Has the latest sneaker bubble officially burst?

0:02Mary O'Sullivan:If you're running creator and affiliate programs across separate platforms for every channel you sell on, there's a better way. Levanta lets brands and agencies run one unified program across Amazon, Shopify, and Walmart from discovery to payout in a single platform. Find the right creators fast, activate partnerships and clicks, and see exactly what's driving revenue across every channel. And right now, when you book a demo, you'll get a$100 gift card of your choice. Stop paying for three tools to do one job. Head to levonta.io slash podcast to book your demo and claim your gift card.

0:58Drew Austin:Welcome to the Modern Retail Podcast, our show that covers the ways the retail industry is changing and modernizing. I am senior reporter Gabby Barco. Last week, Allbirds sold for$39 million to American Exchange Group, a sharp drop from its valuation of$4 billion in 2021. Allbirds is just one example of a shoe brand that stumbled in its quest to gain market share in a busy sneaker market. Its trajectory is indicative of how fierce the competition has become as new and legacy players vie for consumers' dollars. On the heels of that news, I thought this would be a good time to check in on the larger state of sneakers.

1:44Drew Austin:I'm joined by senior reporter Julia Waldo, who's going to break down how all the different companies in the space are faring in 2026. Julia, welcome back to the show. Thank you.

1:58Mary O'Sullivan:Glad to be here. Thanks for having me.

2:00Drew Austin:Yeah, I wanted you to come on to talk about the sneaker space in particular, because it is a category that you cover pretty heavily for modern retail. And I feel like you followed these brands, you know, for the last few years as each of them have either exploded or kind of fallen from grace in some cases. So why don't you tell us a little bit about your theory on why the sneaker bubble, so to speak, has burst, at least the latest one we've been in after almost a decade of growth.

2:33Mary O'Sullivan:Yeah, it's an interesting topic. So basically, what we saw is a huge amount of growth in the sneaker market in the early phase of the pandemic. A lot of people were stuck at home, but for their limited time in which they could be outside, they wanted to take up running, take up intense jogging, quick walking. So a lot of folks started buying sneakers, buying running shoes specifically. And those brands really started to take off. Now, that was a time of a lot of growth for some of these legacy players like Nike and like Adidas, you know, folks that had been in the running and sneaker game for a long time.

3:12Mary O'Sullivan:But also during that period, we saw this rise of, you know, newer companies that came to really eat their lunch, so to speak, such as, you know, Hoka and On. And, you know, those two kind of groups have really been battling for consumers' attention for the past few years. And now, you know, six years out from the pandemic, we're kind of seeing a more leveling out of some of those dynamics. So it's an interesting time to, you know, look at what's actually happening in the sneaker market now and which companies are actually coming forward.

3:46Drew Austin:Yeah, before we get into all of that, I do want to talk a little bit about the Alberts fire sale. I guess we can call it because this is something that we have tracked in the last few years. We've seen the losses pile up for the company after they went public in 2021. So yeah, do you want to just give us an idea of just how badly things got that, you know, they were just down to sell for, in this case, a fraction of their original valuation?

4:16Mary O'Sullivan:Yeah, I mean, Allbirds was once like the it sneaker. I feel like it was on so many people's feet when you walked down the street. Also, like when you walked in the office, it was just a huge shoe. that a lot of people in the late 2010s were really excited about, were wearing in increasing numbers, very commonly associated with Silicon Valley tech bros and the hype and the bust and the boom of all of that era. And with Allbirds, they have struggled for quite a long time. As you said, they went public in 2021 and their valuation at the time was$4 billion, which is really staggering. But, you know, they had an issue with sales in the subsequent years.

5:00Mary O'Sullivan:And last year, their sales fell nearly 20%. And they also reported$77 million in net losses. And one of their issues was, frankly, they just kind of tried to do too much too quickly. Like they had a group of customers who were really excited about their core wool runners. And Allbirds kind of tried to innovate too much from that. But, you know, there's this idea when you talk to a lot of analysts that Auburn's kind of left their core customer behind in trying to make too many other shoe models. And they tried to make apparel at one point and that didn't go very well. And, you know, in terms of opening retail stores, like they went really, you know, quickly into that and, you know, ended up actually closing nearly all of its stores.

