NEW YORK—On Thursday morning, Warby Parker Inc. (NYSE: WRBY) reported double-digit sales increases for both the fourth quarter and full year of 2021, as the company opened 35 new stores during the year and ended 2021 with 161 stores. The company expects to open an additional 40 stores in 2022, primarily in existing markets, as it moves to surpass the 200-store mark by year’s end. On the bottom line, Warby Parker reported that its net loss widened in the fourth quarter to $45.9 million (compared with the year-ago period loss of $4.3 million), due in part to higher stock-based compensation expenses and related payroll taxes.

For the full year 2021, Warby Parker said its net loss was $144.3 million, with full-year adjusted EBITDA of $24.9 million. The adjusted EBITDA margin improved 270 basis points year-over-year to 4.6 percent. The company's net loss in fiscal 2020 was $55.8 million. 
 
For the fourth quarter and year ended Dec. 31, 2021, Warby Parker reported sales of  $132.9 million and $540.8 million, respectively. The increases in the periods were 17.8 percent in Q4 (or $20.1 million) and 37.4 percent for the fiscal year (or $147.1 million).
 
The company said it increased active customers 21.5 percent to 2.2 million year over year. Average revenue per customer increased 13.0 percent year-over-year to $246, the company said, with a portion of the increase due to a higher percentage of sales for its eyeglasses with progressive lenses.
 
In Q4, the e-commerce business represented 41 percent of the company’s overall business, which compares with 56 percent in the comparable period of 2020 and 34 percent of the comparable period of 2019. For the full year, e-commerce penetration was 46 percent last year compared with 60 percent in 2020 and 35 percent in 2019. 
 
“2021 was a milestone year for Warby Parker, and one filled with moments that reinforce our commitment to driving scale and creating impact,” co-founder and co-CEO Neil Blumenthal said in the earnings announcement. “Despite the ongoing impacts of the pandemic, our 2021 performance reflects the strength of our brand, our unique value proposition, and the resilience of our highly engaged team as we continue to deliver long-term sustainable growth. As we turn the page to 2022, we’ve never been more energized by the possibilities in front of us.”
 
Added co-founder and co-CEO Dave Gilboa, “We operate in a large and growing category and are emerging from the pandemic in a position of strength. During 2021, our business grew significantly, expanded profitability and gained share. From broadening our glasses, contacts and exam offerings to opening 40 new stores and introducing first-to-market digital tools, this year we look forward to solving more problems, delighting more customers, and creating even more value and impact for our stakeholders.”
 
Warby Parker opened seven new stores during the fourth quarter, and also opened its second in-house lab in Las Vegas last year, which enabled the company to “strengthen [its] vertically integrated supply chain," according to the year-end earnings report. 
 
Among the other 2021 highlights cited by the company on Thursday: a doubling of full-year revenue from its contact lens offering year-over-year, maintaining an 80+ net promoter score, expanding the product assortment by launching 21 eyewear collections and increasing penetration of progressive lens sales. In addition, Warby Parker said it reached over 10 million pairs of glasses distributed through its “Buy a Pair, Give a Pair Program,” and it became the first public benefit corporation to go public through a direct listing.
 
Also, in 2021 Warby Parker opened stores in nine new markets, from Sarasota Fla. to Albuquerque, N.M., and Richmond, Va. The stores continue to see “a very consistent growth profile when entering new markets, with the entire market growing over 250 percent on average in the first year of opening a new store,” the company said.
 
While the company reported a 17.8 percent sales increase in Q4, it noted that “revenue was negatively impacted by the Omicron variant, with disruption heightened in the last weeks of December, coinciding with peak demand in the optical industry as customers seek to utilize flexible spending dollars ahead of Dec. 31 expirations.”
 
Still, the active customer count increased by 390,000, or 21.5 percent, to 2.20 million at the end of 2021, and gross profit dollars rose 17.0 percent to $76.3 million in Q4.
 
"Excluding a tariff rebate benefit in 2020, gross margin would have improved year over year, driven by the scaling of progressive lenses as well as benefits from continued inventory and product strategy optimization, partially offset by increased penetration of contacts lenses, reflecting Warby Parker’s strategy to grow its contact lens offering,” the company noted.
 
Comparing the fourth quarter of 2021 to the fourth quarter of 2019, net revenue increased $39.3 million, or 41.9 percent, to $132.9 million.
 
Addressing the competitive landscape, Blumenthal told securities analysts on a conference call that he believes the company’s starting price of $295 for progressive lenses represents a significant savings for consumers and provides a key competitive edge.
 
“When we priced [progressive lenses], the intent was to provide the same level of exceptional value,” he said. “And so we frequently see customers spending $100 to $1,000 or more on a pair of progressives. … From us, they are [still] able to get glasses at a fraction of what they would typically cost [in other stores].”
 
He also noted that the Warby Parker customer “tends to skew more affluent and is coming to us from high-end optical shops [and] from optometric practices. We have not seen significant competitive pressure from the lower end of the market. We think in this inflationary environment, our pricing power just becomes more and more competitive and compelling to our customers.”
 
Looking ahead, executives said on the conference call that it expects consumers will likely continue to be impacted by “near-term macro headwinds and global uncertainty.” But the optical industry is healthy and growing and the company said it “remains confident in the long-term sustainable growth algorithm” it provided last September.
 
The executives did lower sales projections for 2022 to between $650 and $660 million, which represents growth of approximately 20 percent to 22 percent. This outlook reflects the impact of an estimated $15 million of lost sales in the first quarter.
 
“As you can see … pre pandemic, we typically have seen sequential step ups of 25 percent plus from Q4 to Q1, and we would have expected a similar dynamic this year but not for Omicron,” the executives noted. “Our full-year guidance assumes continued retail recovery, reaching approximately 90 percent of pre-pandemic levels in Q2 and full productivity by year’s end.
 
"For context, in 2019 our stores open for 12 months or more generated $2.6 million in revenue on average. While we remain optimistic we will ramp back to full productivity faster, we are maintaining a conservative stance as the timing and rate of recovery will continue to be impacted by changes in the COVID environment alongside some of the broader macro headwinds facing the consumer and the economy,” the executives said.