaker Change: Comfort remains foundational, but we will also help consumers see how our products fit into a variety of real life occasions, responding to a clear desire for more styling inspiration.
Speaker Change: Layering on strong proof points around durability and sustainability helps create a well-rounded story, one that can be told consistently over time.
Speaker Change: As we talk last quarter, we have been focused on optimizing our performance marketing strategy and those efforts are beginning to show tangible results.
Speaker Change: In the initial four weeks, key e-commerce metrics improved meaningfully versus the prior year. CAC was down, new customer acquisition accelerated, and conversion rates were up.
Speaker Change: Together, all these efforts reflect a marketing strategy that's both emotionally resonant and commercially effective, designed to build long-term brand equity while delivering measurable impact.
[inaudible]
Speaker Change: The final piece to the puzzle is creating a standout experience, whether customers shop us online or in-store.
Speaker Change: Our efforts to elevate that experience are well underway. On the digital side, our website redesign is on track for a summer launch.
Speaker Change: featuring richer storytelling, more dynamic product detail pages, and a smoother, more intuitive shopping journey.
Speaker Change: In retail, we've been piloting a refreshed store concept that our Hayes Valley location in San Francisco.
Speaker Change: Updates the layout, fixtures, navigation and visual merchandising have created a space that's warmer and more welcoming and much easier to shop. These improvements require minimal investment but deliver outsized impact.
Speaker Change: Early results have been strong, driving increased engagement and higher daily sales.
Speaker Change: We're now rolling out this new format to two additional locations.
Speaker Change: or Soho Store, New York City, and the Stanford Shopping Center Store in Palo Alto.
Speaker Change: We plan to build on our key learnings and expand the concept around more stores in the coming quarters.
Now turning to the macro environment.
while the current tariff landscape has complexity.
Speaker Change: Our team is well equipped to navigate these dynamic conditions, drawing on years of industry experience.
Speaker Change: With the majority of our manufacturing based in Vietnam, we're proactively managing potential cost of goods pressured through tighter inventory buys and ongoing evaluation of future price opportunities.
Speaker Change: At the same time, our growing international distributor business helps mitigate exposure to US tariff impacts.
Speaker Change: Meanwhile, traffic and conversion across the customer landscape have been reported as choppy since early April , and we've seen similar trends.
Speaker Change: Near-term consumer behavior is difficult to predict, and supply chain disruptions may occur as the broader market adjusts to new tariffs.
Speaker Change: Despite this, we remain cautiously optimistic, mindful of the burden on consumers yet encouraged by our strong execution and the positive early indicators I just talked about.
Speaker Change: 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.
Speaker Change: We are grateful to our teams across the company for their resilience and commitment. We simply would not be approaching this next chapter without their contributions.
Speaker Change: We also thank our shareholders for their continued support and remains focused on building long-term value.
Annie: Now, I'll turn the call over to Annie to review the financials.
Thanks, Joe, and good afternoon everyone.
Annie: We continue to deliver strong execution in Q1 with top-line results that were in line with our guidance and adjusted EBITDA that exceeded our expectations.
Annie: Neck Revenue to the quarter totaled $32 million, slightly above the midpoint of our
Annie: Similar to what we've seen across the Zulu landscape, the quarter is generally choppy with some improvement in sales and March compared to the first two months of the year.
G1 Gross Margin was 44.8%
Annie: That's down 210 basis points to last year, but ahead of our expectations.
Let me unpack that for you.
Annie: First, as we expected, there was notable pressure on Q1 gross margin due to a higher mix of sales from our international distributors and the sound setting of products as we prepare for our new assortments in the second half.
Annie: In addition to these factors, gross margin was also impacted by higher per unit freight costs in our direct business.
Annie: These drags and margins will partially offset by approximately $2 million of gift card breakage, which translated to a benefit of about 400 basis points in the quarter.
Annie: From a terrorist perspective, we have multiple levers we can hold to protect gross margin.
