Dive Brief:
- Noting the increasing importance of stores to its business, Warby Parker co-founder and Co-CEO Neil Blumenthal said the brand opened 13 new stores in the second quarter, putting it on track to open 40 new stores in 2023.
- It came as the DTC eyewear brand reported second-quarter net revenue increased 11% year over year to $166.1 million, according to a company press release. The brand’s losses narrowed, reporting an operating loss of $18.2 million and a net loss of $15.9 million.
- Active customers grew 1.2% year over year to about 2.3 million, which the company “believe[s] will be our low point for the year reflecting the fourth and final quarter of our marketing spend pullback,” Blumenthal told analysts on a call Wednesday morning. “We're already seeing positive momentum in active customer growth in Q3 to-date and expect to report increasing active customer growth over the course of the year.”
Dive Insight:
Like many direct-to-consumer brands that started by selling goods online to consumers, Warby Parker is increasingly finding value in brick and mortar.
And the eyewear brand, which ended Q2 with 217 stores, continues to expand its footprint even as other digitally native brands, like Allbirds, pull back on store opening plans.
Co-founder and co-CEO Dave Gilboa said on Wednesday that the company believes it can open at least 900 stores in the U.S. over the long term.
Warby Parker’s retail channel saw revenue increase 21.5% year over year in Q2, largely driven by the addition of 39 net new stores since the second quarter of 2022, while e-commerce revenue fell 5.3%.
Within its stores, Warby Parker has been focused on expanding its eye exam offering, which is now available in 169 locations, or nearly 80% of its store fleet. The eye exams, Gilboa said, are leading to an uptick in average revenue per customer and a higher penetration of more expensive progressive lenses.
But even as average revenue per customer increases, the stores aren’t necessarily leading to an increase in active customers. For many DTC brands, stores serve as an additional marketing vehicle, which can help alleviate the costs associated with acquiring customers primarily online. Warby Parker, which has pulled back on its marketing spend over the past 12 months, has not seen a notable increase in active customers despite opening 13 new stores in the second quarter. While much of the slowdown in customer growth is related to its online channels, “stores should also act as a recruiting sergeant for all channels and be helping to generate a much higher rate of increase,” GlobalData Managing Director Neil Saunders said in emailed comments.
“This means the business is becoming less productive, and this is likely decelerating the speed at which Warby Parker can attain net profitability. This is especially so as even more stores will be added over the course of this year,” he said.
