Allbirds, the pioneering woolen footwear company, has seen phenomenal growth in a short period of time as it rides consumer demand for sustainable products and now offers investors a share of the business through a public offering on the Wall Street Nasdaq market.
The company was co-founded by former All Whites football star Tim Brown, who grew up in the Wellington suburb of Karori. Brown was frustrated during his playing career by heavily branded and colorful sports gear, and sought to do something simpler.
He joins forces with the American Joey Zwillinger, disillusioned by working in biotechnology. Their wives, who had been roommates at university, encouraged them to collaborate and together they created Allbirds, referring to New Zealand’s ancient history as a land of “all birds”, and launched their first shoe using the country’s merino wool in 2016.
In two years, Allbirds had sold a million pairs of this Time magazine dubbed âthe most comfortable shoe in the worldâ.
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Known for his clean style, Allbirds has become a favorite of Silicon Valley tech types like Google co-founder Larry Page, and has drawn prominent fans including Hollywood celebrity Oprah Winfrey, the former chairman of United States Barack Obama and our own Prime Minister Jacinda Ardern. .
After making their treadmills out of wool, Allbirds branched out into using other sustainable materials such as eucalyptus, sugarcane and crab shells and got into clothing.
Estimated at US $ 1.7 billion (NZ $ 2.5 billion), the company is heading for a Nasdaq listing under the ticker symbol BIRD, in what it said would be the first ‘share issue’. sustainable public policies â, verified not only by analysts and investment. banking community, but also environmentalists.
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âDepressingâ, âtragicâ and âvery frustratingâ – these are just a few of the words used to describe the state of the country’s wool industry. (Published in July 2020)
Given the cult status of the company, Forbes The magazine says the listing is likely to attract crowds of Millennials and Gen Z investors who have gone public “like moths.”
Entrepreneur and marketer Geoff Ross, who listed his global vodka brand 42 Below on the stock market through an IPO ahead of its sale to Bacardi, is an Allbirds fan and owns several. .
He says the âphenomenal growthâ of the business has not been seen in any fashion or lifestyle brand for a long time in what is a competitive and mature industry.
âThis is really an interesting signal that the next unicorns and high growth companies in the world may not just be technology companies, they could be companies focused on better environmental outcomes,â he says.
“It gives you the optimism that businesses can actually react and do the right thing, and that consumers will reward those businesses.”
Ross has an eye on this emerging trend. His family moved from Auckland to Lake Hawea Station in central Otago, which became the first farm in New Zealand to have its carbon footprint certified.
The station has just completed shearing its herd of fine merino wool, with some of the fiber intended for Allbirds footwear, and for the first time created a dashboard around the sheep-while-shearing experience to meet the demands of animal welfare requirements of global fashion. brands.
Ross says Allbirds has benefited from two major macro trends. The movement for consumers to become more environmentally conscious and to move away from excessive consumerism and over-designed and over-created clothing.
Allbirds calls it “the right amount of nothing,” removing unnecessary detail and keeping its customers from becoming a traveling billboard.
âTheir design is very clean and simple and is based on the expectation that you will have fewer, better-quality items in your closet,â says Ross.
“It seems to be the main dynamic in fashion right now and they chose it well.”
University of Otago associate professor Sara Walton, who specializes in sustainability and business, agrees Allbirds has had great timing.
âThey developed the shoe at the right time to prepare it for the market,â she says.
“Sometimes people go there too early and your market isn’t quite ready and you have to educate your market a lot about what your product or service is.”
Wool shoes were a risky and unique business in an era when people only put wool on their feet as felted socks or slippers, she says.
âIt could have gone wrong, but it doesn’t,â she says. âThey did very well, remarkably, quite quickly. “
Brown’s background in football has given the company some legitimacy, mana and credibility, and the company’s marketing has been smooth from the start, she says.
âIt’s really important for the products that come out that are slightly different to have a really good story around that and you can do that really well with our wool,â she says.
University of Otago Associate Professor Conor O’Kane, who is leading a Masters in Entrepreneurship, says Allbirds deserves huge credit for using merino wool in a different way and creating a new category of products.
âIt all seems obvious in hindsight, but it’s incredibly difficult to do,â he says.
“If you have a very competitive industry where you have established players who are very powerful, you have to change the rules of the game.”
Allbirds did it perfectly by emphasizing durability, comfort and simplicity and saving costs by selling directly to consumers rather than through other retailers or wholesalers, giving them greater control. and allows higher margins to be reinvested in product improvement, he says.
O’Kane says Allbirds has excelled at customer feedback, continually iterating their product.
In its IPO documents, Allbirds says it plans to increase footwear sales by expanding and deepening its line targeting functional casual occasions and performance athletics, while introducing new style lines, cuts and sizes to give customers more choices.
In apparel, which he launched with socks in 2019 and where his line now includes t-shirts, sweaters, jackets and underwear, he plans to expand into basic and functional casual wear and natural performance clothing.
The company says the core of its business is making sure its customers don’t have to compromise between looking great, feeling good, and doing good for the planet.
Allbirds has sold over 8 million pairs of shoes to over 4 million customers worldwide, and loyal customer sales continue to grow from 41% of sales in 2018 to 53% in 2020. Loyal customers spend also more, bombing 25% more in their second year and continuing to increase their spending in subsequent years.
He envisions a large global market, with Statista estimating that consumers around the world spent around US $ 1.8 trillion on shoes and clothing last year.
The company started online, opening its first physical store in the United States in 2017, and claims it has the ability to reach up to 2.5 billion consumers in 35 countries through its multilingual digital platform and 27 stores. Retail. He says it’s in the first phase of a ramp to hundreds of potential stores in the future.
In the three years to the end of 2020, Allbirds increased revenue by 32% to $ 219.3 million, although physical store revenues fell in 2020 as stores were closed 20% of the days. where they had planned to operate due to Covid-19.
Its gross margin over the three years increased from 46.9% to 51.4% due to a favorable product mix, product innovations and economies of scale.
However, the company’s investment in growing its brand means that it is not yet profitable. His loss widened last year to US $ 23.6 million from US $ 14.6 million in 2019.
Geoff Ross of Lake Hawea Station says a big part of the company’s valuation likely comes from people who think they can replicate the success of their shoes in clothing.
The IPO documents do not specify how much the shares will cost or how much money will be reinvested in the company.
âIf they build a multi-hundred million dollar war chest, that gives them a huge amount of gasoline in the tank to develop this brand,â Ross said.
While companies in new sectors often have erratic and volatile start-ups, Ross says he would buy stocks with a medium to long-term view.
âI have great confidence in Allbirds,â he says.
âIt will be interesting to see what happens in the next 18 months. Their market is going to have pretty high growth expectations and if they don’t achieve that growth in the short term, the market could punish them. “