• by Sarah Mahoney  @mahoney_sarah, December 2, 2021

Skechers is the latest shoe brand stepping deeper toward sustainability. It's kicking off a multiyear partnership with the Nature Conservancy, along with a collection of sustainable shoes. But recent financial stumbles from Allbirds, the popular sustainable D2C brand, show just how crowded and complex the green-sneaker universe has become.

Shoe companies have been struggling for sustainability for years, with some companies making a considerable impact in changed manufacturing processes. What's shifting is that younger consumers demand more transparency and sustainability, resulting in a flood of innovation.

Gen Z is snapping up more sustainable shoes everywhere, ranging from Reebok's Cotton + Corn, Nike Space Hippie, Everlane's Tread, Converse's + Cotton, Converse's Renew, as well as smaller brands like Rothy's and Cariuma.

They're also buying more used shoes, with resale site StockX recently reporting a $3.8 billion valuation.

The Los Angeles-based Skechers says the new collection, Our Planet Matters, is made from recycled cotton, polyester and rubber. In a nod to the growing call for transparency, the company mentions the recycled contents of each style on packaging and in hangtags.

There's no denying it's a good time to be in the sneaker business. The NPD Group reports that footwear sales in the U.S. rose 28% in the first nine months of the year, with performance and outdoor products leading the surge. That's an 8% gain from 2019, and many industry observers believe Americans will stay committed to health and fitness goals developed during the pandemic.

The demand for sustainable sneaks is clear, too. Allbirds, which recently made its public offering, just announced third-quarter sales jumped 33% to $63 million, on top of a 40% gain in the prior-year quarter.

While those sales gains are bigger than analysts expected, so were the company's losses, which rose to $13.8 million, nearly double the $7 million loss of the year-ago period.

Many experts are bullish on Allbird's ability to keep growing. "Allbirds is a natural materials innovation leader and pioneer of the sustainability revolution in footwear and apparel," writes Stifel analyst Jim Duffy, who is recommending the stock. "The brand's ethos aligns with consumer megatrends for appreciation of sustainability and casualization of fashion."

A recent Stifel survey, tapping more than 11,000 consumers in six countries, "shows broad market agreement endorsing this view."

Others, while agreeing that Allbirds has strong appeal and multiyear growth possibilities, are less enthusiastic.

"We see Allbirds as a global leader in sustainability within a favorable casual, health/wellness, ecommerce and sportswear market," writes Matthew Boss, who follows the company for JP Morgan.

Boss likes Allbirds’ differentiated, minimalist appeal, innovative materials and strong omnichannel approach.

But because the brand has yet to achieve profitability and is dependent on new stores, product launches and brand awareness growth, he's rating the stock as neutral.