A shoe brand beloved by former President Barack Obama and actor Ben Affleck is planning more store closures after sales plummeted.
Allbirds’ sneakers became a hit during the pandemic, as celebrities like Leonardo DiCaprio and Silicon Valley tech bros worked from home.
After rapid growth, the company is now looking to cut costs as it joins other brands like Peloton, which were hugely popular during lockdown but failed to maintain the hype.
The New Zealand company, which makes sustainable shoes using wool and other recycled materials, has received complaints from customers about the quality. They reported that there were holes in their shoes months after purchase.
The brand was touted as a competitor to Nike, but its “bland and understated” designs have saturated the market and no longer appeal to sneaker buyers.
The company said it has already closed more than a dozen stores this year and plans to close another 15 by the end of 2024.
Former President Barack Obama is often spotted in the sustainable sneakers
Celebrities such as Ben Affleck are fans of the sustainable shoes
Allbirds has already closed more than a dozen stores this year and plans to close 15 more
That leaves the company with about 15 stores in the US.
“We closed 14 underperforming locations in the U.S. to focus on a smaller physical footprint that better aligns with our footwear strategy and contributes to our goal of building a profitable store base,” CEO Joe Vernachio told analysts during the company’s second-quarter earnings call.
Revenue for the quarter fell 26.8 percent year-over-year to $51.6 million, but Vernachio was optimistic about the brand’s future.
The company now wants to try to move from underperforming physical stores to online sales.
CFO Annie Mitchell told analysts the company will save about $25-30 million from closing 14 stores.
“The impact on retail is greater than expected because we got out of it so quickly,” she told analysts.
The brand ran into problems because it was producing too many shoes and couldn’t sell them fast enough.
The Nasdaq stock index also gives the brand until September 30 to get its share price above $1 for at least 10 consecutive business days.
The shares traded at about 60 cents on Tuesday, losing 95 percent of their value since their IPO in November 2021.
Allbirds was touted as a rival to Nike, but the initial hype has faded
Retail expert Hitha Herzog told DailyMail.com that a number of factors are behind Allbirds’ decline.
“The product isn’t great,” Herzon explains, “the design isn’t exciting, the colors are muted and boring, and their sneakers are subpar compared to their competitors.”
The company also failed to appeal to a younger demographic, argued Herzog, head of research at H Squared Research.
“If a company can’t get a customer to come back every few months to buy a new pair of shoes or to buy other products, that’s not the only problem.”
Vernachio said Allbirds is in the process of introducing new colors and materials for its shoes “to freshen our offerings for the second half of 2024 and the first half of 2025,” he said.
“You’ll first see this in the fall, when we plan to introduce corduroy alongside the more robust versions of our water-resistant collection.”
