Allbirds began trading on the Nasdaq on Wednesday after raising nearly $303 million, with a valuation that jumped as high as $3.3 billion after shares opened 41 percent above their offering price. But with People for the Ethical Treatment of Animals (PETA) quickly snapping up shares, Allbirds could soon have an activist battle on its hands.
The sustainable footwear seller known for shoes made of merino wool and eucalyptus tree fiber priced 20.2 million shares at $15 a piece—pegging its value at approximately $2.16 billion—after initially marketing 19.2 million shares priced between $12 and $14 prior to the opening. But when Allbirds opened its first trade, share prices soared above $21 a piece. The company is now listed on the Nasdaq exchange under the ticker symbol “BIRD.”
Allbirds expects net revenue in the range of $61 million and $62.5 million, according to preliminary quarterly results for the three months ended Sept. 30 in an S-8 filing with the Securities and Exchange Commission (SEC). This would mark an estimated increase of rougly 29.2 percent to 32.4 percent from the $47.2 million generated during the year-ago period.
The Bay Area company said that revenue growth was primarily driven by physical retail recovery after the temporary closures, reduced operating hours, and restricted guest occupancy levels due to Covid-19, as well as increases in number of orders and average order value. Allbirds operates dozens of stores worldwide, opening its newest location in New Jersey last week.
The B Corp still hasn’t found a way to be profitable yet, with net losses estimated at $15 million to $18 million, more than doubling the prior year’s $7 million net loss. Higher selling, general and administrative expenses were behind the mounting losses, the company said.
Adjusted EBITDA losses are expected between $7 million and $10 million, versus the comparable adjusted EBITDA of $3.8 million.
Allbirds is hoping to cash in on an uptick in demand, especially among younger shoppers, for products that are comfortable and also sustainably sourced. It recently launched an activewear line, further expanding its product assortment beyond its popular wool sneakers. The San Francisco-based retailer also sells socks, underwear, sneakers and other accessories.
The 100-percent carbon-neutral brand’s shoes carry a carbon footprint about 30 percent lower than the estimated 14.1 kilograms of carbon dioxide equivalent (CO2e) for a standard pair of sneakers. The company even rolled out an open-source version of its proprietary Carbon Footprint calculator, urging brands to add carbon labels to their products.
The company reported an 83 or higher Net Promoter Score since the first quarter of 2019. For the first half of 2021, that metric jumped to 86. Approximately 53 percent of net sales in 2020 came from repeat customers.
Upon going public, Allbirds sought to attract investors similarly focused on sustainability. The retailer even initially referred to the offering as a “Sustainable Public Equity Offering,” or SPO, which it said could be used as a framework for other companies to emulate. But in a later filing, Allbirds removed all references to the SPO, including those that talked specifically about helping pioneer a framework for other companies to go public.
Allbirds’ listing follows the public debut of fashion rental platform Rent the Runway, as well as a flurry of other recent apparel and footwear IPOs including Chubbies owner Solo Brands, running shoes seller On, DTC fashion brand aggregator A.k.a Brands and popular eyewear brand Warby Parker. Overall, the listings are symptomatic of the wave of trendy, venture-backed retailers testing investors’ appetite on Wall Street.
However, PETA seized Allbirds’ public debut as a chance to up the ante. The animal-rights group, a Levi’s stakeholder similarly urging the brand to ditch leather, acquired one share in the fashion firm in a bid to persuade the celebrity-approved brand to wind down its use of wool.
“Every wool Allbirds shoe represents a gentle sheep who may have been kicked, punched, or left in a pool of her own blood on a shearing shed floor,” PETA executive vice president Tracy Reiman said in a statement. “With our new shareholder status, PETA will push Allbirds to cut the greenwashing by eliminating wool from its products.”
PETA’s latest move comes as Allbirds recently filed to dismiss a class-action lawsuit over its claims around animal welfare. Central to the suit was a PETA blog post claiming “Allbirds Is All Wrong” and accusing the Silicon Valley staple of a litany of offenses, namely engaging in “humane washing and greenwashing.” Touting its planned switch to “regenerative” wool does little for the “sheep who are tormented and eventually killed in the wool industry,” PETA claimed in April.
With help from its partners, PETA says more than a dozen exposés document inhumane treatment of sheep at 117 global facilities, even those touting “sustainable” and “responsible” methods, it said. But Patricia Dwyer’s lawsuit is barking up the wrong tree, Allbirds retorted last week.
In its motion to dismiss, filed on Oct. 25, the footwear company stated that Dwyer does not “dispute the accuracy of Allbirds’ disclosures to customers,” “claim that Allbirds represents its ‘footprint’ disclosures as broader or more comprehensive than they actually are,” or “point to any legal requirement that consumers be provided with information sufficient to allow them to comparison shop based on information she regards as important an environmental impact assessment.”
What’s more, the “misleading” terms Dwyer took issue with—including “humane,” “animal-friendly” and “responsible”—were claims made by supplier ZQ Merino, and not by Allbirds, the brand pointed out. “Nowhere does Dwyer allege that any grower in Allbirds’ supply chain has been accused of, let alone been shown to have engaged in, animal cruelty,” it wrote. “Instead, Dwyer makes sweeping allegations about the treatment of sheep in the world at large.”
PETA said it has “repeatedly” raised the animal-cruelty issue with Allbirds, which “continues to hide behind empty welfare policies that do little to stop animal suffering,” it claimed. Allbirds did not immediately respond to a request for comment on PETA acquiring a share.
Approximately 16.3 million shares were sold by Allbirds and 3.8 million were sold by certain current stockholders. Underwriters have a 30-day option to purchase as many as 504,645 additional shares from Allbirds and as many as 2.5 million additional shares from current stockholders.
Allbirds said its independent registered public accounting firm, Deloitte & Touche LLP, has not audited, reviewed, compiled or performed any procedures with respect to the preliminary information.
Morgan Stanley, J.P. Morgan and BofA Securities are the lead underwriters for Allbirds’ offering.
Additional reporting by Jessica Binns.