The direct-to-consumer (DTC) brand landscape continues to evolve, with the gap between winners and losers widening. The earnings results for Allbirds and Warby Parker paint an especially strong picture, considering how both brands have worked to become true omnichannel (and public) organizations.
Warby Parker Sees Ecommerce Growth Again
For its second quarter of 2024, which ended on June 30, Warby Parker’s net revenue increased 13.3% year over year to $188.2 million. Ecommerce was a significant catalyst for this improvement, growing 4.4% year over year — the highest the brand has seen since Q1 2021. Warby Parker also opened 11 net new stores in Q2 2024.
Gross profit also increased 16.3% to $105.4 million, while gross margin landed at 56% compared to 54.6% the year prior. The company pointed to faster growth in glasses, lower outbound customer shipping costs as a percent of revenue and improved efficiencies in owned optical laboratories as key drivers for this gross margin improvement. Sales, general and administrative expenses (SG&A) represented 60.8% of revenue, down from 65.5% the year prior.
Warby Parker’s most significant expenses were tied to marketing, higher payroll expenses linked to the brand’s store expansion and charitable donations. Its marketing focus clearly paid off: the brand saw its active customer base increase 4.5% year over year and average revenue per customer improve 8.8% to $302.
“Our strong results demonstrate Team Warby’s ability to drive sustainable growth,” said Co-founder and Co-CEO Neil Blumenthal in a statement. “Amidst strategic reinvestment in customer acquisition, store expansion, proprietary technology and more, we’re still expanding the bottom line and delivering value for our stakeholders.”
As a result of this quarter’s results, Warby Parker is raising its 2024 fiscal guidance, with a new goal of achieving $757-$762 million in net revenue. The company also plans to open 40 new stores this fiscal year as brick-and-mortar continues to be a big strategic priority.
Allbirds Emphasizes Transformation Plan with 26.8% Net Revenue Drop
While Warby Parker’s results point to a brighter phase of its sustainable growth journey, Allbirds’ show the brand is still navigating severe turbulence.
For its Q2, which also ended on June 30, Allbirds saw net revenue fall 26.8% year over year to $51.6 million, while gross profit decreased from $30.1 million in Q2 2023 to $26.1 million. The company indicated that this drop was due to lower unit sales within its direct business, especially tied to complete and planned retail store closures.
As part of its strategic turnaround, which was unveiled in March 2023, Allbirds has closed 14 U.S. stores and has since prioritized store profitability and evolving to a distributor model that supports international growth. Since Q3 2023, Allbirds has pivoted to a distribution model in five existing regions and opened in four new regions. In Q2 alone, the brand entered into distributor agreements in Benelux and Scandinavia and completed its distributor transition in Japan and Australia. Allbirds also has decreased its inventory, cutting it by half in 2023 alone, to improve access to working capital.
Despite the revenue and profit decrease, Allbirds’ expenses remained basically the same year over year. The brand’s most significant expenses were tied to marketing and advertising (22.8% of net revenue), while restructuring expenses were a mere 1.8% of net revenue.
“After 18 months of strong execution against our strategic transformation plan, we are entering the next phase of our journey and prioritizing three main focus areas: Making Great Product, Telling Compelling Stories and Providing Customers with an Engaging Shopping Experience,” said Joe Vernachio, CEO of Allbirds in a statement. “We believe the combination of elevated product, storytelling and customer experience in the coming quarters will position the business to return to top-line growth in 2025 and enable us to build long-term shareholder value.”
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