Allbirds on Tuesday filed regulatory documents for an initial public offering, for the first time revealing continued losses.
While the buzzworthy sustainable brand that has disrupted the shoe industry in recent years increased net revenues from nearly $194 million in 2019 to more than $219 million in 2020, it also increased losses. Allbirds registered $14.5 million in losses in 2019, which widened to $25.8 million in 2020.
“We have incurred significant net losses since inception and anticipate that we will continue to incur losses for the foreseeable future,” the company told regulators. “If we are unable to maintain and enhance the value and reputation of our brand and/or counter any negative publicity, we may be unable to sell our products, which would harm our business and could materially adversely affect our financial condition and results of operations.”
The retailer added that other potential headwinds include the continued uncertainty amid the pandemic, the economy and consumers’ desire to purchase discretionary items, supply chain pressures, increased costs in advertising, rising real estate expenses, climate change and subsequent government regulations, competitors with more resources to compete globally and a general lack of experience in the retail industry.
Still, founders Tim Brown and Joey Zwillinger said the direct-to-consumer model, which eliminates costs associated with wholesale, has the potential for continued growth with the right funds in place.
“We started Allbirds as outsiders to the footwear and apparel industry,” the founders wrote in the regulatory document. “The prevailing doctrine of the synthetic-based footwear and apparel world was that comfort equals ugly and that natural materials were more expensive, less durable or less capable of sending you to a personal best, or put another way, worse. We decided to make consumer products differently, harnessing nature to create products that customers like better. We envisioned a future for this company where every step in a pair of Allbirds feels incredible underfoot across both casual and active occasions and we also wanted to complement our shoes with apparel that delivered luxurious second-skin comfort.
“We convinced a load of smart people to join us as colleagues, and together, we formed the Flock — many from outside the industry, along with some shoe dogs with decades of footwear industry experience who we dragged along to make sure we didn’t make dumb mistakes,” Brown and Zwillinger continued. “As a team, we set out to shift the paradigm on what it means to make truly great products. By serving consumers directly, we cut out the layers of costs associated with traditional wholesalers, creating a more efficient cost structure and higher gross margin, which we believe allows us to deliver better products and a better experience to customers at a price point competitors would have difficulty matching. Given the size of our market and the broad set of our target consumers, we believe our core strengths will propel us into the future.
“Likewise, we know a lot of investors want to make money while they create and reinforce positive impact by connecting capital to opportunity,” the founders said. “Our intention is to be a high-growth, profitable business that consistently delivers great outcomes for our stakeholders. We aspire to reward investors with eye-popping returns over the long term and we’ll work our tails off to do just that. And we intend to accomplish that by reaching more and more customers with better products that put less of a dent on the Earth.
“Our commitment to tread lighter and have a large positive impact on all of our stakeholders requires financial discipline and a focus on profitable growth,” Allbirds said. “Our expectation is that the combination of our strategy and growth initiatives will result in both top-line expansion and operational leverage, leading to a strong margin profile and a robust bottom line.”
The company is asking to be listed on the Nasdaq under the stock ticker “BIRD.” The firm listed the size of Allbirds’ offering as $100 million, which serves as a placeholder that will change once terms of the share sale are set.
Allbirds, which was founded in 2015, has sold more than 8 million pairs of shoes since its inception to more than 4 million people, the majority of them in the U.S. The retailer expanded its assortment with a line of sustainable essentials, including T-shirts, socks, underwear and outerwear last October. Activewear was added to the mix this summer.
All the while, the majority of Allbirds fans continued to shop online. The brand had 27 company-operated stores as of June 30, but in 2020, 89 percent of sales were from e-commerce, while 11 percent were from stores, the founders told regulators. In addition, about 53 percent of last year’s net sales came from repeat customers.
The company told regulators that it has $94.8 million in cash and cash equivalents, but more investments, particularly in the digital channel, can help it grab market share and continue to grow.
Allbirds confirmed speculation that it was interviewing banks with the intention of eventually going public in April, saying in a statement, “Allbirds has always been focused on building a great company, and as a B Corp and Public Benefit Corporation, doing what is best for our stakeholders (planet, people, investors) at the right time and in a way that helps the business grow in a sustainable fashion.”
The news was a swift reversal of previous reports, including Brown’s comments to WWD in late February, when he said, “We have no plans for an IPO. The possibility of being a public company is a huge challenge and at five years old, it’s still very early in our life cycle.”
The news of Allbirds’ IPO follows another digital darling, Warby Parker, which also filed regulatory documents for an IPO last week.
Also jumping into the public market are resale experts ThredUp, Poshmark Inc., clean beauty pioneer The Honest Co., Rent the Runway, Dr. Martens, Mytheresa, On running shoes and medical scrubs brand Figs.