Annie: Based on the assumptions in our baseline scenarios, we continue to expect that we can deliver gross margin in the mid-40s for full year 2025.
Annie: This assumes a continuation of the 10% incremental tear on Vietnam does following the 90-day
Annie: We're confident that our scenario planning and the mitigation tactics we developed leave us prepared to navigate the evolving pair of landscapes.
Annie: First, we've reduced our initial inventory purchases for fall 25, as well as our buy plans for spring 26. We will have these flexibility to chase and to good as we did.
Annie: Next, because the majority of our product offerings will be new starting this fall, we have the ability to go to market with modest, big, higher prices.
Annie: Lastly, in addition to these factors, overperformance on the bottom lining Q1 provides us with added flexibility to navigate the current environment.
turning now to expect this.
Our teams continue to exercise strict cost control.
FGNA was down more than 14 million versus Q-1-2024.
Annie: The year-over-year improvements is attributable to lower occupancy and payroll costs and are transitioned international distributors.
Annie: During Q-1, we closed five retail stores and had one additional closure subsequent to
Annie: that brings us to a current U.S. store count of 24.
Annie: Marketing expense in the first quarter, total 12 million, or 37% of revenue.
Annie: We continue to expect marketing expense on both a dollar basis and as a percentage of sales will increase on a full year basis compared to 2024 with variances quarter to quarter.
Annie: Q1, adjusted EBITDA loss of $19 million reflects a year over year improvement of 11%.
Annie: This exceeded our guidance range by about $5 million.
Annie: Primarily reflecting better than expected gross profit and strict cost control.
Annie: Moving to the balance sheet at quarter end, we had $39 million in cash and cash equivalents and no outstanding borrowings under our $50 million.
Annie: We are pleased to be operating from a strong financial position with the runway to continue executing against our product and marketing plans.
Annie: We ended the quarter with $43 million in total inventory down 29% versus the year ago period.
Annie: We are pleased to be in a healthy position and remain focused on carefully managing inventory as we can.
Annie: Per our new assortment, arriving in late summer.
Annie: As we navigate the tariff landscape and ongoing macro challenges, we are maintaining the flexibility to read and react.
Annie: During the quarter operating cash use totaled $28 million, reflecting peak seasonal working capital needs as well as strategic investments to support the launch of our marketing campaign.
Annie: Turning now to guidance.
Annie: Given the evolving global trade policy, and how that may impact consumer sentiment and spending.
Annie: The outlook, we're providing today is in two key factors.
Annie: One the 10% incremental tariff rates on the Vietnam, continuing through the end of the year.
Annie: Two no material worsening of the macroeconomic environment, a broader consumer demand.
Annie: We continue to expect the year to be second half weighted driven by the lineup of new product offerings coming to market beginning in late summer.
Annie: Courted by our full funnel marketing initiatives.
Annie: We are reiterating our full year 2025 outlook as follows.
Annie: We expect net revenue in the range of $175 million to $195 million, which includes approximately 18% to $23 million of negative impact associated with our distributor transition and store closures.
Annie: For added perspective, we anticipate the impact will be spread roughly evenly across the first three quarter.
Annie: So despite the less impact in Q4.
Annie: Stripping out the impact of the structural changes net sales are expected to grow approximately 10% at the midpoint versus 2024.
Annie: Looking at the topline by region, we expect U S net revenue of $145 million to $160 million and international net revenue up 30% to $35 million.
Annie: Full year adjusted EBITDA loss is expected to be in the range of 65 million to $55 million.
Annie: We're also introducing guidance for the second quarter.
Annie: Net revenue is expected to be in the range of 36% to $41 million down 25% at the midpoint versus prior year.
Annie: U S net revenue expected to be 26% to $30 million in international net revenue is expected to be $10 million to $11 million.
Annie: Adjusted EBITDA loss is expected to be in the range of 19 million to $16 million.
