Allbirds Aims To Make Like A Tree As Sales Downturn Clips Its Wings

It’s been another discombobulating week in retail, with Chinese fast fashion phenomenon Shein announcing a new materials recycling project as it reinvents its sustainability credentials, while one analyst pontificated that sustainable footwear brand Allbirds might have to rethink its sustainability credentials.

Confused? You might be after the latest round of ‘green sells, but who’s buying?’

The fact is that Allbirds, a darling of the more eco-conscious pandemic months, is trying hard to figure out what might make the company’s sales fly again.

“We needed to be a business that could use purpose to succeed, grow and capture more attention,” said Joey Zwillinger, AllBirds co-founder, as he insisted during World Retail Congress in Barcelona that having purpose alone was not sufficient for the brand’s long term future.

That was a few days before the company reported results Tuesday that are probably best described as not as bad as expected.

First quarter net revenue took a 13.4% dive year over year to $54.4 million, while net losses increased from $21.9 million to $35.2 million and gross margin declined sharply from 51.9% to 40.1%.

Additionally, the company’s selling, operational, and administrative expenses increased 10.3% year on year to $42.8 million. For the second quarter, Allbirds predicted that net revenue will decline by 12% to 18% on an annual basis.

Allbirds raised more than $300 million in its initial public offering, November 2021, with shares surging 91% on the first day of trading to give the company a valuation of $4.1 billion.

Since then its stock has tanked, with another precipitous fall in March to a market value now a fraction of those heady IPO days.

Not surpisingly, Allbirds has been pruning its feathers.

The company has made moves to realign both its costs and positioning, with a company filing stating that 21 employee roles globally were terminated in May, while Allbirds co-founder Tim Brown said on a call with analysts that he is transitioning to the chief innovation officer role.

Allbirds Pushes Ahead With Reignite

“Our teams are executing well against our strategic transformation plan designed to reignite growth, improve capital efficiency and drive profitability. The dedication and hard work of our flock resulted in a quarter that demonstrated good progress on our strategic initiatives while exceeding our expectations,” Zwillinger said in a statement.

That transition took flight March, when the company announced plans to reignite growth and drive profitability, including scaling back store openings. Its plan also focuses on reconnecting with core customers while improving cost savings and capital efficiency.

It’s a sharp reminder of the fickle hand of consumerism for a brand that was inspired by a desire to do something about the huge use of petrochemicals in the footwear industry.

It launched in 2016 with the aspiration to “make something different and sell differently,” said Zwillinger.

The company now has circa 60 stores globally and he said the “alignment of profit with impact” was the foundation and “something really special.”

Achieving Growth ‘Like A Tree’

However, Zwillinger, speaking at the Congress, conceded that: “As the scale grows, pressure from multiple different stakeholders grows. We have to hit targets for profit and revenue. We also give updates on our carbon reduction, so we try to balance both.”

Reflecting on the company’s initial success, he added: “We captured the imagination of consumers, the tough thing is to balance our ambition with the people we have brought in with expert knowledge. We have hyper growth and want to be different without being stupid.”

In order to try and consolidate what it has achieved to date while upping its commercial wing, Allbirds has launched a number of new product lines recently.

Zwillinger said he wanted growth to be “more like a tree that delivers something without any environmental harm.”