Warby Parker shares drop as eyeglass retailer’s losses widen in third quarter

Warby Parker reported Friday that its third-quarter revenue rose 32% from year-ago levels, but its losses widened as costs associated with its recent direct listing and stock-based compensation ate into sales.

The eyeglasses maker’s shares were down about 4% in premarket trading following Warby’s first financial report as a public company. It went public on the New York Stock Exchange via a direct listing on Sept. 29.

Warby’s net loss for the three-month period ended Sept. 30 grew to $91.1 million, or $1.45 per share, compared with a loss of $41.6 million, or 78 cents a share, a year earlier.

The company reported $65 million in stock-based compensation expenses, $23.9 million of costs tied to its direct listing and $7.8 million in expenses from a stock donation to the Warby Parker Impact Foundation.

Warby also said that as it growsni its contact lenses business, which is about 5% of sales today, those transactions are less profitable and therefore can be a drag on margins.

Revenue grew 32% to $137.4 million from $104.1 million. Sales were up 45% on a two-year basis.

Neil Blumenthal, co-founder and co-CEO, said in an interview that consumers’ shopping habits are beginning to revert to pre-pandemic times, as more people come into Warby’s stores versus buying online.

“But we don’t care where that final transaction occurs,” Blumenthal said. “And we’ve still found more than 70% of our customers are browsing and shopping and interacting with us on our website and on our app before they transact with us.”

The company said active customers totaled 2.15 million, up 23% from 2020 levels.

For the full year, Warby expects revenue to be between $539.5 million and $542 million, representing as much as a 38% jump from a year earlier, or 46% growth on a two-year basis.

Co-founder and co-CEO Dave Gilboa said Warby typically sees a sales boost at the very end of December, as consumers try to use up their flexible spending accounts and other insurance benefits before the New Year.

The company is still planning to open 35 stores by the end of the year, bringing its total count to 161 locations.

Warby shares closed Thursday at $53.51, down almost 1% from its opening trade price of $54.05.

Find the earnings press release from Warby Parker here.