On January 28, 2026, Allbirds, Inc announced a definitive exit from its full-price brick-and-mortar operations in the United States. By February 2026-end, the sustainable footwear pioneer will shutter its remaining 20+ US retail locations, marking a total reversal of its once-aggressive physical expansion strategy. This consolidation follows a turbulent FY25, where the company reported a 23.3 per cent Y-o-Y revenue decline to $33 million in its third quarter. By eliminating high-occupancy overhead, the San Francisco-based firm aims to stem a net loss that reached $20.3 million in the same period, redirecting focus toward higher-margin wholesale and digital channels.
Transitioning to a third-party growth model
The closure of unprofitable ‘doors’ is the cornerstone of a broader multi-year turnaround led by Joe Vernachio, CEO. Allbirds is shifting its primary physical presence to a distributor-led model, having recently finalized agreements with eight international partners covering territories from Scandinavia to Japan. Domestically, the brand will now rely on wholesale titans like REI and Dick’s Sporting Goods for floor space, a move that reduces the burden of lease liabilities while maintaining consumer reach. This ‘capital-light’ approach is reflected in the company's tightened inventory, which decreased 25 per cent annually to $43.1 million, signaling a disciplined push toward a more agile, demand-driven supply chain.
Financial outlook and institutional de-risking
With a market valuation currently hovering near $32 million - a fraction of its $4 billion peak- Allbirds’ survival hinges on achieving positive adjusted EBITDA by late 2026. The exit from direct retail is expected to yield significant SG&A savings, which the company will detail in its March 2026 earnings call. While the firm will maintain two outlet stores in the U.S. and two flagships in London as brand touchpoints, the overarching strategy prioritizes liquidity over scale. This institutional reform is designed to insulate the brand from the volatility of high-street retail, position21 per cent revenue drop ing Allbirds as a specialized sustainable materials company rather than a traditional retailer.
Founded in 2015, Allbirds specializes in sustainable footwear using Merino wool and sugarcane-based SweetFoam. Primarily targeting the North American and Asian lifestyle markets, the company is turning toward a wholesale-first model to restore profitability. Despite a 21 per cent revenue drop in 2025, the firm eyes a global footprint of 500+ third-party points of sale by 2027.
