Ailing Allbirds Looks to Take Flight With Expanded Wholesale Effort

After three grueling months as a public company and an 80% decline in its stock price from its trading debut, eco-friendly footwear and apparel maker Allbirds is hoping third-party sellers will give its brand and bottom line a boost.

In announcing its expanded effort to sell its gear and shoes to yet-to-be-disclosed wholesale partners — in addition to its website and three-dozen retail locations — the San Francisco based eCommerce firm told analysts and investors that the shift would be measured and orderly, with further details to be announced in the future.

“Beginning in Q2, we will selectively enter third-party retail relationships to build brand awareness and to establish greater credibility in the performance category,” Co-Founder and Co-CEO Joey Zwillinger told analysts and investors on the company’s fourth-quarter earnings call Wednesday evening (Feb. 23). “Our brand awareness in the U.S. is 11%, leaving us unknown to a vast majority of Americans.”

As the new wholesale relationships are solidified, Allbirds leadership team said it will choose to engage with multi-brand environments, especially those that focus on educating runners. While the wholesale push is new, it is not unprecedented, and it follows two pop-up pilot programs Allbirds ran with Nordstrom, which Zwillinger said provided excellent uplift, brand awareness and “a positive halo” for its direct sales channel.

A Call for Calm

Allbirds’ move to go deeper into wholesale is in direct contrast with what established sneaker maker Nike is doing, as it uses its unmatched brand awareness and global clout to sell more merchandise directly to consumers while pulling wholesale contracts from smaller retailers that don’t support deep experiential selling, such as what Dick’s Sporting Goods does.

“Allbirds is still a young brand with a tremendous runway,” Co-Founder and Co-CEO Tim Brown said of the company he helped launch in 2015.

Despite the recent rocky performance of its stock, Brown’s belief in the company’s go-to-market appeal to a burgeoning base of sustainably-minded customers is unchanged.

“We have a great deal of confidence in the product and material innovation platform we built to meet what we believe is a transformational consumer shift in our category towards natural materials,” he said.

As it stands, Allbirds does about 80% of its sales digitally, with the balance coming through a small but growing footprint of physical stores that it doubled last year, helping the company achieve record Q4 sales of $97 million, marking a 23% gain.

Despite its sales growth, on a bottom-line base, the company’s expansion and hiring is still taking a toll, as Allbirds said it lost about $10 million in Q4 and roughly $45 million for the period ending Dec. 31.

For 2022, the wool-shoe upstart is projecting sales will grow 28% to 32% as it expands to new international markets and grows existing ones, such as China, which is its second-largest location outside the U.S.

While acknowledging that third-party or wholesale revenues carry thinner margins, Chief Financial Officer Mike Bufano also noted that the company’s strong repeat customer purchasing metrics and pricing power should offset some of that hit.

“After experiencing effectively no drop-off in demand after taking a small price increase last year, we have confidence that our premium brand positioning and quality products will allow us to take price [increases] in the coming months,” Bufano said.