Allbirds was worth more than $4bn on its first day as a public company. In 2026 it sold the entire shoe business for $39m. Casper and Peloton took different roads to the same problem. We went through all three companies' SEC filings to find the exact line on each P&L that broke, and what every DTC brand can learn from it.
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So what happened to Allbirds? In short, its gross margin fell 9.4 points in a single year, its overheads kept growing while sales fell, and the cash ran out. In March 2026 the company agreed to sell the brand, the IP and the inventory to American Exchange Group for $39m, and the deal closed in June. Then it renamed itself Smartbird and became an AI company. That's the strangest ending in DTC, and we'll get to it.
Allbirds isn't the only famous DTC brand that stopped making money. Casper never posted a profit as a public company, and Peloton lost $2.8bn in one year before shrinking its way to its first ever profit in 2026. Each one broke on a different line of the P&L, and every one of those lines is on your P&L too.
All numbers below come from the companies' annual 10-K filings with the SEC unless stated, using the line names exactly as filed. Fiscal years end in December for Allbirds and Casper, and in June for Peloton.
What happened to Allbirds?
Allbirds went public in November 2021 at $15 a share and was worth more than $4bn by the end of its first day of trading, according to TechCrunch. Revenue peaked the next year at $297.8m. Here's what happened next, line by line.
| Year | Revenue | Gross margin | Marketing | Selling, general and administrative | Operating loss | Cash at year end |
|---|---|---|---|---|---|---|
| 2021 | $277.5m | 52.9% | $57.3m | $122.2m | −$32.9m | $288.6m |
| 2022 | $297.8m | 43.5% | $59.1m | $166.7m | −$100.3m | $167.1m |
| 2023 | $254.1m | 41.0% | $49.0m | $174.0m | −$153.0m | $130.0m |
| 2024 | $189.8m | 42.7% | $41.6m | $133.4m | −$97.6m | $66.7m |
| 2025 | $152.5m | 41.0% | $45.2m | $92.5m | −$80.0m | $26.7m |
The line that broke: gross margin
In 2022, Allbirds' gross margin fell from 52.9% to 43.5%. That's 9.4 points in one year. On every $100 of shoes, the money left over to pay for marketing, stores and staff dropped from $52.90 to $43.50, which is 18% less. In its full-year 2022 results, the company blamed discontinued first-generation apparel, promotions (the hidden cost we break down in our guide to how and when to discount), higher logistics costs, a lower mix of international sales and unfavourable exchange rates. It also wrote down $14.4m of inventory that year. Gross margin never got back above 43%.
Here's the part most write-ups miss: it wasn't the ad budget. The "marketing" line stayed at roughly 20% of revenue from 2019 to 2024. The cost that grew was "selling, general and administrative", which covers the stores, the staff and the head office. It rose from $122.2m in 2021 to $174.0m in 2023 while revenue was falling. In 2023 the company lost $60.20 on every $100 of revenue, which included $34.2m of impairments and restructuring as stores started to close.
Is Allbirds going out of business?
The Allbirds brand isn't going out of business, but the company that built it no longer owns it. Allbirds closed 14 US stores in the first nine months of 2024, moved its international markets to distributors, and announced in January 2026 that it would close all of its full-price US stores by February (FashionUnited). On 29 March 2026 it agreed to sell the footwear business, including the trademarks, customer lists, inventory and contracts, to an affiliate of American Exchange Group. The sale closed on 9 June 2026 for $40.7m in cash, against a headline price of $39m, subject to adjustments. By the end of 2025, Allbirds had lost $561.8m in total since it started.
So the shoes still exist, under the Allbirds name, owned by a brand management company. The listed company went somewhere else entirely (more on that at the end).
Lesson 1: gross margin is the first domino. A 9-point drop doesn't look dramatic in one quarter, but it takes 18% out of everything you have to spend on marketing and overheads. Watch it monthly, by product, and know why it moved. If you only check one number, make it contribution margin, which is gross margin after the variable costs of getting each order out the door.
What happened to Casper?
