Allbirds announces new CEO, plans to close some U.S. stores as shoe demand remains subdued

By Bill Peters

Joe Vernachio will succeed co-founder Joey Zwillinger as CEO

Shares of Allbirds Inc. sank after hours on Tuesday after the footwear maker forecast full-year sales that were below expectations and said it would close some U.S. stores, amid continued weaker sneaker demand and a bigger turnaround effort announced last year.

Allbirds (BIRD) also said that Joe Vernachio, its current chief operating officer, would become its new chief executive and a board member starting Friday, a move that will expand the size of the company's board to eight members.

He will succeed co-founder and current CEO Joey Zwillinger. Zwillinger will remain on the company's board.

Shares slid 19% after hours on Tuesday.

Allbirds, its rivals and the retailers that sell their products have had to cut prices to juice demand as higher-priced necessities like groceries and other consumer goods strain consumer budgets.

Allbirds has lost money since it went public in 2021. Last year, it said it was starting a turnaround plan that included doubling down on core customers - generally between the ages of 30 and 40 - after what it called an "overinvestment on newness" that took the focus off the people who liked its Runner and Dasher sneakers. The company also planned to back away from new store openings in the U.S., would try to sell more through outside stores, and work more with distributors abroad.

The company, which makes sneakers using more sustainable materials, said Tuesday it expected full-year sales of $190 million to $210 million, below FactSet forecasts for $246.5 million. Allbirds said that it expected to close 10 to 15 U.S. retail stores this year.

Allbirds said the outlook reflected a hit to sales of $32 million to $37 million related to the closures and "the transition from a direct-selling model to a distributor model in international markets."

Management, during Allbirds' earnings conference call, said the moves would set up the company for longer-term growth.

Allbirds reported a fourth-quarter net loss of $56.8 million, or 37 cents a share, compared with a loss of $24.9 million, or 17 cents a share, in the fourth quarter of 2022. Sales fell 14.5% year over year to $72 million.

Shares of Allbirds are down 19.1% over the past 12 months.

-Bill Peters

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03-12-24 2020ET

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