- Allbirds, Inc. announced a full-year 2022 adjusted EBITDA loss of $60.4 million, which was higher than the guidance target that estimated an adjusted EBITDA loss of $42.5 million to $37.5 million.
- Allbirds has launched a "strategic transformation plan" to improve costs and drive profitability.
- Allbirds Co-CEO Joseph Zwillinger explained that Allbirds overemphasized non-core products and underinvested in its core products, negatively impacting sales.
- A group of investors filed a complaint alleging that the company, its officers, and its IPO advisers made materially false and/or misleading statements.
The Fashion Brand That Took Wall Street
In recent years, Allbirds has been one of the most talked-about companies in the fashion industry. Founded in 2016, this San Francisco-based company quickly gained popularity for its sustainable and eco-friendly shoes. Allbirds' popularity skyrocketed, and the company quickly expanded into other products such as clothing and accessories.
The company has raised over $200 million in funding and went public in September 2021 with an initial public offering (IPO) price of $15 per share. The IPO valued the company at $1.4 billion, making it a unicorn. However, in recent months, the company has faced some challenges, with investors filing a complaint alleging that the company made materially false and/or misleading statements.
Strategic Transformation Plan
On March 9, 2023, Allbirds announced its full-year 2022 adjusted EBITDA loss of $60.4 million, which was higher than the guidance target that estimated an adjusted EBITDA loss of $42.5 million to $37.5 million. In response to these negative results, the company created a "strategic transformation plan" to reignite growth, improve costs and capital efficiency, and drive profitability. The plan focuses on four areas:
- Reigniting product and brand
- Optimizing U.S. stores and slowing the pace of openings
- Evaluating the transition of international go-to-market strategy
- Improving cost savings and capital efficiency
Allbirds' CFO also stepped down following the announcement of the company's poor financial results. During a conference call with analysts, Allbirds' Co-CEO Joseph Zwillinger explained that the company's poor results were driven in part by the fact that Allbirds "overemphasized products that extended beyond our core DNA." As a result, he explained, "some products and colors have had narrower appeal than expected" and "because we were spending significant time and resources on these new products that did not resonate well, we underinvested in our core consumers' favorite products."
Investors Complaint on Misleading
Recently, a group of investors filed a complaint alleging that the company, its officers, and its IPO advisers made materially false and/or misleading statements. The complaint specifically alleges that Allbirds was overemphasizing non-core products, which had a narrower appeal and were not resonating with customers as well as the company's core products.
According to the complaint, Allbirds was underinvesting in its core products, which were more popular with consumers. This underinvestment was allegedly negatively impacting the company's sales. The complaint further alleges that the positive statements made by Allbirds about its business, operations, and prospects were materially misleading and lacked a reasonable basis.
Allbirds has not yet responded to the allegations made in the complaint, and it remains to be seen how the case will be resolved. However, the complaint has highlighted some of the challenges that Allbirds may face as it continues to grow and expand its product offerings.
