This is not investment advice. Do your own research before taking a position in any of the securities mentioned in the post below. The author may hold positions in any of the securities mentioned.
Since Allbirds just lodged their S-1 a week ago, I thought you might find it interesting to serve readers up a few facts showing the difference between Allbirds & Crocs
All birds
Topline - tick: Driven predominantly by online sales, revenue grew at +31% CAGR from 2018-2020. Physical stores which were evidently impacted by COVID-19 are 11% of sales
Gross margin & retention- tick: This has grown 454 basis points from 46.9% in 2018 to 51.4%. What’s more the customer retention rate is strong (c.43% of customers have acquired +2 times). Unlike SaaS which has +90% retention; fashion retention is often much lower/non-existant
But wait… customer acquisition costs are still huge: Despite all of this, Allbirds generated net losses of $14.5m and $25.9m in 2019 and 2020
Expansion plans mean losses continue: The company intends to expand product offering (various outdoors products) and increase physical presence which will likely lead to continued losses
So anyone buying into Allbirds at the $1.7bn valuation needs to accept that they are still in a “j-curve” and any difficulty with new products/more physical stores will not be cushioned by the fact the company is pre-profit
That being said – the founders are retaining their stake in the business which is always a promising sign & they have had wonderful branding to date.
Crocs
Founding: The humble croc was born when 3 founders who had stumbled upon a new boating clog made by Canadian company Foam Creations
IPO: Fast forward to 2006, they had the biggest IPO for a footwear brand in U.S. history, raising $200 million
GFC In 2008/09 their fates turned sour and they had all the hallmarks of a struggling company (+$200m loss, shareholder lawsuits and closing +150 stores)
Growing pains & Blackstone: By 2011, Crocs offered around 250 styles of shoe, and the company reported sales of $1 billion worldwide. Sales began to taper again before in 2014, Crocs received a lifeline in the form of a $200 million investment from private equity firm Blackstone (who made numerous changes – notably the founders were ousted
Today: Fast forward today; the company is doing powerful collaborations with celebrities everywhere and COVID-19 accelerated the take-up of these comfortable shoes. So in favour is this shoe brand that according to Lyst’s 2020 report, Crocs are the eighth-most-wanted item in the entire world.
Future: Forecasting how fashions will grow in the future is a fools errand, however, it is clear that the analysts are a lot more bullish on top-line growth now Crocs are popular with the Tiktok generation
So in conclusion, I am the last person to be able to comment on fashion trends however the key takeaway is that 1) Crocs ability to revamp their brand between 2014 and today is very impressive and 2) Allbirds is still very much in its infancy and your risk appetite for their IPO should reflect this.
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