Dive Brief:
- American Exchange Group, whose brand portfolio includes Aerosoles, has agreed to buy direct-to-consumer footwear brand Allbirds for about $39 million, the companies said Monday.
- Allbirds warned of “substantial doubt about our ability to continue as a going concern” in financial filings Tuesday. The company closed all of its full-price U.S. stores in recent months.
- Last year Allbirds net sales plummeted nearly 20% year over year to $152.5 million. Gross margin contracted to 41% from 42.7% a year ago. The company said it has never turned a profit; net loss last year narrowed by 17% compared to 2024 but topped $77 million.
Dive Insight:
It’s been years since Allbirds relinquished its unicorn status, and this sale is only the latest sign that the disruption from direct-to-consumer brands has fizzled.
“The truth is that Allbirds was more of a flash in the pan than a credible business with huge growth potential,” GlobalData Managing Director Neil Saunders said in emailed comments. “While the company had some success in its early years, this was driven by Silicon Valley hype more than deep popularity with consumers in the American hinterland.”
Compared to its peak valuation $4.2 billion “the $39 million American Exchange Group paid for the business seem like pocket change,” but it’s actually well above Allbirds’ current share price, according to Saunders.
“Unfortunately, Allbirds bought into that hype and built its business plans around it,” he said. “This included a very expensive expansion program, opening a lot of stores in high profile retail locations. Most of those locations did not do the volumes needed to make them profitable and ended up dragging the company deeply into the red.”
The brand never realized its goal of opening hundreds of stores. At the end of the year, Allbirds ran just 23 — two in the U.K. and the rest in the U.S., and now most of those have also shuttered. In other international markets, Allbirds employs a distribution model.
Last May, Allbirds executives struck a note of optimism, saying that top-line growth could return by the holidays depending on how new products were received. Ultimately though the marketing shift hurt sales of popular legacy products. Store closures of recent years also took a toll on sales.
Throughout, the company failed to turn a profit. In financial filings Tuesday, Allbirds said it has “incurred significant net losses since inception” and expects “to incur significant losses and negative cash flows from operating activities in the future.”
At the close of the year, the company employed 362 people, nearly 90% in the United States. More than 200 people worked in its stores at that point, though Allbirds now has fewer than 50 retail employees.
The sale to AXNY is expected to close in Q2.
