Allbirds became a footwear sensation shortly after its launch, along with the likes of Silicon Valley tech bros and ex-president Barack Obama. But lately, the company’s underwhelming performance has been raising questions like- Is Allbirds going out of business?
If you are a loyal fan and a frequent purchaser of Allbirds’ famous Moreno wool sneaker, then this might come as a shock to you.
So what’s the truth? Why is Allbirds losing money? Is it really going out of business?
Keep on reading to find out!
Allbirds is a well-known footwear and apparel company that was founded by Tim Brown and Joey Zwillinger in 2016. The company is known for selling eco-friendly products, especially its shoe range made from Moreno wool.
Allbirds aim to keep all their products as eco-friendly as possible, and they are even B corporation certified.
Shortly after the launch, the Allbirds shot to fame, quickly winning the likes of Barack Obama, Silicon Valley tech bros, and everyone else.
However, recently, the company has been experiencing losses, which can be attributed to its poor expansion strategy.
Keep on reading as we elaborate on why Allbirds is losing money and if they are going out of business.
The Rise and Fall of Allbirds
Back when Allbirds was launched in 2016, it roared with a solid Kickstarter campaign that hit a $30,000 goal in just five days. Shortly after this, the company ended up raising nearly $120,000 to start making their star Moreno wool shoes.
The same year, Allbirds hit another milestone by receiving a B corporation tag, which only organizations that work towards social and advanced environmental causes receive.
In merely the second year of business, Time magazine featured Allbirds’ wool runner shoes, calling them “World’s Most Comfortable Shoes.”
By 2017, Allbirds got another publicity shot when The New York Times described their wool runner shoes as a Silicon Valley uniform.
However, by 2020, the success of wool runners started waning. To cope, the company started launching new projects that included “Dasher,” their first performance-running shoe. They also partnered with Adidas to launch low-carbon shoes, another one-of-its-kind product.
In August 2020, the company generated $219.3 million in revenue, an increase from the previous year’s revenue of $193.7 million. However, their losses also increased at this time, growing from $14.5 million in 2019 to $25.9 million in 2020.
The next year, in 2021, the company launched its IPO and, in 2022, announced the names of its first wholesale partners. Their partnership with wholesale partners signaled that DTC sales were not enough to make the company profitable again.
Soon, the DTC companies started falling out of favor, and the brand started losing its charm.
Is Allbirds Going Out Of Business 2023?
No, Allbirds is not going out of business. However, the company’s revenue is declining, and its losses are surmounting.
In 2023, Allbirds reported $101.4 million in annual loss, which plummeted their shares by 47%. The company also laid off 21 employees globally in May.
Sure, Allbirds is making losses, but which company does not? A temporary setback does not mean that a company is going out of business.
Why Is Allbirds Losing Money?
In the last quarter of 2022, Allbirds reported a loss of $101.4 million. In case you are curious to find out what could be the reason for such a massive decline, then here are a few reasons why Allbirds is losing money:
Lack of Demand
Shoppers came to Allbirds to purchase their original shoes and were not ready to buy running shoes or other apparel from the brand. This has affected the revenue of the company deeply.
Because of the poor response, the company has decided to discontinue its underperforming apparel and will now focus on its best-sellers, the Wool Runner and Tree Dasher.
Although Allbirds became what it is because of its unique Moreno wool shoes, it turns out not everyone wants to be dressed in Moreno wool from head to toe.
Customers even complained about getting holes in their sneakers right after a few months of purchasing them. The questionable quality of Allbirds strayed many customers away from the brand.
After the initial success of Wool Runners, the company decided to expand beyond its base of 30 and 40-year-old target audience.
They launched a couple of new sneakers with different designs and bright colors to cater to the younger population. It also tried its hand at producing other items, such as puffer jackets, underwear, and golf shoes, but didn’t get the expected success.
The company eventually lost focus, unsure if it was selling sneakers or soccer mom’s shoes.
‘As we’ve tried to expand and grow the brand, we created products that haven’t quite met the mark,’ Brown mentioned in an interview.
Because of the aforementioned reasons, a lot of Allbirds’ loyal customers, including the Silicon Valley crowd, moved past the brand.
Allbirds’ hurdles have driven their customers to Allbirds’ competitors and trendsetters such as Hoka and On.
What is the Future of Allbirds?
After trying and testing out the launch of many different items, the company has decided to discontinue many of its underperforming items.
Instead, they have decided to double down on their best-selling shoes, and they plan on updating them with new colors and designs.
Additionally, the company is also slowing down the pace at which it was opening stores before.
They are also thinking about whether they should enter the international market via third-party distributors, which will cost them less, or if they should operate their own stores.
If these new changes work for Allbirds, then they might be profitable again.
Thinking- Is Allbirds going out of business is a bit of an exaggeration. Plenty of businesses face minor setbacks and make losses every once in a while, but that does not mean it’s an end for them.
Allbirds has identified where it is lacking and is trying to fill up the gaps by cutting down new store openings and by focusing on its best-seller items.
Hopefully, these changes will help the company to turn profits soon.
How many Allbirds stores are there currently?
Allbirds currently has around 59 stores in nine countries with 42 locations within the U.S.
Does Allbirds have a future?
Allbirds is expecting to grow its revenue and earnings by 8% and 20.9% per annum, respectively.
Why is Allbirds' CFO leaving?
The chief financial officer of Allbirds, Mike Bufano, is stepping down from his role, and Annie Mitchell will replace him. The decision comes after Allbirds announced that they will be drastically cutting down store opening plans to focus on reaching profitability.