Eyeglass brand Warby Parker Inc. will keep offering $95 eyeglasses and continue opening stores, co-CEO Dave Gilboa said at a retail industry event in Las Vegas.
Launched as an online-only retailer in 2010, Warby Parker (No. 315 in the 2021 Digital Commerce 360 Top 1000) ended 2021 with 161 stores, including 35 that opened that year. It plans to grow to more than 200 in 2022.
Speaking at the Shoptalk conference in Las Vegas on Tuesday, Gilboa said the retailer has no plans to raise the price of its entry-level eyeglasses, which it has sold at the same price since launching in 2010. Even though U.S. inflation hit a 40-year high of 7.9% in February, Warby Parker’s control over its supply chain will allow it to hold the line on prices.
“We started Warby Parker because we were frustrated consumers — frustrated by the high price of glasses,” Gilboa said.
So, the brand wants to continue competing on price and has invested in vertical integration to help it maintain control of its costs and manufacturing process.
A recent example of its commitment to vertical integration was the brand’s opening of a 69,000-square-foot optical lab — its second — in Las Vegas. The retailer also operates a lab in Sloatsburg, New York.
Gilboa said other factors help Warby Parker keep selling $95 eyeglasses. They include long-term contracts with shipping carriers — which insulated it from rising fuel prices and fuel-related surcharges — and sales of higher-priced products such as progressive lenses.
Gilboa said the ability to make glasses with complicated prescriptions allows Warby Parker to serve all demographics. He said customers over 45 — those most likely to need reading glasses or progressive lenses — are the retailer’s fastest-growing demographic. In 2019, the brand also started selling contact lenses.
Values-based marketing
In addition to keeping prices low, Gilboa said he wants to keep connecting with consumers by living up to a set of values. The retailer, organized as a public benefit corporation, announced earlier this month that it distributed more than 10 million pairs of eyeglasses via its Buy a Pair, Give a Pair program.
Through its program, the retailer works with partners worldwide to ensure it distributes a pair of glasses to someone in need for every pair of Warby Parker glasses purchased.
“We think offering glasses for $95 makes them much more accessible. But there are billions of people around the globe who can’t afford $95 glasses,” Gilboa said. “And so, we try to — when possible — to go into those local communities and understand the best way to solve problems for them, whether that’s in rural Guatemala or in our backyard in New York.”
The retailer also operates the Warby Parker Impact Foundation, a public charity dedicated to helping people overcome the barriers to vision care.
As an example of how it tries to make its products more sustainable, Gilboa said, Warby Parker developed packaging for its private-label Scout contact lens brand that uses almost 80% less packaging than a traditional blister pack.
A public benefit corporation is formed to generate social and public good, and to operate responsibly and sustainably.
Opening more stores
Gilboa said the stores allow Warby Parker to offer services, including in-person eye exams. That’s important, he said, because U.S. consumers buy about 70% of their eyeglasses at the place where they get an exam from an optometrist.
While stores can generate new customers, they also introduce risks. Gilboa said sales at its stores took a hit during the pandemic, but he is optimistic about the long-term value of opening physical locations.
“We are expecting that at the end of this year, all of our stores across the country will be back at pre-pandemic levels,” Gilboa said.
In a March 17 conference call with analysts, Gilboa said the omicron variant of the virus that causes COVID-19 resulted in nearly $5 million of lost sales in Q4 and lost sales would total more than $15 million in Q1 — stemming from fewer people shopping Warby Parker stores.
Telemedicine investments
Even while opening stores, Warby Parker continues to invest in telemedicine, Gilboa said. Last year, it rolled out its Virtual Vision Test app that allows users to renew their eyeglasses or contacts prescription in 10 minutes.
A licensed doctor evaluates each exam and patients get results within 48 hours. The service costs $15, but the customer pays only if the current prescription is renewable.
Financial results
For the fiscal year ended Dec. 31, 2021, Warby Parker reported a net loss of $144.3 million, 158% more than the $55.9 million loss for the previous year. In Q4 alone, the loss was $44.9 million, a more than ten-fold increase from the compatible quarter a year earlier.
The primary reason for the increased loss was a sharp increase in selling, general and administrative expenses (SG&A), which increased $51.9 million compared with 2020, year, reaching $122.1 million. Warby Parker reported that the primary causes of the SG&A increase were $31.6 million in stock-based compensation expense and related employer payroll taxes.
In 2022, Warby Parker expects net revenue of $650 million to $660 million, representing growth of 20% to 22% versus the full year of 2021. This outlook includes the impact of approximately $15 million in lost sales, or 3 percentage points of growth, related to the disruption omicron caused at the beginning of the year.
On the plus side, the eyeglasses brand reported that total 2021 revenue was $540.8 million, up 37.4% from $393.7 million a year earlier.
The retailer also reported the following for the year ended Dec. 31:
- Active customers increased 390,000, or 21.5%, to 2.2 million.
- Gross profit dollars increased 37.0% to $317.7 million.
- Q4’s average revenue per customer increased 13% year over year to $246.
Percentage changes may not align exactly with dollar figures due to rounding.
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