Annie: We are continuing to watch the consumer and we'll respond accordingly.
Annie: Importantly, we remain on track to bring our updated assortment to the market beginning in late summer and look forward to keeping you updated on our progress.
Annie: We appreciate your time this afternoon, and we'll now ask the operator to open the call to questions.
Annie: Thank you to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Annie: We ask that you limit yourself to one question and one follow up.
Speaker Change: And the first question will come from Janine Stichter with BTG. Your line is open.
Janine Stichter: Hi, Good afternoon, Andy I was hoping you could help us with the shaping of the gross margin through the rest of the year, obviously, a lot of puts and takes.
Janine Stichter: How to think about the impacts from the international distributor agreements and then and also how to think about when do we start to see the higher inherent inventory flowing through and when would we potentially start to see an offset in terms of price.
Janine Stichter: Great Hi, Julien Thanks for your question.
Janine Stichter: Yes, there's quite a few moving parts going on in gross margin.
Janine Stichter: Let's start a little bit with Q1, so you understand our starting point this year.
Janine Stichter: And while our gross margin was down year over year. It was ahead of our expectations.
Janine Stichter: The decline year over year.
Janine Stichter: Is largely driven by that shift of sales internationally, Glenn from a direct model to distributors.
Janine Stichter: Additionally, we have started to sunset some products in preparation for the new Assortments are coming in the back half of the year.
Janine Stichter: And theres, a little bit of noise as well in terms of higher per unit freight in our direct business.
Janine Stichter: That was then offset.
Janine Stichter: Buy a gift card breakage entry that we had.
Janine Stichter: That was $2 million.
Janine Stichter: And it did increase our gross margin by 400 basis points in the quarter.
Janine Stichter: One highlight that I wanted to make is that our lowered lower average product Cogs are coming to bear as expected all of the great.
Janine Stichter: Sourcing of material work that we've been doing over the past few years around our cost saving initiatives.
Janine Stichter: And so when we think about where do we go from here in terms of our overall gross margin.
Janine Stichter: While we reported the <unk>.
Janine Stichter: $44 eight I'm going to go ahead and have you take out for comparison purposes, the 400 basis points associated with the gift card entry that presented a gross margin of about 41% for Q1.
Janine Stichter: And we do expect that we will improve sequentially each quarter, but really where we start to see some great things in <unk>.
Janine Stichter: Our margins are in the back half of the year in Q3 and Q4.
Janine Stichter: And that is because the second half product that we're so excited about it was actually built and designed with higher margin targets.
Janine Stichter: And so we will be combining this new product coming at better margins, we're going to read the consumer.
Janine Stichter: You asked a little bit about when do we start to feel the impact of the new tariffs.
Janine Stichter: And there'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, where we reiterated that we expect to be in the mid <unk> for the full year, but again increasing from that.
Janine Stichter: Restated Q1 of 41, and then increasing each quarter.
Janine Stichter: So we're excited about the product ahead, we will navigate the consumer will navigate changing tariffs, but we feel like we're well positioned for the quarters ahead.
Janine Stichter: Okay, Great and then.
Janine Stichter: Maybe if you could just talk about the inventory how much you mentioned buying down for I think fall of this year in spring of next year.
Janine Stichter: Do you think about that in relation to your plans to grow revenue in Q4, and maybe speak to your flexibility if you need to change.
Janine Stichter: Okay.
Janine Stichter: Right.
Janine Stichter: So yes as a result of.
Janine Stichter: The macro economic outlook right now in terms of tariffs consumer we have chosen to be somewhat conservative in our last buys for fall holiday 2006, and the buys that we are preparing.
Janine Stichter: To meet our last batch of fall holiday 2005, and the buys that we're preparing for spring summer 2006.
Janine Stichter: We have not cut ourselves so much that it limits our ability to get to that growth. We've just been really cognizant about the way that we are buying the timing et cetera. So we do not we do not expect that the reduction in purchases really hinders our ability to grow because we believe in our plan and we're excited about.
