Warby Parker Inc. reported sales were up in the fourth quarter of 2022 and for the year as it concentrated on in-store experiences and pricier products over ecommerce.
Total net revenue for the quarter ended Dec. 31 2022 grew 10.2% year over year to $146.5 million, a $13.6 million increase. Net loss decreased by $25.7 million to $20.3 million.
Revenue was up for the whole year too. The glasses retailer reported total net revenue of $598.1 million for the year, a 10.6% increase over 2021. Net loss for the year was down 23.5% to $110.4 million.
Warby Parker is No. 317 in the 2022 Digital Commerce 360 Top 1000.
Ecommerce is a relatively small part of the business
Warby Parker started as an online-only eyeglasses retailer, but today, physical stores make up a larger part of the business. In 2022, customers returned to stores after a shift to online shopping during the COVID-19 pandemic, co-CEO David Gilboa told investors on Feb. 28. Ecommerce now makes up 37% of the business, compared to 41% in Q4 of 2021, and 34% in Q4 of 2019.
The retailer opened its 200th store in 2022, including 10 new stores in the fourth quarter. Warby Parker plans to open another 40 stores in 2023, the company said.
Ecommerce sales are more sensitive to marketing spending than in-stores sales, Gilboa said, so they’ve felt more impact from cutting marketing budgets. Consumers are also going back to physical stores across the industry, so Warby Parker’s locations benefited from the trend. Finally, each new store opening immediately boosts sales and brings in customers while depressing online sales in the local market, Gilboa said.
Warby Parker ramps up eye exams
Warby Parker is largely known as an eyeglasses provider, but the retailer is shifting to offer more services, including eye exams. 150 of the company’s 200 storefronts offer eye exams, including all 10 opened in Q4.
Eye exams are good for revenue, Gilboa said. Revenue from eye exams was up 87% in 2022 over 2021. Nearly 80% of glasses are purchased at the same location as an eye exam, Gilboa said, so Warby Parker views offering exams as a driver of glasses sales. More older customers, who tend to buy pricier progressive lenses, are also eye exam customers. This raised average revenue per customer to its highest ever level of $263 in the fourth quarter.
Pivoting to more expensive products
Warby Parker has plans to grow revenue by selling more expensive products, too.
Most glasses the retailer sells are priced at $95, but in 2023 there will also be pricier options. Warby Parker will launch 20 collections including glasses priced at $145, $175, and $195, co-CEO Neil Blumenthal said.
Contact lenses, typically lower priced than glasses, made up 7% of business in 2022, Blumenthal told investors. That was an 84% increase over 2021, but still a relatively small part of the business compared to about 20% industry wide. The company hopes to expand this business in 2023 because contact lens customers are some of the “highest value” buyers, Blumenthal said, due to the repeat nature of the purchase and tendency of contact users to also buy glasses.
Warby Parker released guidance for 2023:
- Net revenue of $645 to $660 million, an increase of 8% to 10% over 2022’s net revenue of $598.1 million.
- Adjusted earnings before interest, taxes, and depreciation (EBITDA) margin of about $51.5 million, and adjusted EBITDA margin of about 7.9%.
- 40 new store openings will bring the total count to 240 at the end of 2023.
For the fourth quarter ended Dec. 31, Warby Parker reported:
- Revenue of $146.5 million, an increase of $13.6 million over the revenue of $132.9 million in 2021.
- A net loss of $20.3 million, a $25.7 million decrease from the reported loss of $45.9 million in Q4 2021.
- Active customers increased 3.6% to 2.28 million.
- Average revenue per customer increased 6.9% year over year to $263.
For the full fiscal year ended Dec. 31, Warby Parker reported:
- Net revenue of $598.1 million, a 10.6% increase over revenue in 2021.
- Net loss decreased by $33.9 million to $110.4 million.
Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News.
Follow us on LinkedIn, Twitter and Facebook. Be the first to know when Digital Commerce 360 publishes news content.Favorite