Net loss of 1 billion! Well-known brands face delisting

Affected by factors such as continued high inflation, weak economic growth, and global consumption downgrade, many leading brands are under tremendous operating pressure, and some are even in deep trouble and have fallen from grace.

Allbirds' net loss exceeds 1 billion! It will face the risk of being delisted

Recently, Allbirds, a well-known American brand, released its 2023 performance report. The company's performance was under pressure and its losses continued to expand.

In 2023, the company's operating income was US$254 million, a sharp drop of 14.68% compared to 2022. The company's net profit fell by 50.42%, and the net loss was as high as US$152 million (equivalent to more than RMB 1 billion).

On the day the financial report was released, Allbirds' stock price fell nearly 20%.

On April 8 this year, Allbirds announced that the company had received a notice from Nasdaq stating that its stock price had fallen below $1 per share for a month in a row, requiring it to close at more than $1 per share for at least 10 consecutive days in the next six months, otherwise it will face the risk of being delisted.

As a representative company of American DTC brands, it is regrettable that Allbirds is facing its current situation.

It is understood that Allbirds is a sports brand founded in San Francisco, USA in 2016, co-founded by former New Zealand international Tim Brown and renewable materials expert Joey Zwilinger. The company mainly sells running shoes and loafers, and is quite well-known in the US market.

Allbirds' selling point is that the carbon footprint of its products is 30% lower than that of ordinary sports shoes. The main material is wool, the environmentally friendly sole is made of sugarcane extract, and the insole is blended with castor seed oil. The main features are comfort, natural environmental protection, biodegradability, no socks required, and even machine washable.

In addition, Allbirds has redesigned the shoe packaging using 90% recycled cardboard, integrating shoe boxes, shopping bags and mail bags into one, putting the concept of environmental protection into practice to the end.

Before the brand was officially established, Allbirds founder Tim Brown launched a crowdfunding campaign for wool running shoes on Kickstarter at a price of $98 per pair. Within five days, the campaign received support from nearly a thousand supporters, pre-sold 1,064 pairs of shoes, and raised $120,000, far exceeding the original project's expected $30,000.

In the early days of the company's development, Allbirds attracted a large number of fans with its high-profile "environmental protection fighter" image. As soon as the product was launched, it was sought after by Silicon Valley's technology and investment elites and became a "hot item" in Silicon Valley. It was even praised by Time magazine as "the most comfortable shoe in the world."

In 2017, Allbirds, which adheres to the DTC (Direct to Consumer) model, continued to advance and opened its first store in San Francisco. In this year, Allbirds, along with the eyewear brand Warby Parker and the mattress brand Casper, were named "DTC pioneer brands" in their respective industries.

Since then, Allbirds has received support from a series of heavyweight investment institutions, as well as Silicon Valley celebrities such as Zuckerberg, Larry Page, Cook, Oscar-winning actor Leonardo DiCaprio, and Starbucks CEO Howard Schultz.

Through crowdfunding and celebrity endorsements, Allbirds has gained a lot of attention and financial support.

According to data, before its IPO, Allbirds completed multiple rounds of financing, with a total financing amount of more than US$200 million.

In 2016, Allbirds completed a $7.25 million Series A financing round led by venture capital firm Maveron.

In 2017, Allbirds completed a US$17.5 million Series B financing round led by Tiger Global Management.

In October 2018, Allbirds completed a US$50 million Series C financing round, with investors including T. Rowe Price and Fidelity Investments.

In early 2020, Allbirds completed a US$75 million Series D financing round.

In September of the same year , Allbirds received US$100 million in Series E financing, and its valuation once reached US$1.7 billion.

In November 2021, Allbirds was listed on the Nasdaq with an IPO price of $15 per share and a total fundraising of $300 million. On the first day of listing, the stock price once reached $32.44 during the trading session, and finally closed up 92.6% at $28.89, with a market value of $4.135 billion, which also became the historical high of Allbirds' stock price and market value.

In the first two years of Allbirds' development, more than 1 million pairs of shoes were sold, making it one of the fastest-growing direct-selling shoe brands in history.

Allbirds is actively seeking change, but is still in trouble!

In the early stages of Allbirds' development, its product line was very simple, with only two types of shoes: runners and loungers. Later, the company expanded its product line to include socks, sweaters, jackets, T-shirts, underwear, etc., but its main source of income is still shoes.

In May 2020, Allbirds launched its first functional running shoe, the Dasher series. Later, the company released a series of "Green Technology Apparel" products, including TrinoXOTM T-shirts, 100% New Zealand Merino wool Wool Jumper sweaters, Wool Cardi knitted cardigans, and TrinoTM Puffer rain and sun jackets. These products still continue the previous sustainable concept, and the products have carbon footprint labels.

In 2022, Allbirds launched the Tree Flyer green technology lightweight running shoes.

Although Allbirds is actively seeking change to adapt to market demand, the company's losses have been expanding in recent years.

In the entire fiscal year of 2021, Allbirds' operating income increased by 27% year-on-year to US$277.5 million, an increase of 43% compared with 2019. However, the net loss for the whole year reached US$45.4 million, and the loss widened by 75.44%. At this time, Allbirds' stock price has plummeted by 70% to around US$8, and its market value has shrunk to US$1.2 billion.

In response, Allbirds co-founder Joey Zwillinger admitted in a public interview that problems caused by the company's decision-making errors led to the company's losses.

In 2022, Allbirds' revenue only increased by 7.3% to $297 million, lower than the expected $305-315 million. The company's net loss widened from $45.4 million in 2021 to $101.4 million in 2022.

Joey Zwillinger told the media that the most fundamental reason for the company's performance problems was the loss of focus in its product structure, as it had previously focused too much on products other than its core competitiveness.

Specifically, Allbirds' repeated losses are the result of a variety of factors, including market competition, internal management, cost control and external environment.

In 2023, Allbirds made a series of strategic adjustments. In order to improve operating performance, the company launched a strategy that included improving products, optimizing U.S. distribution and store profitability, and re-evaluating its international strategy to further reduce costs and increase efficiency.

On November 14, 2023, Allbirds launched its products on Amazon, including Tree Runners, Tree Breezers and other shoe styles, and all products were shipped by Amazon. This move comes at a time when Allbirds is vigorously expanding its distribution network.

In addition to Amazon, wholesale is another strategy of Allbirds. Allbirds' CEO once said: "Wholesale will be a key channel in the future. It can provide us with opportunities to increase brand awareness and achieve profitability."

Previously, Allbirds adopted a direct entry strategy in the international market, but now it has begun to transform into a distributor model.

In September 2023, Allbirds launched the distribution model in Canada and South Korea, and then finalized cooperation agreements with distributors in Australia and Japan in the fourth quarter, but the results have not yet been seen.

During Allbirds' strategic adjustment period, personnel changes also occurred within the company.

In May 2023, Allbirds brand co-founder Tim Brown stepped down as co-CEO and took a non-executive position as chief innovation officer.

In March 2024, the company announced that COO Joe Vernachio would be promoted to CEO and join the board of directors, replacing brand co-founder Joey Zwillinger. Joey Zwillinger will remain a director and serve as a special advisor to the company.

Now, according to the latest financial report released by Allbirds, the company's losses are continuing to expand. The company's stock price is also continuing to fall, and it faces the risk of delisting. The road ahead is full of difficulties.

Delisting

Loss