Warby Parker Joins List of Consumer Brands to Go Public
Warby Parker Eschews Traditional IPO
Warby Parker, the consumer-eyewear company, is going public via a direct listing, becoming the latest direct-to-consumer company to choose this route. While IPOs have traditionally been the way startups raise capital, direct listings are becoming more popular as companies opt to save money that would typically go to bankers. Among the names that have gone public through a direct listing are Coinbase (COIN), Palantir (PLTR), and Spotify (SPOT). One major differentiator between the two is that no new shares are created in a direct listing. Only existing outstanding shares are sold.
Warby Parker is following closely on the heels of other consumer companies that have chosen to go public recently. The list includes Honest (HNST), the organic consumer-products maker and Figs (FIGS), which makes scrubs for the medical industry. Allbirds, the green sneaker maker, is also expected to launch an IPO.
Losses Continue for Eyewear Company
In its filing with the Securities and Exchange Commission, Warby Parker disclosed revenue of $270.5 million for the first half of 2021 and losses of $20.4 million. For all of 2020 it had revenue of $393.7 million and lost $55.9 million. The company warned it needs to generate and sustain increased revenue as well as keep costs at bay to achieve profitability. In March 2020 it closed all its stores as the COVID-19 pandemic struck.
Internet sales have cushioned the blow for the eyewear retailer, with 60% of its 2020 sales coming from online channels. Ecommerce accounted for 50% of its overall sales in the first six months of 2021. The company currently has 145 owned and operated stores and 95% of its revenue comes from selling eyewear.
Warby Has Loyal Fans
Warby Parker was founded in 2010, shipping eyewear directly to consumers to try on in the comfort of their own homes. It subsequently expanded into retail stores and retreated when the pandemic hit. The company has a loyal following of customers and investors. Since its inception it has raised $245 million at a $3 billion valuation. Meanwhile it has a loyal base of customers which has so far translated into high retention rates.
Warby Parker is tapping the public markets at a time when direct-to-consumer brands are having a moment. With the eyewear market in need of some disruption it will be interesting to see if a broader base of investors think Warby Parker is the one to do it.
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