Casper, the mattress in a box, was probably the best-known DTC brand of the last decade. Its problem wasn't gross margin at all, which is why ecommerce profit margins have to be read all the way down the P&L. Gross margin improved every year it was public: 44.1% in 2018, 49.0% in 2019 and 51.1% in 2020. The problem was everything underneath it.
| Year | Revenue | Gross margin | Sales and marketing (of which advertising) | General and administrative | Operating loss |
|---|---|---|---|---|---|
| 2018 | $357.9m | 44.1% | $126.2m ($116.8m) | $123.5m | −$92.0m |
| 2019 | $439.3m | 49.0% | $154.6m ($142.6m) | $148.3m | −$88.7m |
| 2020 | $497.0m | 51.1% | $156.8m ($145.5m) | $172.1m | −$82.7m |
Where every $100 went
In 2020, Casper's best year, here's where each $100 of revenue went: $51.09 was left after the cost of the mattress, $31.55 went on sales and marketing, $34.63 on general and administrative, and $1.55 on restructuring and impairment. That's $16.64 lost on every $100 sold. Advertising alone took 57% of gross profit ($145.5m of $253.9m) before a single salary was paid.
The market priced that in. Casper raised money at a $1.1bn valuation in March 2019, went public in February 2020 at $12 a share (about $476m, per Retail Dive), and was taken private by Durational Capital at $6.90 a share, about $286m, in a deal that completed on 25 January 2022. In October 2024 the foam maker Carpenter Co. bought it for an undisclosed price. By the end of 2020, Casper had lost $414.8m in total since it started.
Lesson 2: fix the $100 before you scale it. Growth doesn't fix unit economics. If you lose money on every $100 at $350m of revenue, you'll still be losing it at $500m, because marketing and overheads grow alongside the revenue. Track marketing and overheads as a share of gross profit, not just revenue. It's the same logic as contribution margin ratio vs contribution margin in dollars: the ratio tells you whether each order works, and the dollars tell you whether the business does.
What happened to Peloton?
Peloton is the one of the three that survived. In the year to June 2021, revenue more than doubled, from $1.83bn to $4.02bn, and the company was worth nearly $50bn at its January 2021 peak. Its line that broke wasn't on the P&L at all. It was on the balance sheet.
The line that broke: inventory
In two years, Peloton's inventory went from $245m to $1.1bn. It bet that pandemic demand was the new normal. In fiscal 2022, revenue fell 11%, sales and marketing hit $1.02bn (28.4% of revenue), and the company took $222.1m of inventory reserves. Gross margin on its Bikes and Treads went to −11.3%, according to its fiscal 2022 10-K, so it was selling hardware for less than it cost to make. The year's operating loss was $2.73bn, and its market value had fallen to $7.9bn by 20 January 2022, the month it paused production. The warning was sitting in the inventory line a year before the loss showed up.
How Peloton got back to profit
In August 2026, Peloton reported the first full year of positive operating income and net income in its history: $160.7m of operating income and $63.2m of net income in the year to June 2026, plus $378m of free cash flow (Peloton FY2026 results). It did it by getting smaller. Revenue is $2.45bn, 39% below the peak. Sales and marketing came down from $1.02bn to $400m, inventory from $1.1bn to $135m, and gross margin rose from 19.5% to 52.6%.
The catch is that it's guiding revenue down again for fiscal 2027, to $2.3bn–$2.4bn, and it has still lost about $5.5bn in total since it started. But it makes money now.
Lesson 3: inventory is a bet on demand. The bet shows up on your balance sheet before it shows up on your P&L. Measure stock in weeks of cover, not units, and treat a jump in stock that runs ahead of sales as a warning, not a sign of confidence. If you're already holding too much, our guide to clearing dead stock ranks the options by how much margin each one recovers.
The 3 numbers to check every month
Three brands, three different lines, and none of them were hidden. Each one was in the filings a year or more before the outcome.
- Gross margin, monthly and by product. Allbirds lost 9.4 points in a year and never got them back. Know why it moved: mix, discounting, freight, write-downs.
- Marketing and overheads as a share of gross profit. Casper spent 57% of its gross profit on advertising alone. If marketing plus overheads is more than your gross profit, growth makes the loss bigger, not smaller.
- Stock in weeks of cover. Peloton's inventory quadrupled in two years, and the loss showed up a year later.