5:45Mary O'Sullivan:Now they only have a couple outlets open. So I think it was a question of kind of pacing and timing and biting off more than you can chew, I would say.

5:53Drew Austin:Yeah, I also think a big theme that we're probably going to come back to in this episode is that sneaker trends, you know, of course, there's like the running segment, there's the lifestyle segment. But one thing is for sure is that you have to be able to adapt constantly to macro and micro trends. I think, you know, frankly, Allbirds was never like the hip, cool sneaker on the block, right? They were always seen as sort of like very technical, focused on sustainability, a little dorky, I'll say it. But, you know, they were, yeah, they weren't like the cool, even like the dad style shoe, right?

6:36Drew Austin:That kind of dominated the last decade. They were never really playing in that space. And I think that's a good segue to start talking about how disruptors like the Ons of the world and the Hokas, how did they infiltrate and were able to capitalize on a lot of these different types of trends that customers are looking for, especially the younger people?

6:58Mary O'Sullivan:Yeah, Onn and Hoka really took advantage of the larger interest in running. And their products focus a lot on, you know, performance running. They're very technical. You know, these shoes, they have a pretty large stack at the bottom. And so there's this idea that they really help propel you forward as you're a runner, that they also provide a lot of support, that they cradle your foot in all the right places. You know, these shoes were really shown to be popular in the early years of the pandemic with runners and with people who are getting into running. And I think that they just really managed to tap into that market and really own the market very well.

7:34Mary O'Sullivan:And they also became really associated with, you know, run clubs. That was something that has really taken off. You know, they had their own running events, they've sponsored races, you know, things like that, I think have really helped build their profile for sure.

7:50Drew Austin:Yeah, but I think even these two companies that were sort of like the epitome of hyper growth during the space are actually also slowing down, which to me is super interesting because they seemed almost untouchable for a little bit, you know, as they were taking away a lot of market share from Nike, Adidas, even New Balance. So what do you think went wrong?

8:13Mary O'Sullivan:Yeah, it's a really good question. And I think that this is something that a lot of analysts and investors are closely watching with, you know, On, for example, they had really good questions. explosive business during the pandemic. And they're still doing well, I will say. But they have dealt with deceleration. Their business in the Americas, for instance, it was up 18 % from 2024 to 2025 compared to 27 % from 2023 to 2024. So while they're still growing, they're growing at a slower pace. Hoka is also having a very similar problem. Their most recent quarter, their net sales were up 18.5%. Again, that's good.

8:56Mary O'Sullivan:But that's a far cry from early 2022, the first quarter of 2022, when their net sales were up 95.5%. So that's really stunning. So these disruptors, they are still disrupting and they're still doing well, but they're kind of coming back down to earth a little bit. And there is so much competition now. customers have so many different shoe brands to choose from that, you know, these players that were really big breakout stars a few years ago, they, you know, they're dealing with challenges now as well. Yeah.

9:29Drew Austin:And I think with that, we'd be remiss if we don't talk about the tariffs of it all that plagued a lot of footwear in 2025. I know this is an area that you covered pretty heavily, Julia, where there's some crazy stat where like the majority of sneakers are made overseas. And so a lot of these brands have had to either increase prices or, you know, have had their margins impacted by rising costs. So would you say that that was just another factor there?

10:02Mary O'Sullivan:100%. Yeah, tariffs have been a huge, huge headache for sneaker brands, all footwear brands, really. But yeah, as you mentioned, there is this crazy stat, this is from the FDRA, that about 99 % of the footwear sold in the U.S. is made abroad, which is huge. And that is, you know, because largely in the U.S. there aren't the manufacturing capabilities to make these shoes, you know, closer to home. So a lot of footwear today is manufactured in places like China and Vietnam, you know, places abroad where when we had these very high tariffs on, you know, products coming from there that immediately really threatened the foundation of a lot of footwear companies.

