money Warby Parker co-founders: We are doing things differently
The long-awaited Warby Parker IPO arrived to the New York Stock Exchange on Wednesday via a direct listing, and with a story for investors that is probably a little different than most others in retail.
For starters, the eyeglass retailer — famed for hawking spectacles for $95 — is defined as a public benefits corporation, per its S-1 filing (aka prospectus). The label reflects Warby Parker's long-time initiative to give free glasses to those in need and carefully manage the resources used along its production line.
The destination also means the company may make decisions that could impact near-term profits, something outlined in the S-1.
Meanwhile, Warby Parker (WRBY) remains true to the direct-to-consumer model that shot it to fame upon its founding in 2010. That said, it does have 145 retail stores that in large part serve as entry points into the brand as buying glasses online is still foreign to most consumers.
And lastly, while many retailers were canning workers at the height of the pandemic, Warby Parker kept paying its employees even as its stores closed and sales took a hit.
None of these ingredients to the Warby Parker story should come as a shock to those who have watched how patient co-founders and co-CEOs Neil Blumenthal and David Gilboa were in going public.
"Our corporate structure just reflects how we run our business, which is focusing on customers, focusing on employees, focusing on our investors and shareholders and this [public benefit] status enables us to do that. We have built Warby Parker for the long-term. We were one of the first national retailers to close our stores in March 2020 when the pandemic was first hitting, but we continued to pay our employees because it was the right thing to do. And we have always been concerned there might be short-term thinkers who think it's a bad financial decision, when in reality it's the right financial decision for the long-term," Blumenthal said on Yahoo Finance Live.
Investors appear to appreciate Warby Parker being different than most.
Shares of Warby Parker surged 34% to $54 in Wednesday's session. The stock's reference price for the direct listing was $40.
The company's financials likely piqued the interest of the bulls, too.
Despite the effects of the pandemic, Warby Parker delivered $7.7 million in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization] in 2020. Sales last year rose 6.3% from a year earlier. Through the first six months of 2021, Warby Parker posted adjusted EBITDA of $20.1 million on a 53% sales increase.
With the IPO out of the way, Warby Parker will now shift its focus back to growth, the co-founders said.
"The incidents of refractive error to the percentage of the population that needs glasses is increasing over time. That's due to people spending more time looking at screens, and also more people entering into the category where they need progressive lenses. That's another huge opportunity for us at Warby Parker, where we are offering progressive lenses for $295. At most retailers of comparable quality they might be $1,000 or more. It's a newer part of our business, it's going to create tailwinds for us going forward," Gilboa explained.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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