Most founders see these numbers once a quarter, when the accountant sends the management accounts, if at all, which is one reason DTC brands outgrow their accountant. That's the gap StoreHero was built for: contribution margin, marketing efficiency and stock cover in one place, updated daily from your Shopify, ad and finance data. If you want to see how UK brands compare, we ranked 20 UK DTC brands by profit from their filed accounts, and Gymshark kept £1.97 of every £100.
The twist: Allbirds is now Smartbird, an AI company
After it sold the shoes, the listed company didn't wind up. In June 2026 it renamed itself Smartbird, Inc., hired former Amazon Web Services executive Nadia Carlsten as CEO, and announced that it's now an AI infrastructure company (CNBC). The shares jumped. So the wool sneaker company is now an AI company with no shoes, and the shoes, under the Allbirds name, belong to American Exchange Group.
Gross margin by product, marketing and overheads as a share of gross profit, and stock in weeks of cover, updated daily from your Shopify, ad and finance data. Don't wait for the year-end accounts to find out.
Key takeaways
- Allbirds' gross margin fell from 52.9% to 43.5% in 2022 and never got back above 43%, while selling, general and administrative costs rose from $122.2m to $174.0m as revenue fell.
- Allbirds sold its shoe business for a headline $39m in 2026, about 1% of its first-day market value, then renamed the listed company Smartbird, an AI infrastructure company.
- Casper lost $16.64 on every $100 of revenue in 2020 despite a 51.1% gross margin; advertising alone took 57% of gross profit.
- Peloton's inventory quadrupled to $1.1bn in two years, a year before a $2.8bn loss; it reached its first annual profit in fiscal 2026 on revenue 39% below its peak.
- The 3 numbers to check monthly: gross margin by product, marketing and overheads as a share of gross profit, and stock in weeks of cover.
Frequently asked questions
What happened to Allbirds?
Allbirds' gross margin fell from 52.9% to 43.5% in 2022, its selling, general and administrative costs kept rising while sales fell, and cash dropped from $288.6m in 2021 to $26.7m at the end of 2025. It sold its footwear business to an affiliate of American Exchange Group for a headline $39m, closing in June 2026, and the listed company renamed itself Smartbird and became an AI infrastructure company.
Is Allbirds going out of business?
The Allbirds shoe brand is still trading, now owned by an affiliate of American Exchange Group, which bought the brand, IP and inventory in 2026. The original listed company, Allbirds, Inc., is now Smartbird, Inc. and no longer sells shoes. Allbirds closed its full-price US stores by February 2026.
What went wrong at Allbirds?
Its gross margin fell 9.4 points in one year because of discontinued apparel, promotions, higher logistics costs and inventory write-downs, while overheads from a fast store build-out kept growing. Its marketing spend stayed around 20% of revenue, so it wasn't an advertising problem. It was a margin and overheads problem.
What happened to Casper mattresses?
Casper lost money every year it was public. In 2020 it lost $16.64 on every $100 of revenue, even with a 51.1% gross margin, because sales and marketing plus general and administrative costs were bigger than its gross profit. Durational Capital took it private for about $286m in January 2022, and Carpenter Co. bought it in October 2024.
What happened to Peloton?
Peloton's inventory quadrupled to $1.1bn as it bet on pandemic demand, then demand fell and it lost $2.8bn in fiscal 2022. It cut sales and marketing, cleared inventory and rebuilt gross margin, and in fiscal 2026 it reported the first full year of operating and net income in its history, on revenue 39% below its peak.
Sources
- Allbirds / Smartbird, Inc. (CIK 1653909), 10-K XBRL financial data
- Casper Sleep Inc. (CIK 1598674), 10-K XBRL financial data
- Peloton Interactive (CIK 1639825), 10-K XBRL financial data
- Allbirds Q4 and full-year 2022 results (8-K)
- Allbirds 8-K: sale of the footwear business, June 2026
- Peloton fiscal 2022 10-K
- Peloton Q4 and fiscal 2026 results
- TechCrunch: Allbirds is selling for $39 million (30 March 2026)
- CNBC: Allbirds renames itself Smartbird (17 June 2026)
- CNBC: Peloton pauses production (20 January 2022)
- Retail Dive: Casper IPO valuation (February 2020)
- Business Wire: Durational completes acquisition of Casper (24 January 2022)
- Retail Dive: Carpenter acquires Casper (October 2024)
- FashionUnited: Allbirds to close remaining full-price US stores (January 2026)
