An overview of the atmosphere at Warby Parker’s store in The Standard, Hollywood
Michael Buckner | Warby Parker | beautiful pictures
Warby Parker Thursday joined a slew of retailers that slashed their financial forecasts for the year, even as they reported narrower-than-expected losses for its fiscal second quarter and sales in line with analyst estimates.
Chief Financial Officer Steve Miller said the eyeglasses maker was facing an “uncertain macroeconomic environment.”
“We are taking a disciplined approach to cost management that sets us up for sustainable growth and profitability,” he said in a statement.
A spokesperson confirmed to CNBC that as part of a cost-cutting effort, Warby has cut 63 jobs, representing about 2% of all employees and 15% of company positions.
In recent weeks, retailers include Walmart, Best buy, Distance and Allbirds reduced sales or profit expectations as it began to see consumers cut back on spending on discretionary items, such as clothing or electronics, amid soaring inflation. However, at the same time, premium brands like Ralph Lauren and owner Versace Capri Holdings says that people are still splurging on expensive shoes and handbags.
At Warby, customer demand began to decline in the second half of May, executives told analysts during a conference call Thursday morning. The company also said it has reduced marketing spend as fewer people visit its brick-and-mortar stores.
However, the retailer’s shares rallied on Thursday, closing up more than 19%. Investors applauded the cost-cutting effort as Warby tries to turn a profit while remaining in growth mode.
Here’s how Warby did in the fiscal second quarter ending June 30 compared to what analysts had predicted, based on Refinitiv estimates:
- Loss per share: 1 cent adjusted vs. 2 cents expected
- Revenue: $149.6 million vs. $149.5 million expected
Warby’s losses for the three-month period ended June 30 increased to $32.2 million, or 28 cents per share, from a loss of $18.8 million, or 35 cents per share, a year earlier. Excluding one-time items, it takes a penny a share.
Sales rose about 14% to $149.6 million from $131.6 million a year earlier, driven in part by loyal customers spending more money than average.
The company said its number of active customers increased by 8.7% to 2.26 million. It defines these customers as those who have purchased at least one product or service from Warby during the preceding 12 month period.
Neil Saunders, managing director of GlobalData Retail, said: “Despite the disappointing losses, they are somewhat understandable given the company is still in expansion mode.”
However, Saunders said, the main concern is that the money spent needs to translate into higher returns.
For fiscal year 2022, Warby is currently calling for revenue between $584 million and $595 million, down from $650 million to $660 million previously.
It shows its adjusted EBITDA to about $22 million to $26 million, including a $7.5 million loss related to pandemic-related disruption to its business. .
In the most recent quarter, Warby said it opened nine stores, bringing its total number of physical locations to 178. The retailer, which was founded online in 2010, has ramped up investments in real estate to further its expansion. Reach more customers and market your brand. It hopes to one day grow to more than 900 stores.
In addition to his glasses, Warby also sells contact lenses and offers eye exams in his stores. The company has said that people who buy contacts from Warby will end up spending more than people who just buy its eyeglasses.
Including Thursday’s gains, Warby stock is down more than 60% so far.
