Is Allbirds doing something wrong or something right?
Allbirds was able to report substantial sales growth, but that was not enough to earn the admiration of Wall Street for the fourth quarter of 2021.
The company experienced a drop in share price after its most recent earnings report, despite a 23 percent sales increase during its fourth quarter, according to CNBC. Expenses incurred over the quarter attached to physical retail store openings and increased corporate headcount counted against the direct-to-consumer brand’s overall revenue growth.
Allbirds also experienced difficulties faced by many businesses in the COVID-19 era — supply chain logistics problems and temporary staffing shortages. The company’s revenue prediction for Q1 2022 missed analyst expectations, though it expects the situation to improve in subsequent quarters in 2022. The stock was trading around $8 on Wednesday, down from its $21.21 IPO in November.
While the once online-only shoe brand’s physical store strategy seems to be counting against it in the eyes of investors, it has proved to be a profitable endeavor.
Allbirds doubled its physical store sales in 2021, growing 112 percent to $52 million, according to a report from Footwear News. The 13 stores that Allbirds opened in 2021 contributed 43 percent of its total physical retail dollar growth that year. In-store sales were the biggest contributor to growth for Allbirds in the last quarter.
Physical stores are not the only way that the brand has been expanding recently.
Joey Zwillinger, cofounder and CEO of Allbirds, said on the company’s earnings call this week that it is pursuing new third-party wholesale relationships. It is making the move in light of the fact that the brand has only 11 percent brand awareness in the U.S.
Allbirds also recently announced a partnership with re-commerce company Trove on a shoe trade-in platform called ReRun Recommerce, according to garment trade publication Fibre 2 Fashion. The program, which launched at stores in Los Angeles, Chicago and New York City, allows customers to trade in worn Allbirds shoes for $20 store credit. The platform will then enable the marked down resale of the gently-worn shoes.
The brand is expanding its product lines, as well. At the end of 2021, Allbirds announced it would be releasing new lines of performance and lifestyle products.
- Allbirds shares fall as sneaker retailer reports widening losses, despite 23% jump in sales – CNBC
- Why the Digitally Native Allbirds is Leaning Into Physical Stores – Footwear News
- US’ Allbirds & Trove launch ReRun Recommerce trade-in platform – Fibre2Fashion
- Allbirds, Inc. (BIRD) Q4 2021 Earnings Call Transcript – The Motley Fool
- What happens when d2c brands diversify product lines? – RetailWire
DISCUSSION QUESTIONS: Where do you see the right balance for Allbirds when it comes to its consumer-direct business and wholesale relationships? Will the company be helped or hurt by expanding its wholesale relationships?