ber 2021.  However, it appears that this once-high-flying DTC brand has flown a bit too close to the sun and has certainly not performed according to expectations.  Two-and-a-half years post-initial public offering (IPO), the company’s market capitalisation had diminished to about US$116 million in after-hours trading on March 12, and it had less than US$130 million in cash on its balance sheet. On the same day, the company reported a 14.5 per cent drop in Q4 revenue, bringing the full-year decline to nearly the same percentage, with expectations that net revenue may decrease by as much as 25 per cent this year.  This week, the company has announced that it will be making several major structural and operational shifts. In a call with analysts on March 12, Zwillinger stated that the company plans to close between 10 and 15 underperforming US stores in 2024, about a third of its total number. This decision, as the company explained, will have a financial impact between US$7 million and US$9 million, which will mainly be relegated to the first half of the year.  As Zwillinger told analysts on a call, “The ones that we’re closing for the year are really some of the newer ones that were designed with a little bit of a larger store footprint and probably best served with a more robust apparel offering. And as we refocus the product line really sharply on those iconic franchises in footwear, we wanted to make sure that the fleet was the right size for the go-forward product as well as a great optimised US marketplace.”  The company also announced that Zwillinger will be stepping from his role as CEO, and the current chief operating officer Joe Vernachio will be stepping into the top job, effective March 15. Zwillinger will remain on the board of directors and will serve as a special advisor to the company.  What happened with Allbirds One of the most notable drivers of Allbirds’ less-than-impressive performance since its IPO, retail experts said, was the company’s overly quick and poorly executed plans for expansion.  Allbirds went from having 22 brick-and-mortar global stores in 2020, to 35 in 2022, before rapidly ending up with 58 locations by the end of 2022. Expenses tied to new store openings added to a major increase in selling, general, and administrative expenses (SG&A), which were US$166.7 million in 2022, or 56 per cent of total revenue. To put this in perspective, the SG&A totaled up to just US$122.2 million in 2021.  While some retail executives attributed the company’s less-than-stellar performance recently to diminished consumer spending, Christine Russo retail expert and principal leader of Retail Creative and Consulting Agency shared a more critical take.  Russo told Inside Retail, “I think the industry is being kind, attributing Allbird’s retail revenue drops to shopper cutbacks. I see it a different way. I believe the roadmap of retailers that IPO is flawed.” Russo noted that Allbirds and many similar DTC brands tend to expand too much, too quickly post-IPO and that the decision to do so is not in their best interests.  “From Warby Parker, Allbirds and others; the CEO touts the new cash to fund capex and store expansion. It’s practically an automatic pilot. And not soon after, there are too many stores with many of them too big of a footprint. Sure enough, Allbirds stated on their earnings call that several of the new stores were too big. Additionally, the DTC that sell one thing — Away, luggage; Allbirds, wool sneakers; Warby Parker, eyewear; Casper, mattresses — are simply not sustainable models for retail store rollouts,” Russo concluded.  Can Allbirds make a comeback? Neil Saunders, managing director and retail analyst at GlobalData, is less positive about the footwear brand’s comeback.  As Saunders previously told Inside Retail, “The truth is that Allbirds is simply not aligned with what the consumer wants and its focus on sustainability, while worthy, is all wrong. By and large, sustainability does not sell footwear. Despite consumers being generally concerned about sustainability issues, it is hardly ever the key determinant of footwear purchases; it is only ever an afterthought.” While Russo acknowledged that “Allbirds’ DNA is sustainable footwear, they need to absolutely continue to maintain this North Star,” she believes there is still room for improvement. “I suggest they evolve their designs. They are a bit dated, so perhaps they should bring on a creative team that can speak to the multi-generations of wearers and provide updated styles,” Russo said. In a company-released statement, it was announced that Allbird’s new CEO would be leading the team forward with a transformation plan, focusing on four key areas, including: Reignite product and brand “Executing a highly focused brand strategy to drive resonance with the consumer through fresh, innovative products, as well as more impactful storytelling and marketing.” Optimise United States distribution and retail store profitability “Driving traffic and conversion to our US fleet, selectively closing Allbirds stores and expanding our third-party wholesale channel.” Evaluate transition of international go-to-market strategy “Transitioning to a distributor model in certain international markets to grow those regions in a cost- and capital-efficient manner. In the third quarter of 2023, Allbirds transitioned two regions, Canada and South Korea, and we have subsequently finalised agreements for an additional two regions, Australasia and Japan.” Improve cost savings and capital efficiency “Tracking to the cost of goods savings and SG&A savings we outlined for 2025, and optimising cash.”