A worker wipes dust from a Ray-Ban sunglasses display, manufactured by EssilorLuxottica, at a store in Barcelona, Spain, on June 30, 2021.
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The glasses company Varby Parker is at a turning point in its 12-year history.
The firm has been recognized as a leader in direct consumer, a model where businesses have ruled out resellers for selling through their own stores, and perhaps it has become an inspiration to other companies such as Away Luggage Manufacturer and Allbirds sneaker brand. .
Warby Parker has made a name for itself by selling glasses online and undermining existing companies such as Ray-Ban EssilorLuxottica offering frames with a starting price of $ 95 – including lenses.
Debuted on the stock market through a direct listing on September 29, and saw it the stock price soars That day, Warby Parker begins the next phase of its journey: it moves toward selling services as well as points, CNBC co-founder and CEO Dave Gilboa said in a phone interview.
“We are in such an interesting transition when historically we were a spectacle company and a spectacle brand, and now we are moving to a holistic vision care company,” Gilboa said. “Where, in addition to buying glasses from us … Now more and more of our customers are also undergoing eye examinations and prescriptions,” he added.
In 2020, Warby Parker customers spent an average of $ 218 each, compared to $ 188 in 2018, and it expects growth to come from people buying progressive – or multifocal – lenses, eye examinations and contacts, according to an investor presentation. in 2021. The company said these “holistic vision customers” could spend $ 500 or more a year after the initial purchase, more than double the amount for a buyer who only uses glasses.
Co-CEOs, Neil Blumenthal and Dave Gilboa of Warby Parker at the NYSE, September 29, 2021
Physical points are another possibility. Warby Parker currently has 160 seats in the U.S. and Canada, and Gilboa said he has the potential to increase that number to 900, though he said it will take some time to get there.
The big question, however, is whether he will be able to fight EssilorLuxottica, the $ 85 billion Franco-Italian giant created in Merger of 48 billion euros in 2018, Warby Parker’s market capitalization is currently $ 3.37 billion, but some analysts believe it can compete.
“I’m sure,” said Oliver Chen, an analyst and head of an investment bank Cowen, to the question of whether he has a chance against a European company. “You can argue that Warby Parker is a destroyer, you know in this segment, a very lucrative segment, and Warby Parker offers better value [than others]”He told CNBC by phone.
In the 12 months to June 30, 2021, Warby Parker earned $ 487 million, an increase of 33% over the previous year, and although it was profitable on EBITDA (earnings before interest, taxes, depreciation and amortization) for this period. $ 27 million, net loss was $ 53.2 million.
The EssilorLuxottica model is multi-brand: it produces its own labels, such as Ray-Ban, and is licensed to some of the world’s largest luxury players, including Chanel, Versace and Ralph Lauren. According to a company spokesman in an email to CNBC, it produces about 80-90 million pairs a year, and it amounted to 5.5 billion euros earnings in the third quarter of 2021, sales in North America, EMEA and Asia.
The French-Italian company also runs Sunglass Hut and other stores that sell its glasses, and owns vision insurance companies, including EyeMed, which has drawn criticism from some that it is a monopoly. But for Rebecca Harwood-Lincoln, a consultant in the spectacle industry, working in different aspects of the market is a “fairytale concept.”
“They’ve been very successful in buying out, so Sunglass Hut, Lenscrafters, David Clowlow … then they get automatic distribution of their products and make a profit,” she told CNBC by phone. Last year, the firm bought Dutch GrandVision glasses for $ 8.5 billion.
While Warby Parker sees growth in the domestic market, EssilorLuxottica is identifying an aging Asian population and a growing number of people who need glasses but don’t yet own them, in countries like China and Latin America as opportunities. As for innovation, the spokesperson said it is focused on Stories by Ray-Ban – his smart glasses, collaboration with Facebook – and Stellest, a lens that can slow the development of myopia in children.
Can Warby Parker compete? “We don’t spend a lot of time thinking about others in space, and as a company that works directly with consumers, we get a lot of feedback [on] that works well, “Gilboa said.” We expect that in the coming years and decades it will grow much faster than the industry as a whole … We don’t really think in terms of market share or sort of getting bigger than others in this category, ”he added.
Mark Maheni, senior executive and analyst Evercore, says that while Warby Parker has a “decent” business model (the firm gives it a “content” rating), gaining market share may not affect EssilorLuxottica. “How about this for fun? [Warby Parker] could triple their market share, and I’m not sure Essilor will even notice. ”