Warby Parker's Premium Shift Boosts ASP, Despite Tariffs
Warby Parker, the eyewear retailer, is seeing a shift in customer preferences towards higher-priced products and prescription lenses, driving up its average selling price. Despite tariff headwinds, the company has added new customers, accelerated revenue growth, and strengthened its full-year guidance. With an enterprise value of $2.81 billion at current prices, Warby Parker presents a reasonable entry point for investors.
The company's gross margin profile remains high at around 55%, even after absorbing tariffs. Warby Parker's expansion plans include diversifying its product portfolio with contact lenses and offering in-store eye exams. It aims to expand into 900+ more stores in the United States, indicating a strong focus on growth. For fiscal year 2025, the company expects revenue to reach $880-$888 million, a 14%-15% year-over-year increase, and adjusted EBITDA of $98-$101 million at an 11.1-11.4% margin. Notably, Warby Parker's competitors in the augmented and mixed reality headset market include major tech companies like Google, Meta, Samsung, and Amazon, as well as specialized players such as Magic Leap 2, Meta Quest Pro, Vuzix M4000, and Digilens Argo.
Despite facing tariff headwinds, Warby Parker has demonstrated resilience and growth. With a strong gross margin profile, diversified product offerings, and ambitious expansion plans, the company presents a compelling investment opportunity. The author reiterates a 'Buy' opinion on Warby Parker, with the stock currently trading near $25 per share.
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