10:43Mary O'Sullivan:So they had to figure out, okay, do we try to move manufacturing somewhere else where, again, there's still tariffs, but maybe the rate is less? Do we try to adjust our production schedule? Do we up prices for the consumer, you know, to cover costs, even though maybe that could put some consumers off of buying the product. So yeah, tariffs have really been like the main headline as a problem for footwear brands and a lot of these brands that we're talking about in particular.

11:12Drew Austin:And then tell me a little bit about rubber prices. This is something I don't know anything about, so please explain.

11:22Mary O'Sullivan:Yeah, well, right now, a lot of footwear brands are having problems with the price of synthetic rubber, you know, that is made from oil and petroleum. And right now, because of the conflict between the U.S. and Israel and Iran, the closure of the Strait of Hormuz, which is vital to, you know, the carrying of a lot, a lot of barrels of oil every day, that is something that is now another issue for, you know, sneaker brands, which do, you know, largely rely on synthetic rubber as a material. Here's something every brand and agency managing affiliate or creator programs is dealing with right now.

12:06Mary O'Sullivan:You've got one tool for influencers, another for Amazon affiliates, maybe a third for publishers. Separate dashboards, separate partner networks, separate reporting. It's expensive, it's time consuming, and it's holding your team back. Levante is the affiliate and creator platform built for modern e-commerce. You can now run one unified program across Amazon, Shopify, and Walmart, all from a single platform. Discover high-performing creators through an AI-powered marketplace, automate product seeding, set commissions or flat fee partnerships, and measure performance across every channel. The brands that consolidate their creator and affiliate programs into one platform are saving time, cutting costs, and making smarter investment decisions.

12:52Mary O'Sullivan:The ones still stitching together separate tools are falling behind. And right now, when you book a demo, you'll get a$100 gift card of your choice. See what a unified creator and affiliate program looks like. Head to levonta.io slash podcast to book your demo and claim your reward.

13:14Drew Austin:yeah i guess it feels like they can't really catch a break but i do think there is a little bit of a reprieve in that uh you know of course we have to talk about nike and adidas and new balance where you have these incumbents right that have been around for decades that owned a lot of the market are clawing their way back at least gradually is that right yeah i would say it's

13:39Mary O'Sullivan:interesting because, you know, there's this kind of like David Goliath dynamic that has been going on for the past few years where, you know, you have these huge legacy brands like Nike, which is still on top. You know, they still make, you know, about$50 billion a year, roughly, you know, compared to some of these smaller startups that are, again, really quickly gaining ground, but are still very small compared to these behemoths. But I would say, yeah, the legacy players, they're still managing to do pretty well, largely. You know, like New Balance, they grew their sales 19 % last year to$9.2 billion.

14:18Mary O'Sullivan:They really have been able to expand into new wholesale channels and really up their cool factor. And they actually passed Puma recently to be in what's called like the big three, which is with Nike and Adidas. So they're doing really well. But I think, you know, a lot of the brands that are coming on top that are legacy brands specifically are kind of these more like specialty brands or ones that really cater to more technical aspects of the shoes. So like Brooks Running, for instance, they're not a new brand, but they've been doing really, really, really well. And they just had their ninth consecutive year of growth.

14:57Mary O'Sullivan:And so they're a good example, I think, of how, you know, speaking to your consumers' interests and even dealing with their pain points and trying to develop products that speak to those right now, you know, that really helps with loyalty and with sales. Yeah.

15:14Drew Austin:And we hear a lot, like there's an adage of, you know, runners specifically, like are very loyal to a brand. Once you find a shoe you like, you tend to, of course, they wear them out because they're running in them a lot and they just repurchase the same shoe. So in that case, that's pretty good news for these specialty brands. But But then I think if we zoom out a little bit, let's talk like, of course, there's mistakes. There's things that are happening on the company's side. But I want to talk about the cachet, right, where you just gave New Balance as a good example. It's just a cool brand now.

15:53Drew Austin:And I can't quite put my finger on one thing that they're doing right. But they're popular among young people. They're popular with older people, just cross demographics. And sometimes things just kind of come full circle for a company like that, even though they have been around as long as Nike and Adidas, roughly around the same time. So I guess what do you attribute that to, other than just great timing?

