Economic turbulence takes its toll on Warby Parker as they minimize Q4 net loss
Warby Parker, the direct-to-consumer eyewear company, has been on an expansion spree in 2023, aiming to boost its retail presence and product offerings. Co-founder and co-CEO Dave Gilboa declared that the team will take decisive action, deliver on the value proposition, and make strategic investments in areas of the business.
The company's strategies have resulted in steady revenue growth, although net losses have continued to impact profitability. In 2023, Warby Parker achieved an annual revenue of approximately $669.77 million, representing an 11.98% year-over-year growth. This growth was driven by the DTC model and ongoing innovation such as the Home Try-On program.
Warby Parker complemented its online business with the expansion into physical stores offering in-person eye exams and fittings, enhancing the omnichannel customer experience and market reach. By the first quarter of 2025, quarterly revenue reached $223.8 million, up 11.9% year-on-year, showing sustained top-line growth.
Strategically, Warby Parker has pursued geographic expansion, including plans for international markets, and product diversification. The company launched smart glasses in partnership with Google, which includes a potential $150 million investment supporting innovation and growth into new eyewear categories. These moves aim to unlock new revenue streams beyond traditional eyeglasses and enhance customer engagement with technology-driven products.
Despite solid revenue growth, Warby Parker has not yet turned profitable. As of mid-2025, the company shows a negative return on equity (-4.25%) and an EPS of -0.12, indicating ongoing net losses. The market expects substantial earnings growth in the future, reflected in a high forward P/E ratio (55.29), but profitability remains a key challenge.
Warby Parker's fourth-quarter revenue increased by 10.2% year over year, reaching $146.5 million. Changes in marketing spend, consumer shift back to shopping in stores, and the impact of new store openings on local online sales contributed to the decrease in e-commerce growth. The company plans to open 40 more stores in 2023, with most of them being in suburban areas.
Warby Parker expanded its brick-and-mortar presence to 200 locations in 2022. The net loss decreased by about 56% in the fourth quarter, mainly due to a decrease in selling, general and administrative expenses related to lower marketing costs. Warby Parker cut guidance for the year, expecting revenue to be between $584 million to $595 million.
The cuts did not impact store or customer-facing positions. With store and service expansion continuing, this will act as a drag on profits, but Saunders maintains Warby Parker's eventual path to profitability. GlobalData Managing Director Neil Saunders expects revenue growth to remain around the current level in the new fiscal year.
Warby Parker is committed to expanding profitability while investing in brand awareness and creating more value for its customers. The company continues to focus on profitability despite an uncertain economic outlook. In August, Warby Parker reported its Q2 net loss widened. Warby Parker projects 2023 revenue will increase by 8% to 10% year over year, with a projected range of $645 million to $660 million.
For the full year, Warby Parker's net revenue increased by 10.6% to $598.1 million, and net loss decreased by 23.5% to $110.4 million. Warby Parker's gross margin declined to 55.1% in the fourth quarter, primarily due to an increase in salary and benefit expenses for optometrists.
Despite the challenges, Warby Parker remains optimistic about its future. The company is expanding its eye exam services and is committed to delivering on its value proposition, making strategic investments, and pursuing growth in both physical retail and product offerings. The path to profitability may be uncertain, but Warby Parker is determined to navigate it successfully.
- Warby Parker's strategic investments in areas of the business, such as technology-driven products like smart glasses in partnership with Google, aim to unlock new revenue streams and enhance customer engagement.
- In an effort to boost its retail presence and product offerings, Warby Parker plans to open 40 more stores in 2023, with most of them being in suburban areas, even though this may act as a drag on profits in the near term.
- Warby Parker, despite facing ongoing net losses and a negative return on equity, remains optimistic about its future and is committed to expanding profitability while investing in brand awareness and creating more value for its customers.
