Allbirds Says Stores Remain a Powerful Tool
Allbirds continues to push into brick-and-mortar retail, reaching a total of 38 U.S. stores at the end of its third quarter of 2022.
Its U.S. physical retail channel sales grew 53% compared to 2021. The footwear retailer opened six U.S. stores during the quarter and 15 since the end of 2021.
“Our stores remain a powerful acquisition tool, allowing us to gain leverage on marketing spend to lower customer acquisition costs, increase the penetration of valuable omnichannel repeat customers and are ultimately the best expression of our brand,” Joseph Zwillinger, Allbirds co-founder, co-CEO, president, treasurer, secretary & director, said during the retailer’s earnings call.
Allbirds, an RIS Hot Retail Startup in 2018, opened its first physical store in 2017 after debuting as a direct-to-consumer brand in 2016. The retailer had 51 stores globally as of September 30, 2022.
Zwillinger noted that nearly half of the current store fleet is still in the ramp-up phase, which has historically taken around four quarters to reach revenue maturity, but due to the macro headwind that sales ramp is taking longer currently.
“Our U.S. stores maintained an impressive score for NPS of above 90 which we believe positively correlates to repeat purchase and the health of the Allbirds brand,” Zwillinger said. “That said, we continue to be negatively impacted by traffic levels that remain below pre-COVID levels. The slow traffic recovery appears to be consistent across our industry and though we believe that we will recover the majority of this traffic, the timing of that recovery is unclear given the operating environment.”
Despite these challenges, Zwillinger said the brand continues to see an overall uplift in omnichannel sales in markets with stores above what the company sees in e-commerce-only regions.
As announced last quarter, Allbirds continued to implement simplification initiatives designed to generate cost of revenue savings and lower operating costs.
The brand is working towards reducing logistics costs in the U.S. Later this year, it will commence production with a new factory partner, which it expects will significantly decrease its landed product costs on a run rate basis in early 2023. “I'm also pleased to report that just last week in the U.S., we successfully transitioned to our automated distribution centers and new dedicated returns processor,” said CFO Michael Bufano.
Allbirds is also taking steps to optimize inventory, including the liquidation of excess end of life inventory, and accelerate logistics cost savings.
“Looking ahead to year end and 2023, we continue to expect macro headwinds to persist but believe that our brand, our growth strategy, and simplification initiatives position us well to emerge strongly from this period,” Zwillinger said in a press release. “Thanks to the team’s hard work I remain confident in our ability to continue to execute into the holiday season and next year. November also marks the one-year anniversary of our IPO, a critical step in building Allbirds into a 100 year brand while setting a new industry standard for sustainable business for others to follow.”
Allbirds said it remains on track to cut its per product carbon footprint in half by 2025 and achieve near zero by 2030.