Dive Brief:

• Amid the brand’s struggle with sales, a shareholder filed a class action complaint against Allbirds on April 13 alleging that the company’s registration statements were false or misleading, according to court documents. A summons was issued to Allbirds on April 26.
• The complaint alleges that Allbirds’ Form 424B4 filed in November 2021 following its IPO failed to disclose to investors that the brand was overemphasizing non-core products, which were not as popular with customers. It also alleges Allbirds’ sales were negatively impacted by underinvesting its core products, thereby rendering its positive statements about the business “materially misleading and/or lacked a reasonable basis.”
• Allbirds did not respond to requests for comment at the time of publication. During its second-quarter earnings call with analysts in March, co-CEO Joseph Zwillinger said the brand had “overemphasized products that extended beyond our core DNA. And as a result, some products and colors have had narrower appeal than expected.”

Dive Insight:

Allbirds’ share price has fallen steeply from its initial $15, now hovering around $1.17 at the time of publication.

In March, the company reported that Q4 net revenue dropped 13.4% year over year to $84.2 million, while its net loss grew 138% to $24.9 million. For the full fiscal year, net revenue increased 7.3% to $297.8 million, while net loss increased to $101.4 million from $45.4 million the prior year.

At the same time, Allbirds announced its Chief Financial Officer Mike Bufano would be stepping down in mid-May, with former Gymshark executive Annie Mitchell taking over the role.

The direct-to-consumer footwear and apparel brand also announced a new strategic plan as it focuses on reaching profitability. Allbirds said it would scale back its store openings in 2023 to three locations, compared to the 19 opened in 2022. It will continue to grow wholesale partnerships while it also works on driving store traffic.

The latest complaint against the company — which requests a jury trial — is asking the courts for compensatory damages and coverage for expenses incurred with the legal action.