Warby Parker narrows Q4 net loss amid economic uncertainty

Dive Brief:

While navigating a “depressed consumer environment,” Warby Parker reported fourth-quarter revenue increased 10.2% year over year to $146.5 million, according to a Tuesday press release. Gross margin declined to 55.1% from 57.4% in 2021, which was caused mostly by an increase in salary and benefit expenses for optometrists as the company expands eye exam services.
The direct-to-consumer eyewear company also saw its net loss decrease by about 56% compared to the same period last year, mainly due to a decrease in selling, general and administrative expenses related to lower marketing costs.
For the full year, Warby parker reported net revenue increased 10.6% to $598.1 million and net loss decreased 23.5% to $110.4 million. Looking forward, the company projects 2023 revenue will increase by 8% to 10% year over year to be between $645 million to $660 million.

Dive Insight:

For Warby Parker, profitability is still in focus despite an uncertain economic outlook.

“As we enter a new year, our team continues to focus on aspects of our business within our control, taking decisive action, and delivering on our value proposition while positioning our brand to continue to outpace industry growth,” co-founder and co-CEO Dave Gilboa said in a statement. “We’re committed to expanding profitability while making strategic investments in areas of the business that will drive brand awareness and create even more value for our millions of customers.”

The company grew its brick-and-mortar presence in 2022, reaching 200 locations. It plans to open another 40 stores in 2023, with most of them being in suburban areas, co-CEO Neil Blumenthal said during an earnings call.

The company's e-commerce three-year compound annual growth rate in Q4 was down 1.6% year over year, according to Blumenthal. Contributing to that change included the channel’s sensitivity to changes in marketing spend, a broader consumer shift back to shopping in stores and the impact of new store openings on local online sales.

The company’s push for physical expansion may impact more immediate numbers, but plays into a long-term strategy, according to GlobalData Managing Director Neil Saunders.

“Looking ahead, the new fiscal should be a reasonable one for Warby Parker. However, we expect revenue growth to remain around the current level,” Saunders said in emailed comments. “With store and service expansion continuing, this will act as a drag on profits. However, we maintain our view that the company is playing a long-term game and has an eventual path to profitability.”

In August, the brand cut 63 corporate employees — 2% of its total workforce and 15% of corporate roles — due to changing consumer behaviors. The cuts did not impact store or customer-facing positions. In the same month, Warby Parker reported its Q2 net loss widened and it cut guidance for the year, expecting revenue to be between $584 million to $595 million.