Sustainable shoemaker Allbirds files for US IPO

Sustainable shoemaker Allbirds on Tuesday said it had filed for a public listing in the US, as it seeks to capitalise on demand for fashion brands with green credentials.

The San-Francisco-based start-up is looking to list its stock as part of what it is calling a “sustainable” initial public offering, led by bankers at Morgan Stanley, JPMorgan and Bank of America.

The deal’s moniker requires the company to adhere to certain environmental, social and governance standards, such as maintaining a minimum ESG rating, implementing “best practices” towards climate change and making “commitments to make meaningful progress on important ESG matters”, according to a regulatory filing.

“We hope to help pioneer a framework for companies to conduct what we are calling a sustainable public equity offering . . . Our vision is that Allbirds’ initial public offering will lay the groundwork that can be used by other companies for future SPOs,” the filing said.

Allbirds, founded in 2015, last raised $100m in a Series E funding round in September of last year, valuing it at $1bn.

The company, backed by T Rowe Price, Franklin Templeton and Baillie Gifford, gained popularity among sustainability-conscious millennial consumers with its wool-based athletic trainers, dubbed “the world’s most comfortable running shoe” by Time Magazine in 2016.

The footwear brand’s products are produced using naturally derived materials, and the company claims that the carbon footprint from making a standard pair of its sneakers is about 30 per cent less than that of its rivals. It said its supply chain had been carbon neutral since 2019.

But shipping is not included in the carbon footprint calculation, according to the sustainability report from last year. The company’s website states that wool for two of its collections is imported to Milan and processed into fabric before being shipped to Korea to be assembled into a shoe.

The shoes have become popular among tech workers in Silicon Valley and urban young professionals, propelling online sales revenue to jump 74 per cent from $126m in 2018 to $219.3m in 2020. The company has expanded rapidly and operates in 35 countries.

Earnings before tax grew from $1.3m in 2019 to $15.4m in 2020. However, the company said it was yet to turn a profit. Net losses amounted to $40.4m between 2019 and 2020.

The company, which calls its employees its “flock”, also said that it expected to continue to be lossmaking for the foreseeable future.

Allbirds said in its filing that, as a result of the pandemic, “the lines have blurred between home, gym and play”, and that it expected a more casual approach to work attire to continue to boost sales of its shoes, which retail for about $100 to $150 a pair.

The company had previously bet big on brick-and-mortar retail through its 27 stores, and said digital sales remained strong. In the filing, the company said online sales revenue had grown to $194.6m in 2020, up from $113m in 2018.

New stores had contributed to “increased brand awareness and web traffic”, the brand said, but the pandemic had hurt in-person sales, which made up 11 per cent of the company’s revenue and fell 17 per cent from 2019 to 2020.

Allbirds’ filing leaned heavily on its ESG credentials, and noted that environmental impact and brand trust were increasingly important factors for generation Z and millennial consumers, according to a McKinsey study.

Allbirds declined to comment beyond the contents of the IPO filing.

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