Warby Parker Inc. (No. 315 in the 2021 Digital Commerce 360 Top 1000) reported significant revenue year-over-year increases for the quarter and six months ended June 30. However, its losses grew even faster.
The vision care merchant reported revenue for the quarter rose 13.7%, to $149.6 million, from $131.6 million in Q2 2021. For the six months ended June 30, revenue was $302.8 million, up 11.9% from $207.5 million for the comparable period in 2021.
The net loss for the quarter ended June 30 was $32.2 million. That was up more than three-fold from $10.3 million a year earlier. For the six months, Warby Parker’s net loss was $66.3 million. The loss was more than triple the loss of $20.4 million during the first half of 2021.
While the quarter started strong, Warby Parker saw a shift in its productivity and overall demand starting in late May, Dave Gilboa, co-founder and co-CEO, told analysts during an Aug. 11 conference call.
“We believe this weakness in demand is industry-wide driven by lingering pandemic effects, inflation and shift in how consumers are spending their money,” Gilboa said, according to a Seeking Alpha transcript.
Despite the macroeconomic trends, the average revenue per customer grew 8.2% and reached a new high of $234 in Q2. The retailer also reported an 8.7% year-over-year increase in active customers to 2.26 million.
During the quarter, Warby Parker also streamlined its corporate team. It eliminated 63 roles, roughly 15% of its corporate headcount.
Lower margins, higher costs
The retailer attributed the second-quarter results to greater penetration of contact lens sales — which have lower profit margins than eyeglasses — and rising costs. The retailer says the increased contact lens sales contributed to a decline in its gross margin to 57.7%, down from 59.3% in Q2 2021.
Other factors affecting second-quarter results included store-count growth and increased salary and benefit costs associated with optometrists as the retailer hired them to boost its eye-exam business. Warby Parker says selling higher-margin progressive lenses and savings gleaned from using its in-house optical laboratory network partially offset those costs.
Warby Parker says its selling, general and administrative expenses increased from $31.6 million to $118.4 million. Reasons included an increase of $16.2 million in stock-based compensation costs and payroll taxes. Also contributing was a $3.3 million stock donation to the Warby Parker Impact Foundation.
Warby Parker offers revised guidance
Warby Parker is revising its 2022 full-year outlook to the following:
- Net revenue of $584 million to $595 million, representing 8% to 10% growth versus the full year 2021. The retailer’s prior 2022 guidance projected revenue growth of 20% to 22% over 2021, or $650 million to $660 million.
- Adjusted earnings before interest, taxes, and depreciation (EBITDA) margin of approximately 3.8% to 4.4%. Adjusted EBITDA of about $22 million to $26 million, which includes an estimated impact of about $7.5 million related to the pandemic.
- 40 new store openings bringing the total store count to 201.
During the quarter ended June 30, Warby Parker reported:
- Revenue of $149.6 million, up 13.7%, compared to $131.6 million in the second quarter of 2021.
- A net loss of $32.2 million, up more than three-fold from $10.3 million a year earlier.
- An 8.7% year-over-year increase to 2.26 million active customers.
- An 8.2% increase in average revenue per customer increased to $254.
- The opening of nine new stores during the quarter, ending the quarter with 178 stores.
For the six months ended June 30, Warby Parker reported:
- Revenue of $302.8 million, up 11.9% from $207.5 million for the comparable period in 2021.
- A net loss of $66.3 million, more than triple the loss of $20.4 million during the first half of 2021.
Percentage changes may not align exactly with dollar figures due to rounding.
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