Nordstrom signage outside one of the company’s department stores.
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Allbirds will begin selling its shoes at select Nordstrom department stores next month, the companies announced Tuesday, as the sneaker brand looks to partner with other retailers to expand its reach and turn profits.
Starting June 1, a selection of Allbirds footwear, including the company’s signature wool sneakers, will be available for sale at 14 Nordstrom stores. The assortment will expand to Nordstrom’s website and other stores later this year, the companies said.
For Allbirds, change is a chance to win new customers and become profitable. It’s also emblematic of a broader trend among retailers like Allbirds and Warby Parker that have started selling products exclusively online directly to consumers.
Increasingly, these direct-to-consumer businesses — including Casper mattresses, Harry shavers, and sportswear manufacturers Vuori and Outdoor Voices — have expanded to sell through third parties. Others pushed to open dozens of brick-and-mortar stores to personally connect with shoppers. Thanks to these changes, new companies are more like long-time retailers like Nike or Ralph Lauren.
The deal helps Nordstrom build its reputation as a partner of choice for new retailers looking to test the waters of wholesale. It also helps give the department store company an edge over rivals like Macy’s and Kohl’s, with items that are likely to attract shoppers.
Earlier this month, Allbirds announced its first two retail partners: Public Lands, a flagship of Dick’s Sporting Goods, in the US, and Zalandao in Europe. He joked at the time that other deals were in the works.
Selling through other retailers should help Allbirds reach consumers who might not otherwise know the brand, Joey Zwillinger, co-founder and co-CEO of Allbirds, said in a post-conference conference call.
In particular, the company hopes to attract environmentally conscious buyers. By 2020, Allbirds has committed to halving its carbon footprint by 2025. In addition to labeling all of its products carbon footprint, the company said it sources natural materials found in trees and sugarcane fields and strives to reduce waste.
Allbirds brand recognition in the United States is still in the double digits of 100%, according to Zwillinger. Third-party retailing can be “a very effective way to increase brand awareness and credibility,” he said on the call.
Allbirds shoes are made from wool and the laces are made from recycled plastic bottles.
Allbirds hopes the move will help boost investor confidence. The company’s shares fell from an IPO price of $15 to close Monday at $4.68. Allbirds was listed on the Nasdaq stock exchange last November, before the public debut window was frozen amid rising inflation and Russia’s war with Ukraine.
In the three months ended March 31, Allbirds’ net loss increased to $21.9 million from a loss of $13.5 million a year earlier. It was then that its sales increased 26% to $62.8 million from $49.6 billion.
Allbirds also revised its outlook for the year, citing ongoing disruptions to its overseas business due to ongoing Covid-related lockdowns in China and the war in Ukraine.
This isn’t the first time the Allbirds and Nordstrom have teamed up. In 2018, Allbirds opened at Nordstrom’s rotating pop-up display, marking the sneaker company’s first attempt with another retail partner. Nordstrom has worked with other brands online, including Kim Kardashian’s Skims line and On Running.
Zwillinger said on the conference call that Allbirds plans to be selective about how it expands its third-party business. The company does not expect to have a significant impact on its finances in 2022, but the partnerships are expected to become a catalyst for new business in the year ahead, he said.
BMO Capital Markets analyst Simeon Siegel has advocated for retailers to use wholesale to build a profitable business with strong gross margins, citing Ralph Lauren and PVH, which owns Calvin Klein, as companies that have used this approach successfully.
“Companies are building very healthy, very large businesses by embracing wholesale,” Siegel said in an interview. “You shouldn’t totally avoid wholesale and just think of wholesale as a bad thing.”
It’s when companies lash out too hard and use excessive discounts and unclear messaging that can ruin their reputation, he said.
Nordstrom is expected to release its first-quarter fiscal results after the market closes on Tuesday.