Allbirds is bringing it back to the basics.
After another quarter of losses, the footwear brand is making a concerted effort to focus on its core franchises to help it lift business.
“Our product team remains laser-focused on recalibrating our assortment with a focus on revitalizing our core franchises and driving more of the business from these models while also delivering important innovation to engage with our loyal consumers,” said Allbirds co-founder and CEO Joey Zwillinger in a call with analysts on Tuesday discussing the brand’s second-quarter results. These efforts will become more pronounced next year in spring 2024.
In the second quarter, the San Francisco-based footwear company reported a sales decline during the period due to decreases in average selling prices, foreign exchange headwinds and a highly promotional environment. Compared to the prior year, revenues dropped 9.8 percent to $70.5 million in Q2. Allbirds posted a net loss of $28.9 million, or 19 cents per basic and diluted share. In March, Allbirds outlined a transformation plan, meant to jumpstart growth and improve capital efficiency and profitability.
At the time, Zwillinger said Allbirds put too much emphasis on products outside its core competency in 2022, a problem that peaked in Q4 and resulted in poor sales for the brand. “We haven’t had the selection, color or style enhancement on our core products,” he said in an interview in March.
Now, Allbirds is going full force on its core styles, which typically have higher full-price sell-throughs than its noncore assortments. Zwillinger said Allbirds will be strategic about its use of markdowns and promotions to help it eliminate low-performing product that lives outside its core franchises, including seasonal colors that have become irrelevant.
“We’ve had a couple of franchises that have been iconic for the brand and have been around for quite a long time now,” Zwillinger said. “One of the key focal areas for us in 2024 is to revitalize some of these core franchises with updated tooling and, in many cases, a lot of new designs on the upper.” For example, Allbirds plans to update its Wool Runner franchise in Q4, he said.
Other footwear brands are also doubling down on their core styles after seeing poor results from breaking away from these franchises. The Wolverine Worldwide-owned Sperry brand recently walked back its push to expand Sperry’s appeal beyond its waterside heritage and instead turned back to the core boat models that put the brand on the map. This focus on core product has been a solid approach for Crocs, which has always placed the most emphasis on its classic clog silhouette, the company’s most profitable product line.
