Source: Allbirds Announces 1-For-20 Reverse Stock Split | Allbirds, Inc.
When Nike struggles, every brand gets caught in the rough waters churning behind the ship. Add in giant waves already being generated in the ocean and smaller brands, not even in the performance running space, can find themselves spinning in the whitewater. Brands which maintain discipline but focus on innovation and catering to segments rooted in need find a way to navigate the waters and avoid being caught in the wake. Brands without an identity get pulled into the undertow.
Allbirds is a brand without an identifier. adidas has the Trefoil and Three Stripes. Nike has the Swoosh and Jumpman. New Balance’s “N” logo was splashed across the Olympics with champions like Sydney McLaughlin Levrone and Gabby Thomas. Those are legendary sports brands. Newer brands like On Running and HOKA are easily identifiable by design elements and endorsements.
Allbirds arrived at a time when people were moving towards a logoless sneaker. Even adidas’ YZY held that aesthetic. The knit trainers from adidas were distinguished by design, but there weren’t really logos on Yeezys. Logos are important. Design elements offer power, and messaging can pull in a segment, but unless the message is constantly reinforced it gets lost as other companies find their way into similar narratives. Allbirds arrived with a message of creating better footwear.
Almost every brand in performance now offers styles which tout sustainability. The buzzwords of eco-friendly are everywhere, but the actions aren’t. Almost all footwear eventually enters landfills contaminating the soil. Allbirds had a niche but for some reason, instead of doubling down on their messaging and an important investment the company botched, they partnered with adidas and then made a logoless transition into apparel (which failed). Again, they left design on the cutting room floor. Even as they have had to rescue their stock from being delisted from Nasdaq, their imagery on the site and in social is vanilla and safe. It’s easily replicable and that is a serious problem.
Allbirds Would Benefit From Touting NFW vs Just Saying “Plant-Based Leather Shoes” | Analysis
How Did Allbirds Stay Listed?
Their Reverse Stock Split is, “every 20 shares of Allbirds Common Stock issued and outstanding will be combined automatically into 1 share of Common Stock. The Reverse Stock Split will apply equally to all outstanding shares of Common Stock, and each stockholder will hold the same percentage of Common Stock outstanding immediately following the Reverse Stock Split Shares.” This process allows the brand to stay above the minimum 1 dollar to avoid being delisted.
Let’s imagine Allbirds as a fisherman. Fishing looks like a calm, relaxing sport until action takes place. If an angler isn’t paying attention a fish can escape. Doing a Reverse Stock Split is akin to a fisherman adjusting the pole, but failing to check if everything is in place when the action kicks in. Allbirds gave itself a respite, but the brand hasn’t changed anything outside of closing underperforming stores (which limits distribution and brand awareness) and expanded distribution via wholesale accounts (which could contribute to dilution although the wholesale is primarily in the international market).
Had you heard of a Reverse Stock Split? Did you know a company could be removed from a stock exchange? Want to read the name of other publicly traded companies who did an RSS? Charming Charlie’s and Radio Shack both made the move. Both companies eventually went bankrupt.
Allbirds Licensed Innovation Instead of Creating
While the company touts the M0.0NSHOT (which was supposed to release this year) their SweetFoam was licensed from Braskem. Similar outsoles can be found in startup brands like Zen Running. Allbirds also touts its approach to carbon neutral as additive, but the release with adidas ended up being sold on eBay for a fraction of the SRP. The one thing Allbirds did first, and right was their investment in NFW. Instead of capitalizing on the partnership, they designed a bland, vanilla sneaker and they didn’t make a larger investment into NFW which could have given Allbirds possible involvement with every brand who has created with the amazing products from Natural Fiber Welding. Would you like to know the brands that have featured NFW’s materials?
- BMW
- Lagerfield
- Ralph Lauren
- Vivobarefoot
- UNLESS (made a completely biodegradable sneaker, something Allbirds should have done first)
- Camper
- Stella McCartney
- Baabuk (a direct competitor to Allbirds
I could continue delivering companies NFW worked with, but the point is Allbirds made a big early investment and should have secured inexpensive debt to invest more. Why? Ultimately, the calling card for Allbirds is sustainability and Natural Fiber Welding is a shining star in the bio-based materials realm. Instead of a true investment into design and innovative materials Allbirds has delivered overpriced sameness sans style.
UNLESS founder Eric Liedtke just became the Executive Vice President of Brand Strategy at Under Armour. Under Armour brought UNLESS into the fold. Under Armour will now be able to tout its commitment to sustainability (they have yet to do so) and also gets a burgeoning streetwear brand in their portfolio. The UNLESS apparel allows Under Armour to better understand how to approach lifestyle which has been an issue for UA since their UAS debacle. Liedtke provides a completely different leader at UA. This is the person who guided adidas through the rise of NMD and YZY. Now he is at a company which would typically never be mentioned in the same sentence of the eco-friendly Allbirds… but if Under Armour does things right, they can market themselves as an eco-friendlier brand. With the acquisition of UNLESS, Under Armour has a streetwear brand consumers can literally take off and place in a compost bin where it will biodegrade without harming the environment. Allbirds has another bigger, stronger competitor.
I once wrote Allbirds could find a path to correction, but the companies who have done Reverse Stock Splits mostly continue to struggle. They become anglers biding their time in the ocean waiting on a bite, instead of moving into better waters. Allbirds hasn’t changed anything. When I wrote this post:
Allbirds’ Delivers a ‘Panda’ with the New Couriers | What Would an Allbirds x Nike Collab Look Like?
It was a subtle suggestion to create something signature and defining to compliment the footwear. It was a call for better imagery. It was a request to let the designers inside of the brand get creative and drop dope shit. Charming Charlie’s thought it could cheaply design its way to profitability after a reverse stock split. That didn’t end very well and the empty anchor stores at outdoor malls tell the tale.