The rise and fall of Allbirds is a cautionary tale of the direct-to-consumer era. Once lauded as a disruptor in the footwear industry, the San Francisco-based company, founded by Tim Brown and Joey Zwillinger, is now dramatically scaling back its physical presence, closing all of its full-price stores in the United States. This move, announced on January 28, 2026, marks a significant shift for a brand that just a decade ago promised to revolutionize the shoe market with its sustainable materials and minimalist design.
Allbirds’ journey began in 2014 with a Kickstarter campaign seeking $30,000 to launch its signature wool runners – shoes designed to be worn without socks and boasting odor-resistant properties. The campaign quickly surpassed its goal, raising $100,000 in just five days from 970 backers. This early success signaled a strong consumer appetite for the brand’s innovative approach. The sneakers officially launched on March 1, 2016, coinciding with the company’s first fundraising round. The focus on sustainability quickly resonated, earning Allbirds B Corp certification in December of that year and a glowing review from Time magazine, which dubbed them “the world’s most comfortable shoes.”
The company’s initial success was fueled by a clever combination of factors. The merino wool upper, sourced from New Zealand and manufactured in Italy, offered a unique blend of comfort, breathability, and moisture-wicking properties. Early adopters, including tech industry figures and celebrities like Leonardo DiCaprio and Barack Obama, helped to establish Allbirds as a status symbol within Silicon Valley and beyond. The brand’s direct-to-consumer model, bypassing traditional retail channels, allowed it to offer competitive pricing and build a direct relationship with its customers.
By 2018, Allbirds had expanded its product line to include jandals (flip-flops) made from sugarcane and the Tree Runner sneaker, certified by the Forest Stewardship Council. The company also began collaborations with other brands, including Shake Shack and Air New Zealand, further solidifying its brand recognition. A legal battle with Steve Madden over alleged trade dress infringement, ultimately settled out of court in 2018, underscored the growing popularity and influence of Allbirds’ design aesthetic.
The company’s momentum continued into 2021, culminating in an initial public offering (IPO) on the Nasdaq stock exchange in November. Shares initially traded at $15 each, peaking at $27.55 and briefly valuing the company at $3.52 billion. However, this marked the beginning of a downturn. The company faced increasing competition, supply chain challenges, and a shift in consumer preferences.
The post-pandemic landscape proved challenging for Allbirds. While online sales remained strong, the cost of acquiring customers increased, and the company struggled to maintain its growth trajectory. A series of missteps, including an expansion into athleisure wear that failed to resonate with consumers, and increasing scrutiny over its sustainability claims, contributed to its declining fortunes. In 2022, the Wall Street Journal reported that the “tech bros” who had initially embraced the brand were moving on to other trends. Revenue fell 25.3% in 2024, and the company reported a loss of US$152.5 million.
Throughout 2023 and 2024, Allbirds attempted to course-correct. It appointed new leadership, including Joe Vernachio as CEO in March 2024, and focused on streamlining its operations. The company also launched the Moonshot Zero sneaker, billed as the “world’s first zero carbon shoe,” demonstrating a continued commitment to its sustainability ethos. However, these efforts were not enough to stem the tide.
The decision to close its remaining US stores, announced in January 2026, is a clear indication of the company’s financial struggles. CEO Joe Vernachio stated that the move is intended to “reduce costs and support the long-term health of the business.” By February 2026, Allbirds’ global retail footprint will be reduced to just four company-run stores – two in London and two outlet stores in the United States. The Auckland store is operated by Compendium Group.
The Allbirds story serves as a reminder that even the most innovative and well-intentioned companies can face significant challenges in a rapidly evolving market. The company’s initial success was built on a unique product, a strong brand identity, and a favorable economic climate. However, it ultimately failed to adapt to changing consumer preferences, manage its costs effectively, and navigate the complexities of the public market. As the sportswear and sneaker industry faces a potential “long-term slowdown,” as noted by Bank of America in January 2026, Allbirds’ future remains uncertain. The company’s ability to successfully pivot to a primarily e-commerce model and maintain its commitment to sustainability will be crucial to its long-term survival.