Janine Stichter: The product coming to market late summer supported by the marketing work that we've already done.
Janine Stichter: And then as we will continue to again watch the consumer see how things continue to shake out we will have the opportunity to chase into spring 'twenty six product if needed.
Speaker Change: Thanks, So much investment luck.
Janine Stichter: Thank you Janine.
Speaker Change: And the next question comes from Alex <unk> with Morgan Stanley. Your line is open.
Speaker Change: Great. Thanks, so much.
Speaker Change: I know you all gave rationale for the post first quarter.
Speaker Change: Sales improvement last call that that kind of back half weighted dynamic to the topline, but obviously things have changed with tariffs. So can we just talk about how your view on the back half revenue in Berlin.
Speaker Change: Has changed now versus three months ago, and what degree of conviction you still have there.
Speaker Change: Yes, Hi, how are you a nice day.
Speaker Change: Speak with you today.
Speaker Change: Yes.
Speaker Change: We've been working on this plan now for well over a year and we've been executing against it like a metronome.
Speaker Change: The product the marketing and the experience of really all coming together.
Speaker Change: In less than a 100 days from now this will all start to come together.
Speaker Change: One point, where the way we think about it as this is our starting line not a finish line like we're just getting started.
Speaker Change: And it only accelerates through the back half of this year.
Speaker Change: Yes, there is certainly there is uncertainty out there.
Speaker Change: And on.
Speaker Change: Uncertainty does not necessarily lend itself well to consumer sentiment, but we are a very experienced team and we've navigated through many of these types of situations over the years.
Speaker Change: One little proof point, our talking point around.
Speaker Change: Just how much is coming to give you a sense of it.
Speaker Change: We will have only had three new products in the first half of this year over 50% of our product thats delivering from July through the end of the year will be new product.
Speaker Change: And we've shown that when we deliver new product the consumer responds and we're getting these new products.
Speaker Change: Showing up in the top part of our selling ranking and so we're just we're really excited and motivated by everything thats coming together.
Speaker Change: The road ahead might move and shift, but the way you get through that is with a clear plan and clear execution and that's what we're focused on.
Speaker Change: Perfect maybe.
Speaker Change: One more follow up for you can you just can we zero in on holiday when do you guys kind of start and finish placing those orders, obviously theres a lot of angst in the market around how retailers are planning just given the tariff uncertainty around consumer demand.
Speaker Change: Yes.
Andy: As Andy said.
Andy: We've trimmed the very back half of Q4 purchase orders just to make sure.
Andy: If we had 10 color ways of something maybe we go with age.
Andy: But the full flush of the expression of this product offering that we've built is still intact and still coming through.
Andy: So as far as timing goes.
Andy: We're pretty much fully purchased for the back half of this year.
Andy: And.
Andy: Our plans and when we look at the consumer and the trend in all of our leading indicators at all points towards pointed in the right direction and points towards the plan that we put in front of us.
Andy: <unk>.
Andy: We believe that there is always.
Andy: The consumer always reacts to a company that knows.
Andy: What they're delivering what their proposition is what their promises and delivers on that relentlessly with their product and their message and that there will be plenty of room for us to reach these growth expectations in the back half of the year.
Andy: Great. Thanks, so much good luck.
Andy: Thanks.
Speaker Change: The next question comes from Thomas Forte with Maxim Group. Your line is open.
Thomas Forte: Great. So first off John Andy Congrats on the quarter.
Thomas Forte: I wanted to ask two questions and I would note that anecdotally I for one and looking forward to buying the new products.
Thomas Forte: Can't wait to see them and buy them.
Thomas Forte: So first off you recently ran what I thought was very innovative advertising campaign cards on the table.
Thomas Forte: What I'll do you believe it contributed to a strong performance in the quarter that.
Thomas Forte: And it seems to me that one of the advantage of the effort is there.
