If one company does things differently, it’s Warby Parker, the Wharton-founded startup that has taken on a monopoly eyewear industry by selling specs for $ 95 and above directly to consumers online.
In more than a decade since its inception, Warby Parker has built a portfolio of 145 stores to increase its large online presence and is expected to exceed $ 500 million in sales this year. Growing interest in other online retailers, such as Allbirds and StitchFix, likely helped spur Warby Parker’s latest venture: the filing last week to go public.
And that doesn’t go down the traditional route of the IPO, either.
First difference? Warby Parker will be listed directly on the New York Stock Exchange, foregoing traditional investment banker support and roadshow with investors.
Second difference: Like Amazon, Warby Parker has moved from selling only online to opening its retail stores. This can help it attract an older population and develop a retail presence in addition to its direct-to-consumer business, said Michael Solomon, professor of marketing at the university’s business school. St. Joseph.
“They’re riding a few waves favorably – the shift to online shopping and a category like eyewear was waiting to be improved. Plus, it’s a pure online game that has moved towards opening up. retail stores, ”he said.
Others, like beauty subscription company BirchBox, “have done it too, and it reflects the reality of omnichannel retail in which we live. You have to be where your customers are and people want to go back to the stores, ”Solomon said. “From a purely marketing point of view, it really makes sense to claim both areas.
The online boom has spurred investor interest in Philly startup GoPuff, a recently valued $ 15 billion food delivery company, and mattress seller Casper, which went public last year. .
It is not known when Warby Parker’s IPO will start trading. The company is still waiting for the United States Securities and Exchange Commission to complete its review, although it hopes to file a listing of its Class A common stock this year under the ticker symbol “WRBY”.
Another big difference? Warby Parker operates as a B-Corp., Or public benefit corporation, which means shareholders don’t always come first. The public interest is at the heart of their thinking. In fact, as part of the spectacle distribution program, he claims to have distributed eight million pairs for free.
Investors need to understand the implications of this. The company “focuses on having a positive impact on all stakeholders” as opposed to just shareholders. According to their SEC filing, this means the company can make decisions that result in higher costs if it benefits the public good or local communities.
This has been their style so far. And it worked pretty well. But it could get complicated.
Warby Parker was founded in 2010 by four Wharton alumni, two of whom have remained – Neil Blumenthal and Dave Gilboa.
Now based in New York City, the co-founders sell designer-quality eyeglasses and contact lenses. The company now offers eye exams and vision tests and has opened stores in the United States and Canada. In this region, its stores can be found on Walnut Street in Philadelphia and in the shopping district of Suburban Square in Ardmore and the King of Prussia Mall.
Warby Parker also appeals to Gen Z’s desire for a “double bottom line,” by handing out a pair to someone in need with every purchase through their Buy A Pair, Give A Pair program. To date, Warby Parker has distributed over eight million glasses to people in need.
“Gen Z business creators want to solve problems, and thank goodness they do,” said Donna De Carolis, dean of the Close School of Entrepreneurship at Drexel University. “Whether it’s through a for-profit business, a non-profit organization, or a B corporation, there are many ways to make a startup successful. “
The eyewear seller has experienced tremendous revenue growth, but has yet to turn a profit.
Despite COVID-19, Warby Parker has actually seen his share of in-store sales increase. Before the pandemic, it carried out 65% of its activity in stores, the rest online. This year, even after the virus struck, the proportion sold in stores fell but then returned to 50%.
In 2019, the company’s sales jumped to $ 371 million, a jump of $ 100 million in one year. But in 2020, growth slowed. Warby Parker posted sales of $ 394 million that year, reflecting a slowdown during the pandemic when the company closed some stores. The company broke even in 2019, but lost $ 22 million in 2018 and $ 55 million in 2020.
Still, it has bounced back this year. It sold $ 271 million worth of glasses in the first six months of 2021, a 54% increase from the same period the year before. And losses for the semester have declined from $ 10 million in 2020 to $ 7.3 million in 2021.
This lack of profitability is in large part due to the fact that Warby Parker spends a lot on marketing, “as they should. Otherwise, they won’t be around for very long, ”said St. Joe’s Solomon.
What is the company worth? More recently, its valuation was estimated at around $ 3 billion. Admittedly, it is still much smaller than those who dominate the field, notably the international giant EssilorLuxottica, owner of LensCrafters and Pearle Vision. EssilorLuxottica is worth over $ 70 billion.
Yet current Warby Parker investors include many venture capitalists and Wall Street firms.
Crunchbase data shows that Warby Parker has raised a total of $ 536 million in funding over nine rounds, the latest in August 2020. Funders include D1 Capital Partners and T. Rowe Price more recently.
After the IPO, the two founders will own a controlling stake in the company and will be able to appoint any directors, according to a filing with the SEC.
Blumenthal and Gilboa will “be able to control any action requiring the approval of our shareholders” and will have the final say in any mergers or sales of companies in whole or in part, according to the SEC filing.