Warby Parker shares sunk in premarket trading Thursday after the eyewear retailer reported continued losses and said its sales were hurt during the holiday quarter due to the omicron variant of Covid-19, which kept people out of stores.
The company also issued a weaker-than-anticipated forecast for 2022 sales. Warby Parker sees annual revenue ranging between $650 and $660 million. Analysts were looking for $687.7 million, according to Refinitiv data.
Management said the effects of omicron resulted in nearly $5 million of lost sales in the fourth quarter, and it projects losing more than $15 million in the first quarter, as fewer customers came in for eye exams and to try on new eyeglasses in early January.
The stock was recently down around 15%. It fell further once the company kicked off a conference call with analysts, following the quarterly financial report. As of Wednesday’s market close, Warby Parker shares are down more than 42% this year.
Warby Parker booked a net loss in the three-months ended Dec. 31 of $45.9 million, or 41 cents a share, compared with a loss of $4.3 million, or 8 cents a share, a year earlier. It attributed the wider losses to a $31.6 million increase in stock-based compensation expense and other related employer payroll taxes.
Revenue grew to $132.9 million from $112.8 million a year ago.
Warby Parker blamed the spread of the omicron variant for hurting sales in the final weeks of December, which coincided with typical peak demand in the optical industry as consumers use their final flexible spending dollars before the New Year.
Analysts were expecting Warby Parker to report sales of $133 million in its fourth quarter on a loss of 9 cents per share, according to Refinitiv data.
One bright spot, though, was that the people who visited Warby Parker were spending more money overall. Average revenue per customer increased 13% year over year to $246, the company said.
Co-founder and Co-CEO Dave Gilboa called Warby Parker’s recent challenges a “temporary setback.” In recent weeks, the company has seen a recovery curve, he told analysts on a conference call.
“We remain as confident as ever in our long-term growth plan in a reacceleration of our growth in the coming months,” he said.
Warby Parker said it projects its brick-and-mortar locations will get back to 100% productivity before the end of the year. It opened 35 stores last year, ending 2021 with 161 locations. In 2022, it anticipates opening another 40 locations.
The company also has a virtual try-on option available on its website for customers to see how different eyeglasses might look on their faces. Warby said this has been a competitive advantage when store sales have tapered off.
In 2021, Warby Parker’s e-commerce sales represented 46% of total revenue, down slightly from 50% in 2020, but up from 35% in 2019.
Find the full earnings press release from Warby Parker here.
