Allbirds Inc., the once-hot sustainable footwear brand beloved by Silicon Valley executives, delivered a stark admission Tuesday: It will shutter all remaining full-price U.S. stores by the end of February. The move leaves just two outlet locations in California and Massachusetts, plus two full-price shops in London, as the company redirects resources to e-commerce, wholesale partnerships and international distributors. CEO Joe Vernachio framed the decision as a cornerstone of the firm’s turnaround efforts, stating, “This is an important step for Allbirds, as we drive toward profitable growth under our turnaround strategy. We have been opportunistically reducing our brick-and-mortar portfolio over the past two years. By exiting these remaining unprofitable doors, we are taking actions to reduce costs and support the long-term health of the business.”

The announcement, detailed in a GlobeNewswire press release, caps years of retrenchment for Allbirds, which peaked at over 60 global stores in 2023 before a rapid pullback. Fiscal 2024 saw 14 U.S. closures, followed by nine more in the first half of 2025, per Retail Dive. U.S. store revenue plunged roughly 20% year-over-year in the third quarter, contributing to a 23.3% overall net revenue drop to levels that left the NASDAQ-listed firm (BIRD) with a mere $32 million market cap—down over 80% in two years, as noted by CNBC.

A Calculated Retreat from Physical Retail

Allbirds expects the closures to be “capital-light,” with selling, general and administrative savings to be outlined during its Q4 and full-year 2025 earnings call in March. The strategy echoes broader shifts among direct-to-consumer brands facing rising rents and waning foot traffic. “The closures will allow Allbirds to ‘dedicate resources toward its e-commerce platform, wholesale partnerships and international distributorships, all of which offer greater reach, flexibility and operating leverage,'” the company explained, according to StockTitan.

Founded in San Francisco in 2015 by Tim Brown and Joey Zwillinger, Allbirds rode a wave of hype with its merino wool Wool Runners, attracting A-list endorsements from Barack Obama and Leonardo DiCaprio. A Kickstarter launch raised $119,000, followed by over $200 million in venture funding pre-IPO. The 2021 public debut valued it at billions, but sales peaked and then eroded amid product missteps like apparel expansions and performance running shoes that alienated core fans.

Years of Mounting Pressures

By 2023, Allbirds reported a $101.4 million net loss on $254 million in revenue, prompting a strategic overhaul: halting most store openings after adding 19 in 2022 alone, per Los Angeles Times. CFO Mike Bufano departed, replaced by Annie Mitchell from Gymshark. Leadership churn continued; Zwillinger stepped down as co-CEO in March 2024, succeeded by Vernachio, formerly chief operating officer, as detailed in Retail Dive.

Store rationalization accelerated. Plans called for closing 10-15 underperformers in 2024—17% to 25% of its 60-store fleet—targeting newer, larger spaces built for apparel that the brand later abandoned. “We have closed 14 underperforming U.S. locations to bias toward a smaller physical footprint that better serves our footwear product strategy,” Vernachio told analysts in August 2024, via Retail Dive. Q2 2024 revenue nosedived 23% to $39.7 million, with closures siphoning four percentage points.

Financial Freefall and Strategic Shifts

Over five fiscal years through 2024, Allbirds lost $419 million on $1.24 billion in sales, per Fortune. Q3 2025 revenue fell another 25% to $43 million, with gross margins contracting to 43.2% amid promotions and distributor transitions in Europe. International shifts—to lower-cost distributors in Canada, South Korea, Australasia and Japan—aimed at capital efficiency but dragged short-term top lines by $25-30 million annually.

Wholesale expansions into REI, Nordstrom and Dick’s Sporting Goods provided lifelines, though Nordstrom quietly delisted Allbirds by January 2026, as observed on Wikipedia. A 1-for-20 reverse stock split in September 2024 briefly propped up shares to $13.79, but they languished below $1 amid persistent losses.

Product Missteps and Brand Fatigue

Critics point to overexpansion and diluted focus. “Allbirds opened north of 60 store locations by 2022, ultimately didn’t have enough variety in product strategy or assortment to keep pace,” noted Inc.. Ventures into leggings and Tree Flyers emphasized performance over the minimalist comfort that defined its appeal to “tech bros.” Cofounder Brown later admitted marketing strayed from consumer wants.

Layoffs hit in May 2023 (21 global roles) and earlier rounds, saving $7 million. New product launches—10 slated for late 2025-early 2026—target lifestyle staples with sustainable materials. Partnerships like Uber Eats’ Climate Collection aim to reach 19 million users near remaining stores.

Peers in Peril, Broader Retail Reckoning

Allbirds joins a parade of DTC firms retreating from physical retail. Casper, Warby Parker and others struggled post-IPO, shifting to third-party platforms like Amazon for visibility, as chronicled by Business Insider. Rising rents and shopper thrift amid inflation exacerbated woes; 4,600 U.S. retailers closed in 2023 alone.

San Francisco’s last Allbirds outpost in Hayes Valley succumbed pre-announcement, symbolizing faded tech prosperity. “Once symbolic of a mid-2010s San Francisco tech bro, the shoe brand is closing almost all of its physical stores,” lamented Yahoo Finance. Yet online sales persist, with hopes pinned on reigniting the brand’s eco-credentials in a crowded sneaker market dominated by Nike and Adidas.

Path Forward Amid Uncertainty

Vernachio’s playbook emphasizes core footwear, smaller footprints (21 U.S. stores halved in size) and distributor leverage. Analysts like Wedbush’s Tom Nikic caution reenergizing demand will take time: “While they are transitioning the business model to improve fundamentals, we believe it will take quite a bit of time to reenergize the brand.” Q4 guidance tempers optimism, with revenue projected at $33-38 million. Survival hinges on execution as Allbirds sheds its physical skin for digital agility.