Warby Parker may have started as a digital brand, but the latest results prove its reinvention as an old-school retailer is paying off.
For the first quarter, the New York-based company says net revenue climbed 12.2% to $172 million, compared with $153.2 million in the first quarter of last year. Warby Parker trimmed its losses to $10.8 million, versus the $34.1 million it lost in the comparable period. In part, that’s due to a 35% reduction in marketing spending.
Both sales and profits exceeded Wall Street forecasts. Sales have “been encouragingly stable despite a choppy consumer spending backdrop and a pullback in marketing, and management appears to be progressing towards profitability targets,” writes Mark Altschwager, an analyst who follows the company for Baird. He continues to rate it as likely to outperform its peers.
The company says its gains are especially impressive compared to the stagnant $76 billion industry, which the Vision Council says grew just 0.5% in 2022 and is expected to rise by just 1% this year.
“While the optical industry continues to face demand pressures and our growth has been impacted by our pullback in marketing spend, we are capturing market share gains through our focus on the customer experience, product innovation, and store expansion,” said Neil Blumenthal, co-founder and co-chief executive, in a call that was webcast for investors. “The combination of double-digit revenue growth, along with the actions we took midway through last year to right-size our corporate cost structure and a more efficient use of marketing dollars, fueled significant leverage and a sizable improvement.”
A significant shift has been making sure more of its 204 stores can offer eye exams. At the end of this quarter, 155 stores now have that ability, compared to just 114 a year ago.
Stores that offer eye exams have higher average revenue per customer, “driven by both eye exam revenue and a higher penetration of progressive lenses,” Blumenthal said. And progressive lenses now account for about 22% of sales.
In proof that its bundling offers are gaining favor, average customers spending per year rose 8.4% to $270. On average, people replace their glasses once every 2.2 years.
The company’s research finds that people who haven’t selected the brand for vision care say it’s either because they don’t live near a store, haven’t been able to get an eye exam, or both. And since about 80% of people buy their specs at the same place they get their vision checked, that’s important.
After opening 40 stores last year, Warby Parker intends to add 40 more, opening six in the first quarter. “Longer term, we believe we can open 900-plus stores in the U.S.,” says Dave Gilboa, the company’s other co-founder and co-chief executive officer.
For the coming year, it says it anticipates sales of between $645 to $660 million, a gain of 8% to 10%.