Warby Parker Inc. reported that revenue increased for the fourth quarter of 2022 and for the year as it focused on in-store experiences and more expensive products versus e-commerce.
Total net sales for the quarter ended December 31, 2022 grew 10.2% year-on-year to $146.5 million and $13.6 million, respectively Increase. Net loss decreased by $25.7 million to $20.3 million.
Sales had also increased throughout the year. The eyewear retailer reported total net sales of $598.1 million for the year, an increase of 10.6%. Up from 2021. Net loss for the year decreased 23.5% to $110.4 million.
Warby Parker is #317 in the 2022 Digital Commerce 360 Top 1000.
Ecommerce is a relatively small part of the business
Warby Parker started out as an online-only eyewear retailer, but today physical stores make up a larger part of the business. In 2022, customers were returning to stores after a shift to online shopping during the COVID-19 pandemic, co-CEO David Gilboa told investors on Feb. 28. E-commerce accounts for 37% of business compared to now 41% in Q4 2021 and 34% in Q4 2019.
The retailer opened its 200th store in 2022, including 10 new stores in the fourth quarter. Warby Parker plans to open an additional 40 stores in 2023, the company said.
E-commerce sales are more sensitive to marketing spend than in-store sales, Gilboa said, so they’ve felt more of an impact from marketing budget cuts. Consumers are also returning to physical stores across the industry, so Warby Parker’s locations have benefited from this trend. After all, every new store opening immediately increases sales and attracts customers, while online sales in the local market plummet, Gilboa said.
Warby Parker steps up eye exams
Warby Parker is largely known as an eyewear supplier, but the retailer is shifting to offering more services, including eye exams. 150 of the company’s 200 stores offer eye exams, including all 10 that opened in the fourth quarter.
Eye exams are good for revenue, Gilboa said. Eye exam revenue increased 87% in 2022 versus 2021. Nearly 80% of eyewear is purchased at the same location as an eye exam, Gilboa said, so Warby Parker sees offering eye exams as a driver of eyewear sales. More older customers, who are more likely to buy more expensive progressive lenses, are also customers for eye exams. As a result, average revenue per user rose to an all-time high of $263 in the fourth quarter.
turn to more expensive products
Warby Parker also plans to increase sales by selling more expensive products.
Most of the glasses the retailer sells are $95, but there will be pricier options in 2023, too. Warby Parker will launch 20 collections, including eyewear priced at $145, $175 and $195, said co-CEO Neil Blumenthal.
Contact lenses, which are typically cheaper than glasses, accounted for 7% of its business in 2022, Blumenthal told investors. That was an 84% increase from 2021, but still a relatively small portion of the business compared to about 20% industry-wide. The company hopes to expand that business in 2023, as contact lens customers are among its “highest value” buyers, Blumenthal said, due to the repetitive nature of the purchase and the tendency of contact lens wearers to also buy eyeglasses.
Warby Parker published forecast for 2023:
- net sales of $645 to $660 million, an 8% to 10% increase from 2022 net sales of $598.1 million.
- Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). of approximately $51.5 million and an adjusted EBITDA margin of approximately 7.9%.
- 40 new openings will bring the total to 240 by the end of 2023.
For the fourth quarter ended December 31, Warby Parker reported:
- income from $146.5 million, an increase of $13.6 million over sales of $132.9 million in 2021.
- A net loss of $20.3 million, down $25.7 million from the reported loss of $45.9 million in Q4 2021.
- The number of active customers increased by 3.6% to 2.28 million.
- Average revenue per user increased 6.9% year over year to $263.
For the full year ended December 31, Warby Parker reported:
- Net sales of $598.1 million, a 10.6% increase over 2021 sales.
- Net loss decreased $33.9 million to $110.4 million.
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