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Nike rival that boomed during the pandemic shuts 14 stores
A footwear brand - whose shoes are loved by former President Barrack Obama and actor Ben Affleck - is planning further store closures after its sales slumped.
Allbirds' sneakers became a pandemic-era hit with celebrities including Leonardo DiCaprio and Silicon valley tech-bros working from home.
However, after rapid expansion the company is now cutting costs as it joins other brands, such as Peloton, that boomed during lockdown but have struggled to retain the hype.
The New Zealand based company, which makes sustainable shoes with wool and other recycled materials, has faced quality complaints from its customers who reported holes appearing in their shoes just months after buying them.
The brand was touted as a rival to Nike, but its 'muted and boring' designs have saturated the market and no longer excite sneaker shoppers.
The company said it has closed more than a dozen stores already this year, and plans to close up to 15 more by the end of 2024.
Former president Barack Obama has often been spotted in the sustainable sneakers
Celebrities such as Ben Affleck are fans of the sustainable shoes
Allbirds has closed more than a dozen stores already this year, and plans to close up to 15 more
That would leave the business with around 15 stores left in the US.
'We have closed 14 underperforming US locations to bias toward a smaller physical footprint that better serves our footwear product strategy and advances our goal to build a profitable retail fleet,' CEO Joe Vernachio told analysts on the company's second quarter earnings call.
The quarter's revenue was down 26.8 percent year-over-year to $51.6 million but Vernachio was optimistic about the brand moving forward.
It will now attempt to move away from underperforming brick and mortar stores to online sales.
CFO Annie Mitchell told analysts the company will save around $25-30 million after closing 14 stores.
'The impact on retail is higher than anticipated due to the speed at which we've been able to exit these,' she told analysts.
The brand faced issues after producing too many shoes and was unable to sell them quickly enough.
The Nasdaq stock market index has also given the brand until September 30 to get its stock price above $1 for at least 10 business days in a row.
Its stock was trading at around 60 cents on Tuesday, losing 95 percent of their value since it IPO's in November 2021.
Allbirds was touted as a rival to Nike, but the initial hype it enjoyed has worn off
Retail expert Hitha Herzog told DailyMail.com that it was a series of factors that have led to Allbirds' downturn.
'The product is not great,' Herzon explained, 'its design is not exciting, the color ways are muted and boring, and their performance shoes are subpar compared to their competition.'
The company also failed to successfully appeal to a younger demographic, Herzog, chief research officer at H Squared Research, argued.
'If a company can't bring a customer back every couple of months to purchase a replacement pair of shoes or have them purchase other products, it's not just one thing that's the issue.'
Vernachio said Allbirds is working on introducing new colors and materials to its shoes 'to infuse freshness into our offerings for the second half of 2024 and the first half of 2025,' he said.
'You'll first see this reflected in the fall when we plan to introduce corduroy as well as more rugged versions of our water resistant collection.'