Warby Parker raises $75M, reaches profitability
On Wednesday, Warby Parker announced a Series E funding round of $75 million led by T. Rowe Price, the company told Retail Dive in an email. Before this round, the company had raised $215 million, according to a Warby Parker spokesperson. That brings the eyewear upstart’s valuation to $1.75 billion, according to a report from Business of Fashion.
The company also announced that it is profitable, the spokesperson told Retail Dive in an email. The company has yet to release sales but said that for the first time last year it reached profitability on the basis of earnings before interest, taxes, depreciation and amortization, according to the Business of Fashion.
Warby Parker plans to use the financing to continue to invest in the future. The capital will go towards R&D and technology that will help the company better serve customers and continue to transform the optical industry in the years to come, according to its statement.
Warby Parker for a long time was a poster child for e-commerce disruption — any startup showing signs of shaking up a category is often referred as the "Warby Parker" of that space.
But the fact that it now runs some 65 stores in the U.S. and Canada underscores the notion that brick-and-mortar remains key to retail fundamentals, including customer experience and marketing. The retailer reportedly logs sales of some $3,000 per square foot of retail space, which Fast Company magazine compared in 2015 to Tiffany’s estimated $3,043. That was the year the startup landed on Fortune’s list of "unicorns," private companies that have reached a valuation of $1 billion or more. At the time, the company had a valuation of $1.2 billion.
This new round of funding will be used to fuel growth as Warby Parker moves toward an IPO. "Given the rationale for raising this capital is to invest in future products and services, sometimes those investments are easier to make as a private company," Warby Parker co-founder and co-CEO Dave Gilboa told Recode. "And hopefully by the time that we do go public, we’ve proven kind of the value to the business of some of them."
In addition to adding stores, Warby Parker has expanded its assortment, most recently testing sales of children's eyewear. While merchandise expansion could fuel sales, however, children's eyewear is a tricky business. The frames are hinged differently than adult models because of how children grow and play, co-founder Neil Blumenthal told CNN Tech. Plus, while the costs of manufacturing children's glasses are the same as those for adults, shoppers for kids may be less inclined to perceive the $95 price point as a wildly better deal.
According to the company and outside number-crunchers, sales have gained steadily of late, with quarter-over-quarter sales growth of anywhere between 23% and 37% in the five quarters through the first quarter of last year, when the highest rate was noted, according to a study of online receipts from conducted last year for eMarketer Retail by Slice Intelligence.
In its eight years, the company has grown to more than 1,400 employees, and through the Buy a Pair, Give a Pair program, Warby Parker has distributed glasses to millions of people in need worldwide. On Wednesday, the company also said that Youngme Moon, a Harvard Business School professor and expert in innovation and brand strategy with a focus on millennials and the digital economy, is joining its board of directors. At Harvard, she spearheaded the launch of the global Field initiative and led the launch of its online learning platform, and she serves on the board of Unilever, Rakuten and Sweetgreen.
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