Allbirds is closing several stores this year as the brand continues to overhaul its business.
The brand’s co-founder and outgoing chief executive officer Joey Zwillinger said in a Tuesday call with analysts that the company plans to close between 10 and 15 “underperforming” stores in the U.S. in 2024, or about a third of its total fleet. The company said this decision will have a financial impact of between $7 million and $9 million, which will mainly be relegated to the first half of the year.
The stores targeted for closure mainly consist of newer, larger stores with a strong apparel offering, Zwillinger said. Moving forward, the company wants to highlight its core footwear franchises at retail as opposed to apparel. As part of a transformation plan outlined in March meant to jumpstart growth and improve capital efficiency, Allbirds has sought to revamp its product assortment with a focus on classic styles. This involves zooming in on popular core franchises, like the Wool Runner, and shifting away from newer styles that have not resonated as strongly with consumers.
In tandem with this strategy, the once DTC darling has made a more concerted push into the wholesale channel via retailers like REI, Nordstrom, Public Lands, House of Sports and Scheels. In addition to its brick-and-mortar wholesale presence, Allbirds launched on Amazon in November. A robust wholesale presence, Zwillinger said, will fill in the gaps in regions where the brand does not operate an Allbirds store.
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“We wanted to make sure that the fleet was rightsized for the go-forward product as well as just a great optimized U.S. marketplace so that we’re in the key cities that we need to win,” Zwillinger, who will remain with the company as a member of the board of directors and special advisor, said. “We can balance out some of those other places with more robust wholesale distribution.”
Allbirds, which started as strictly a direct-to-consumer brand, in recent years had been consistently ramping up its store count until 2023, when it announced its decision to pull back on openings amid its transformation plan. In 2021, Allbirds opened 13 new stores and more than doubled its sales via physical stores that year. In 2022, it opened nineteen stores.
In regards to future store opening plans, Zwillinger said the first step is to regain brand momentum and relevance with new consumers. “Then we can start thinking about building stores again,” he said.
“The right number of stores should reveal itself as the business scales and we regain momentum,” he added. “And that will be a geographic-specific decision and one we want to maintain to drive great omni-channel purchase but in a very balanced way.”
In its fourth quarter reported on Tuesday, Allbirds’ revenues were down 14.5 percent to $72 million. Net loss in the fourth quarter was $56.8 million or $0.37 per basic and diluted share.
For the full year of 2023, net revenues were down 14.7 percent to $254.1 million and net loss was $152.5 million, or $1.01 per basic and diluted share.