Thomas Forte: Have legs, so how should we think about its ability to contribute to sales for the remainder of 'twenty five.
Tom: Great Hi, Tom.
Speaker Change: Welcome to the call we're very excited.
Speaker Change: That you've chosen to follow the stock we really appreciate it welcome to the team.
Speaker Change: Yes, we are we're really pleased with the results of cards on the table.
Speaker Change: Remember its purpose was to get us back in the conversation to get people talking about us again to put us in association with with people that reflect our values and that are are part of the ongoing cultural conversation out in the world and it absolutely achieve that.
Speaker Change: The numbers that we talked about earlier.
Speaker Change: 12, 25 million Instagram views.
Speaker Change: <unk> is a real number and.
Speaker Change: That momentum is showing up in places like our subscribers on Instagram.
Speaker Change: We see real tangible results of getting people into our funnel into our our view and being able to talk to them and communicate with them and you are right to notice that.
Speaker Change: Part of this plan is that that was evergreen and is evergreen content and if you actually look at it today.
Speaker Change: Viewership is only increasing it's not like a advertisement campaign that goes up and goes down it is accumulating because it is good valuable content. So people are constantly coming into view and seeing this and what youll see when we come into the back half of the year is will <unk>.
Speaker Change: These little threads from from that and I won't go into the detail of how we're going to do that but it will be through people and situations, where we will connect the stories and the messaging that we're going to be delivering from July through the balance of the year to that work and that will give us the chance to reexplain that that in <unk>.
Speaker Change: <unk> again and resurface it for people. So it continues to work for us through the balance of the year.
Speaker Change: Great. Thank you, Joe and I am very impressed with the multi year turnaround effort and the metronome I think was the term used alright. So for my follow up question. Thanks for the update on your new store prototype of San Francisco and plans to rollout in several in Stanford can you explain how the new store prototype better positions you to drive sales for your next Gen.
Speaker Change: <unk> products.
Speaker Change: Yes, I'd love to stores are near and Dear to my heart.
Speaker Change: So.
Speaker Change: I'll give you a simple example, just making the store feel warmer and more inviting through very very simple tactics. So first of all we had a in our current store format, we have a single.
Speaker Change: Sure.
Speaker Change: Footwear wall, where many of the shoes are you cannot take them off the wall. They are on glass are fixed to the wall. It is very difficult to shop, a shoe that you can't pick up and look at the toe down and look at the stance of the shoe in different orientations. So we have.
Speaker Change: Change the entire fleet already to pegs, where you can just sit the shoe on top a shoe shelf, where the consumer can take it off and interact with tissue. That's a very simple example.
Speaker Change: One of the things that we've done across the fleet then specifically within the.
Speaker Change: The prototype now we've added at least three to five depending on the size of the store additional touchdown spaces, where we can.
Speaker Change: Tell additional stories like travel story or a color story or a material story and we're really seeing a significant increase in.
Speaker Change: But interaction with those people picking up shoes.
Speaker Change: Understanding the story and and most importantly, our daily sales and the Hayes Valley store has increased noticeably to the point that we've enrolled rolled this out so we just did Stanford yesterday.
Speaker Change: We just saw the first pictures today Im going down on Saturday to go view it myself to see how it looks and feels.
Speaker Change: And we will be doing Soho in.
Speaker Change: On the 20th I believe of this month and then once we get the proof points out of those will be looking to see where else in the fleet should we go should we should we do a smaller store or a bigger mall store or a bigger street store, where we specifically picked those three so that we could get really good tests on it and.
Speaker Change: I think the most important thing is is that it's not a very expensive.
Speaker Change: Face lift, it's very economical, but gets a really big powerful financial lift for the stores.
unknown: Great. Thank you John I appreciate all that.
Speaker Change: Yes, you bet.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone. The next question comes from Dylan Carden with William Blair. Your line is open.
Dylan Carden: Thank you.