16:21Mary O'Sullivan:Yeah, the timing, I think, is really helpful because, you know, with Nike, they are currently in the midst of a turnaround right now in which they are trying to get back into wholesale more after pulling out of wholesale. And like New Balance really took advantage of that opening when Nike pulled back out of wholesale, New Balance went more into wholesale. And like, that's actually been really helpful for the brand. But yeah, as you said, like, they're actually just kind of cool. Like I've, you know, been really interested in like the roster of athletes that they've been able to build, like Shohei Otani and Coco Guff and, you know, people across sports, not just running, even though they are really popular in running, but like, you know, folks in baseball, folks in tennis, like they are really kind of capturing a larger market across sports.

17:08Mary O'Sullivan:and they're doing, you know, interesting new silhouettes, different colorways, like things that are really resonating with young people. And they're doing really well on resale sites too, I will say. And I think that that probably also helps, you know, with some of their cool factor. But it's funny because I feel like, you know, 10 years ago or whatever, they were just known kind of as dad shoe and that was it. And now they're, you know, one of the splashiest brands at the shoe store, you know, among young people. So it's kind of funny.

17:39Drew Austin:Yeah, I mean, I know I wear mine just to run errands and go to the grocery store, but they're comfortable and they're great for walking. So I guess, you know, we all have our own reasons for why we gravitate towards certain brands. And I was a Nike person for a long time, but I can't remember the last pair I bought maybe a few years back.

17:59Mary O'Sullivan:Yeah, but I'll say that Nike, they are trying to, you know, regain some of the momentum that they've been struggling with. You know, Nike is in the midst of this turnaround plan, as we talked about before. You know, they brought back CEO Elliot Hill, longtime executive of the company, at the end of 2024 to really help correct some of these mistakes that Nike had been dealing with for the past few years, including, you know, betting too much on direct sales versus wholesale. And, you know, they are coming back slowly. You know, a lot of the analysts that I've talked to say that, you know, Nike is really dealing with a lot right now.

18:37Mary O'Sullivan:It's a monumental shift in the way that they are thinking about their business and the way that they're even merchandising things. Like they, you know, are no longer grouping things by men's, women, and kids. Like now it's by sport. And so they are really just kind of in the middle of this monumental effort, but it does seem to be working. It's, you know, their Q3 revenues, you know, were flat, not down. I mean, their net income was down year over year. But again, they have like a monumental task ahead of them. And I think it's just probably happening at a slower pace than people would like, but it's still happening.

19:13Drew Austin:Yeah, it's a large ship. It takes a while to ride it, right? Yeah, on that note, I do want to bring us back to the news of the month or of last week, which is the Albert sale, right? It's always really interesting to kind of put two brands up next to each other and be like, but why is this one not doing well? And this one is one on paper. Again, we can't really pinpoint maybe to why that is. But I think something like Allbirds losing its way while Brooks is almost having this like resurgence or momentum at the moment is really interesting because it's never just one thing. But sometimes to me, it just comes down to aesthetic and the need of the customer at any given moment, which unfortunately is very fickle these days.

20:09Drew Austin:I think people change their minds pretty much every day. So what are your thoughts there?

20:14Mary O'Sullivan:Yeah, I totally agree. I think it's a matter of not losing sight of your core customer while also keeping up with new technologies. You know, with Allbirds, that's something that they struggled with. Like a lot of their original customers who liked their original shoe felt like they weren't really being heard by the brand anymore. And Brooks Running, I will say, they have been doing really well with listening to their customers. I spoke with their chief product officer recently. He's the first person to be given the title in this brand. And he was telling me kind of about their philosophy in terms of two of their shoes, which are the Glycerin Max and the Glycerin Flex.

20:50Mary O'Sullivan:And the Glycerin Max, you know, has that really chunky, maximized sole, like the bottom of the shoe that is very popular with a lot of runners. But he was telling me that they were also getting feedback as a brand that some of their consumers didn't like the way that it felt, that they, you know, didn't really feel like there was a good weight distribution on the shoe, particularly in terms of the front and the back. So what they did was they went back and they reworked it. So the front and the back of the shoe, so to speak, can kind of be separate a little bit in terms of movement. It's not all just one chunky piece.