Allbirds is going all-in on its business transformation plan to return to growth in 2025. Part of that plan centers on returning to full-price selling after a year of higher promotional activity.
“Allbirds’ DNA is to be a full price brand,” the company’s new chief executive officer Joe Vernachio said in a Wednesday call with investors. “I would say one of our number one KPIs is our full-price selling.”
After spending much of last year getting its inventory levels back in check, Allbirds made the decision to return to full-price selling in January. Vernachio noted that the change could have a near-term impact on sales, but touted the initiative’s progress thus far.
“I’m really happy with the results that we’ve seen returning back to full-price and bringing back our customer as a full-price customer,” said Vernachio, who stepped into the CEO role in March.
Looking ahead, Allbirds won’t eliminate its promotional strategy entirely, but will instead opt for what Vernachio described as a regular “cadence of limited promotions connected to consumer-driven moments throughout the year.” For example, in Q1, Allbirds carried out one planned promotional event in March.
The pullback on promotions will be bolstered by a fresh new product line-up from the company, which Vernachio believes will drive demand. As part of its business turnaround plan announced in March 2023, Allbirds has centered on revamping product with a renewed refocus on core styles like the Wool Runner. In Q1, Vernachio said customers have already responded well to recent product launches like the Wool Runner 2 and Tree Runner Go.
“As we start to deliver a more robust offering of fresh, updated product later this year, we believe the consumer will respond,” Vernachio said “We are laser-focused on creating a cohesive icon strategy that celebrates and innovates upon the core franchises that Allbirds is known for and our customers love.”
For the first quarter, Allbirds reported results in line with or better than its prior guidance. Q1 revenues dropped 27.6 percent to $39.3 million, in line with its guidance, and net loss was $20.9 million, or 18 cents per basic and diluted share, which beat its guidance range.
As of mid-day on Thursday, Allbirds stock was down more than 5 percent. Since its initial public offering in 2021, Allbirds’ stock has plunged more than 90 percent. In April, Nasdaq warned the shoe brand that had six months to raise its stock price to more than $1 for 10 consecutive business days.