Dylan Carden: I'm just curious how you how you would contextualize the cadence of the quarter sort of improving there in March.
Dylan Carden: With that coincide with a certain amount of marketing or new product.
Dylan Carden: And you've spoken to at several points on the call kind of encouragement with new product and I guess.
Dylan Carden: Part of that is that sort of what you've flown in.
Tony: Already this is Tony you can elaborate on that.
Tony: And then part of that question also touches on just the marketing spend being relatively elevated I'm, just curious kind of what youre spending into if youre spending into a higher level of back half sales.
Tony: Or wouldn't that ratio might kind of.
Tony: Tamped down a bit right.
Tony: Sure.
Tony: So yes, we've had quite the interesting start to 2025.
Tony: Like many others. It was a slow start to the year in January and February and then we saw quite a bit of momentum in March. We believe this is both macro because we've heard from other folks compounded then by the result of our cards on the table investment.
Tony: And so we were really pleased to see how the trends picked up in March.
Tony: Of course that in early April when the consumer got quite distracted with.
Tony: Macro headlines we have seen some choppiness similar to what others have reported.
Tony: But really when we think about it and we look forward to the rest of the year.
Tony: It sounds like everybody across multiple industries has seen the change in the consumer.
Tony: What we do know and what we believe is that there is appetite for our brand with authenticity and message.
Tony: And we believe that our marketing and product places us in a competitive position.
Tony: Which is why we're really excited about what we've done so far the investments that we're making in marketing the initial results from it and how it's setting us up for success.
Tony: In terms of a little bit of nuance with Q2, we do expect that our marketing spend.
Tony: In the quarter will be down slightly year over year, but that's really more about last year you might recall that in Q2 of 24 is when we have meaningful launch with the tree Lennar ago that was a high volume launch support with quite a bit of marketing.
Tony: So we do expect year over year marketing spend to be down, but it's still overall.
Tony: We're continuing to invest in the brand and we will for the rest of the year.
Tony: And so I will just turn it over to Joe talk little more about kind of the color on top of those financials.
Tony: Yes, so you're asking about the new products that we brought in for the quarter.
Tony: There were two products the canvas Piper and then the utility product.
The interesting part about that is it's kind of both ends of our pricing spectrum, so from $80 to $120 a.
Tony: And both of them performed really well and that's our sweet spot and.
Tony: And having only two products to really lean into and have them shoot up into the top five of our selling ranking.
Tony: Is it just a really good proof point that.
Tony: People are just waiting for us to deliver all of this new product and.
Tony: Just very encouraging and promising and.
Tony: Yes.
Tony: <unk> is excited and again I'd say, we're less than a 100 days away, we actually have a little countdown calendar and our office that we.
Tony: Look two and everybody is focused on getting the back half of this year back to growth.
Tony: Awesome.
Tony: To the extent that you can measure it is this a new customer or are you kind of re engaging existing customers I'm sure. It's a bit of both but as any one, particularly skewed one way or the other.
Tony: Yes, no exactly right its a little bit of both.
Tony: We're finding lapsed customers starting to come back when we show them the new products.
Tony: Our performance marketing is getting a lot sharper and a lot more focus so we can.
Tony: Customize it a little bit better so we can serve up the right products to them.
Tony: Yes.
Tony: It's all moving in the right direction. There is not any leading indicator that is at all concerning to US right now it's all moving in the right direction.
Tony: Yes, we see the macro and we read the things that everybody else reads, but right now inside of our business.
Tony: Everything we read gives us confidence that we're on the right track.
Speaker Change: Okay. Thank you very much for the time.
Tony: Yes.
Tony: I show no further questions at this time I would now like to turn the call back over to Joe for closing remarks.
Joe: Thanks, everybody. We appreciate you being on today and we look forward to talking to you next quarter and we look forward to the next phase in our brand.
Tony: The starting line not the finish line.
Joe: Thanks.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
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