Warby Parker’s latest quarterly sales jumped 14.2%, its strongest revenue gain this year. And the eyewear company raised the forecast for the full year. Both are signs that the company is successfully navigating the problems that have plagued many direct-to-consumer brands as they’ve transitioned to malls and Main Streets.
Revenue climbed to $169.8 million, and the average revenue per customer rose by 10%. The New York-based company says the growth came from 11 new stores, four new collections and solid performance in the contact lens business.
The company’s net loss improved to $17.4 million, compared to $23.8 million in the comparable period last year. However, it says profit margins are under pressure as the retailer struggles to balance the lower profitability of contact lenses, the increased costs of in-store eye exams, and rising occupancy costs.
“Customers continue to find exceptional value in our products, and we are focused on finding more ways to serve them through our growing and highly productive retail footprint, product innovation, and broader holistic vision care services,” says Neil Blumenthal, co-founder and co-chief executive officer in the earnings announcement.
In the quarter, Warby Parker also distributed more than 15 million pairs of glasses through the Buy a Pair, Give a Pair program, which has long been a signature element of the brand.
The company has 227 stores, up from 190 in the prior year. It increased the revenue forecast for the full year and said it is on track for 40 new store openings this year.
Placer.ai, which tracks foot traffic in retail locations, says Warby Parker isn’t just attracting more shoppers. It’s luring in the most likely demographic targets, inspiring multiple visits per month. Compared to a September 1, 2019 baseline, visits during September 2023 were up 97.5%, Placer.ai says. Visits climbed almost 36% in September, with visits-per-venue rising 10%. Those include more affluent shoppers, ultra-wealthy families, educated urbanites, young professionals and baby boomers.
All that is promising, writes Neil Saunders, managing director of GlobalData, as is the new interest created by recently launched collections. But he sees trouble spots, too, as more challenging economic conditions encourage people to delay buying new specs.
“Warby Parker added 1.8% more active customers this quarter, which is better than last quarter’s nadir but remains a long way below the long-run average,” he writes.
The purchase cycle keeps lengthening as the economy has become more challenging. “People are keeping existing glasses for longer,” Saunders says. “As a more fashion-focused player in the market, this hits Warby Parker particularly hard. We do not see this trend disappearing any time soon, so the issue of weak active customer growth is likely to persist.”
Expanding vision testing capacity helps, he says, strengthening sales for both contact and eyeglass frames. “A change in prescription or a need to get new lenses is becoming a relatively more important driver of eyeglass purchasing, as fashion fades as a driver of buying.”
Overall, he’s optimistic. “We believe Warby Parker has a distinct and differentiated proposition, which is relevant to consumers,” Saunders says. “It is one of the few D2C brands we think has longevity and a strong business model.”