Dive Brief:
- Allbirds on Thursday announced that its chief financial officer, Mike Bufano, is stepping down from his role. He will remain with the company through mid-May, according to a company press release.
- Annie Mitchell will become the DTC footwear brand’s CFO, effective April 24. Mitchell most recently served as vice president of finance and insights at the athletic apparel brand Gymshark. She also comes with experience from Adidas, where she held various finance roles, including senior vice president of finance for Adidas North America.
- The CFO transition comes as Allbirds announces a strategic transformation plan, which includes dramatically scaling back store-opening plans as it focuses on reaching profitability.
Dive Insight:
After an aggressive brick-and-mortar expansion over the past several years, Allbirds is “significantly slowing the pace of new store openings,” co-founder and co-CEO Joey Zwillinger told analysts Thursday.
The brand plans to open just three stores in 2023 compared to the 19 it opened in 2022. Allbirds ended 2022 with 58 stores globally, up from 35 at the end of 2021 and 22 at the end of 2020. Expenses tied to new store openings contributed to an increase in 2022 SG&A expenses, which were $166.7 million, or 56% of total revenue, compared to $122.2 million in the year-ago period.
While shoppers in its stores are less price-resistant, the brand needs to drive more footfall to its stores and increase engagement within its locations, Zwillinger said.
“We plan to drive traffic through an increased store marketing investment, including omnichannel opportunities focused on our most engaged customers,” he said. “Additionally, we intend to increase conversion through region specific merchandising, improved store navigation and enhanced associate training so that every consumer entering our stores enjoys an experience matched to their high intent.” The brand has brought on a new head of stores for North America who comes with 15 years of experience from brands like Athleta and Under Armour.
But the slowdown in store openings comes as the brand refocuses its priorities on reaching profitability. In the fourth quarter, net revenue fell 13.4% year over year to $84.2 million. Losses expanded, with operating loss growing by nearly 300% to $25.5 million and net loss widening by 138% to $24.9 million. For the full year, the brand reported net revenue increased 7.3% to $297.8 million, but operating loss swelled to $100.3 million from $32.9 million last year and net loss reached $101.4 million from $45.4 million in the year-ago period.
Executives said Allbirds will continue to grow its wholesale partnerships to drive awareness. The brand currently has wholesale deals with retailers like REI, Nordstrom and Dick’s Sporting Goods.
DTC brands have increasingly been seeking out wholesale partnerships as a way to boost their profiles and reach new customers. Casper, Glossier, Harry’s, Vuori and others all entered traditional retailers. More recently, intimates brand CUUP inked a deal to be sold in Bloomingdale’s and skincare brand Loops began selling in Target.
Looking ahead, Allbirds expects first-quarter net revenue to fall between 20% and 28% year over year to $45 million to $50 million.
