Coastal Contacts’ 2013 Fiscal Report Indicates Continued Focus on Online Eyeglasses Sales and Increase in Brick-and-Mortar Stores

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VANCOUVER, British Columbia—Sales for eyeglasses and contact lenses retailer, Coastal Contacts, Inc. (NASDAQ: COA) (TSX: COA) increased 11 percent to $217.6 million in fiscal year 2013, when compared to 2012, while net loss for the year totaled $15.9 million, compared with a $4.9 million net loss for fiscal 2012. Overall contact lenses sales increased 8 percent to $159.8 million in 2013 when compared with fiscal year 2012, while total eyeglasses sales increased 21 percent to $58 million.

These figures are according to the company’s financial statement for fiscal year 2013 ended Oct. 31, 2013, released yesterday. During a conference call with investors yesterday, Coastal founder and CEO Roger Hardy cited investments made in 2013 in a U.S. facility and the company’s own brands as among major expenses this year.

Company executives credited the opening of the manufacturing and distribution center in the U.S. in 2013 with lowering fulfillment costs while improving turnaround times and customer service. “A key development this year was the establishment of our U.S. manufacturing and distribution facility,” said Hardy in a statement released yesterday. “We intend to continue expanding our eyeglasses business in a number of ways this year including direct-to-consumer marketing, retail stores and showrooms, partnership opportunities, such as the recent agreement announced with Overstock.com, and through co-branded partnerships with leading managed care organizations.”

Coastal’s partnership with Overstock.com was reported in VMail Dec. 13, 2013, and its brick-and-mortar store openings were reported by VMail Nov. 18, 2013 and Aug. 9, 2013.  During the conference call, Coastal executives also predicted growth in the company’s managed vision care relationships, stating that the company is in “significant discussions with managed vision care leaders” to offer a “vertically integrated store to help reduce their costs while improving benefits and customer service.”

During the conference call yesterday, CFO Nick Bozikis told investors that the company relies on profits from contact lenses sales to invest in its eyeglasses business. He remarked that the company continues to build this part of its business “in a large market with very low online penetration.”

Regarding expansion in the eyeglasses market in 2014, company executives told investors during the call that Coastal plans to open eight more brick-and-mortar retail locations in Canada and a couple of stores in Europe. This follows the nine retail locations the company is currently operating, three in Canada and six in Scandinavia. The company also announced during the conference call that it plans to open its first retail locations in the U.S. in 2015. Coastal will also introduce a silicone hydrogel contact lens within its proprietary Splash line in 2014, the company announced.

Other highlights reported for 2013 during the conference call included adding 1 million customers overall, shipping 892,723 frames, increasing the average eyeglasses order size 34 percent to $77 when compared with the same period last year, increasing contact lenses sales 13 percent in North America and 9 percent in Europe when compared with the same period in 2012, and increasing the average contact lenses order to $113 from $107 when compared with the same period last year.

During the company’s fiscal fourth quarter of 2013, overall sales totaled $53.4 million, a 5 percent increase over the same period in 2012. Contact lenses sales were $39.5 million and eyeglasses sales were $13.9 million for the last fiscal quarter of 2013. Net loss totaled $2.9 million for the period compared with a loss of $2.6 million during the same period in 2012. The fourth quarter of 2013 was the company’s 48th consecutive quarter of year-over-year revenue growth.