Warby Parker Posts Mixed Q4 Results & Muted FY2022 Outlook
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Warby Parker Posts Mixed Q4 Results & Muted FY2022 Outlook

Warby Parker (NYSE: WRBY) reported mixed Q4 results with a better-than-feared loss but revenues that fell short of expectations. Further, the American retailer of prescription glasses, contact lenses, and sunglasses issued FY2022 guidance lower than analysts’ estimates.

Despite the mixed results and muted outlook, shares of the company gained 3.3% on March 17 to close at $27.70.

Q4 Numbers

The company reported an adjusted loss of $0.08 per share, one cent ahead of the Street’s estimated loss of $0.09.

However, revenues jumped 17.8% year-over-year to $132.9 million but lagged consensus estimates of $133.43 million.

The increase in revenues reflected a higher number of active customers, increasing 21.5% to 2.20 million, as well as improved average revenue per customer, which grew 13.0% to $246.

FY2022 Outlook

Looking ahead, management provided financial guidance for FY2022.

FY2022 revenues are forecast to grow between 20% and 22% to $650 – $660 million, lower than the consensus estimate of $687.8 million. Adjusted EBITDA margin is expected to range between 5.6% to 6.6%.

Notably, the company plans to open 40 new stores during the upcoming year, taking the total store count to 201.

CEO Comments

Warby Parker Co-CEO Neil Blumenthal commented, “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.”

Wall Street’s Take

Following the earnings release, Cowen analyst Oliver Chen decreased the price target on Warby Parker to $38 (37.2% upside potential) from $66 and reiterated a Buy rating.

Chen cautioned that new COVID variants could pose risks to Warby Parker’s sales based on the significant impact of the Omicron variant in late December.

The analyst believes, “Rebounding traffic levels in-line with previous recovery curves and targeting 90% store productivity in 2Q appears critical for achieving guidance.”

The rest of the Wall Street community has a Strong Buy consensus rating based on 5 Buys and 1 Hold. The Warby Parker stock price projection of $48.67 implies 75.70% upside potential to current levels.

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