Dive Brief:
- Warby Parker on Thursday reported net revenue increased 16.3% year over year to $200 million. Active customers grew 3.2% to 2.36 million, while average revenue per customer was up 9.6% to $296.
- The eyewear brand narrowed its losses during the quarter: Operating loss was down almost 60% from the year-ago period to $5.1 million and net loss fell more than 75% to $2.7 million, according to a company press release.
- As a result of its first-quarter performance, the company is raising its full-year outlook, now expecting net revenue between $753 million and $761 million, up 12.5% to 13.5% year over year, compared to prior guidance of $748 million to $758 million. Warby Parker also projects adjusted EBITDA margin of 9.2%, up from its prior outlook of 8.9%.
Dive Insight:
As the eyewear brand grows its sales and narrows its losses, Warby Parker is pushing forward with its brick-and-mortar expansion.
Over the past 12 months, the company has opened 41 net new stores — with eight of those opening in the first quarter — pushing its footprint to 245 locations. The brand reiterated its commitment to opening 40 stores this year alone as the brand continues to see potential to eventually operate more than 900 locations.
The company said that as its store footprint grew 20% from the year-ago period, its retail revenue increased 24.4% year over year; e-commerce revenue increased 1.8%. Retail represented 69% of its overall business during the first quarter, up from 64% in the first quarter of 2023, Chief Financial Officer Steve Miller said on a call with analysts Thursday. And to help drive traffic to its stores and attract new customers, the company in April ran a promotion to give out free solar eclipse glasses, which resulted in its highest retail traffic week ever, according to co-founder and co-CEO Dave Gilboa.
An area of growth for the company is its eye exam business.
“Today the majority of our customers still get their eye exams elsewhere and bring their prescriptions to Warby Parker, highlighting the opportunity in front of us,” Gilboa said.
Over the past year, Warby Parker added nearly 50 net new eye exam locations, bringing its fleet to 204 stores, or over 80% of its total footprint.
“We find that exam stores drive higher sales than nonexam stores, and industrywide, approximately 75% of prescription glasses are purchased at the same location an eye exam takes place,” co-founder and co-CEO Neil Blumenthal added. “As we've increased the number of stores offering eye exams, we've seen strong growth in average revenue per customer driven by eye exam revenue, a higher penetration of progressive lenses and contact lenses.”
But attracting customers from other optical retailers remains a challenge for Warby Parker even as it invests more in the exam side of its business, according to GlobalData Managing Director Neil Saunders.
“The problem is that, for many, optical testing and frame purchasing are interlinked and there is a habitual nature in returning to the same store to have eye exams. Warby Parker needs to find a way to break this cycle via creative marketing which will, in turn, help it to boost customer numbers,” he said in emailed comments, noting that as the company continues to build out its store footprint, it needs to promote “its expertise in eye care much harder.”
“We think the company has a lot of growth levers to pull and has a continued opportunity to disrupt the optical market. At the same time, it is moving much closer to becoming profitable at net income level which will provide a boost to confidence in the proposition and business model,” Saunders said.
