A shoe brand whose shoes are beloved by former President Barack Obama and actor Ben Affleck is planning more store closures after its sales plummeted.
Allbirds sneakers became a hit in the pandemic era, with celebrities like Leonardo DiCaprio and Silicon Valley tech giants working from home.
But after a rapid expansion, the company is now cutting costs by joining other brands, such as Peloton, that boomed during lockdown but have struggled to maintain traction.
The New Zealand-based company, which makes sustainable shoes from wool and other recycled materials, has faced quality complaints from its customers who reported that holes appeared in their shoes just a few months after purchasing them.
The brand was promoted as a rival to Nike, but its “dull and boring” designs have saturated the market and no longer excite sneaker buyers.
The company said it has already closed more than a dozen stores this year and plans to close up to 15 more by the end of 2024.
Former President Barack Obama has often been seen wearing sustainable sneakers.
Celebrities like Ben Affleck are fans of sustainable shoes
Allbirds has already closed more than a dozen stores this year and plans to close up to 15 more.
That would leave the business with about 15 stores remaining in the United States.
“We have closed 14 underperforming locations in the U.S. to pivot toward a smaller physical presence that better fits our footwear product strategy and advances our goal of building a profitable retail fleet,” CEO Joe Vernachio told analysts on the company’s second-quarter earnings conference call.
Revenue for the quarter fell 26.8 percent year-over-year to $51.6 million, but Vernachio was optimistic about the brand’s progress.
It will now try to move away from underperforming brick-and-mortar stores and into online sales.
Chief Financial Officer Annie Mitchell told analysts the company will save between $25 million and $30 million after closing 14 stores.
“The impact on retail is greater than anticipated given the speed with which we have been able to emerge from these,” he told analysts.
The brand ran into trouble after producing too many shoes and failing to sell them quickly enough.
The Nasdaq stock index has also given the brand until September 30 to ensure that its share price exceeds $1 for at least 10 consecutive business days.
Its shares were trading at around 60 cents on Tuesday, losing 95 percent of their value since its IPO in November 2021.
Allbirds was touted as a rival to Nike, but the initial enthusiasm it enjoyed has dissipated.
Retail expert Hitha Herzog told DailyMail.com that a number of factors led to Allbirds’ downfall.
“The product isn’t very good,” Herzon explained, “its design is unattractive, the colors are dull and boring, and its performance shoes are inferior to the competition.”
The company also failed to successfully attract a younger demographic, argued Herzog, research director at H Squared Research.
“If a company can’t get a customer to come back every two months to buy a new pair of shoes or to buy other products, there isn’t just one problem.”
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 see this reflected for the first time in the fall, when we plan to introduce corduroy, as well as more rugged versions of our water-resistant collection.’