WRBY Q1 Earnings Call: Management Details Tariff Mitigation, Store Expansion, and Pricing Actions

Eyewear retailer Warby Parker (NYSE:WRBY) fell short of the market’s revenue expectations in Q1 CY2025, but sales rose 11.9% year on year to $223.8 million. Its non-GAAP EPS of $0.14 per share was 27.2% above analysts’ consensus estimates.

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StockStory’s Take

Warby Parker’s first quarter was shaped by continued investment in customer acquisition and product assortment, with management highlighting seven consecutive quarters of active customer growth and strong performance in new store openings. Co-CEO Neil Blumenthal emphasized that the company’s omnichannel strategy and supply chain flexibility enabled it to navigate weather-related disruptions and shifting consumer behavior. Notably, the company achieved its first quarter of positive GAAP net income as a public company, a significant milestone. Positive trends were also noted in its contact lens and eye care businesses, along with a steady increase in average revenue per customer, attributed to a greater mix of premium lenses and higher-priced frames. Management was direct in acknowledging the challenges presented by recent tariff changes, stating that decisive supply chain adjustments and expense discipline were already underway to help offset higher costs.

Looking forward, Warby Parker’s full-year guidance reflects a more cautious stance due to continued macroeconomic uncertainty and the impact of new tariffs on cost structure, with projected net revenue growth revised to 13% to 15% year-over-year, down from a previous outlook of 14% to 16%. Co-CEO Dave Gilboa pointed out, “We’re taking just a more cautious and conservative approach to guidance for the rest of the year, given that we know that consumers have a lot on their minds these days.” The company plans to continue investing in marketing and new store openings, including shop-in-shops with Target. Management believes its supply chain diversification, selective price adjustments, and expense control measures will help mitigate tariff-related headwinds. CFO Steve Miller added that while tariffs present a significant challenge, Warby Parker expects to offset most of the potential $45 million to $50 million exposure through these actions.

Key Insights from Management’s Remarks

Management detailed a multifaceted strategy to address tariff pressures and sustain growth, emphasizing the company's proven resilience, adaptability in its omnichannel model, and decisive actions in supply chain realignment, targeted price increases, and disciplined expense management.

• Supply Chain Diversification: Warby Parker significantly accelerated its multiyear effort to reduce reliance on Chinese suppliers, aiming to decrease China-sourced goods from approximately 20% to under 10% of cost of goods sold by year-end. This proactive move is designed to manage the direct impact of recently increased tariffs and maintain crucial production flexibility across its global network.
• Selective Pricing Adjustments: The company implemented targeted price increases for some lens types and accessories, while strategically retaining its iconic $95 entry price point for prescription glasses. Management reported positive early signs from these changes, observing no apparent resistance from customers and continued growth in average revenue per customer, underscoring the brand's strong value proposition.
• Disciplined Expense Management & AI Leverage: Warby Parker slowed hiring and reduced discretionary spending, particularly in non-marketing SG&A, achieving improved operating leverage without compromising investments in growth-driving marketing initiatives. These efforts are further supported by meaningful productivity gains from the increasing use of AI and automation, enhancing operational efficiency across the business.
• Store Expansion and Enhanced Service Capabilities: The company opened 11 new stores in the quarter—its highest Q1 total—and plans to open 45 new stores in total for the year, including the previously announced shop-in-shops with Target. Crucially, 86% of Warby Parker's total store fleet now features eye exam suites, with nearly every new store including this capability, supporting both customer acquisition and higher-value services.
• Continued Product Innovation & Digital Advancement: Warby Parker launched seven new collections, including its first rimless frames and a premium light-responsive lens, contributing to growth in glasses, contacts, and eye exams. The company also reported early positive traction from new AI-powered personalization features in its e-commerce channel, which drove accelerated growth in Q1 and are set for broader rollout.
• Achieved GAAP Profitability Milestone: A significant financial highlight for the quarter was achieving positive GAAP net income for the first time as a public company, demonstrating progress towards sustainable profitability alongside robust growth.

Drivers of Future Performance

Warby Parker anticipates future growth will be propelled by its supply chain agility, ongoing store expansion, and strategic pricing actions, while also targeting continued margin expansion through cost discipline, despite acknowledging potential headwinds from tariffs and consumer uncertainty.

• Comprehensive Tariff Mitigation Strategies: Management is focused on offsetting potential tariff-related cost increases, estimated at $45-$50 million gross, through a combination of supplier diversification (reducing China COGS exposure from ~20% to <10% by year-end), selective price adjustments (low single-digit impact on glasses), and disciplined cost control. While confident in mitigating most of the impact, the company acknowledges that shifts in trade policy could introduce volatility.
• Store Fleet Expansion and New Channel Development: The planned rollout of 45 new stores in 2025, including the initial five shop-in-shops with Target, is designed to capture additional market share and broaden consumer access. Management views these new formats as complementary to its existing standalone stores, driving incremental customer acquisition and leveraging consistent operational protocols for a seamless brand experience.
• Sustained Marketing and Deepening Insurance Integrations: Warby Parker plans to maintain marketing investment in the low-teens as a percentage of revenue to support customer acquisition and retention. A key focus is deepening insurance integrations, such as the Versant partnership, which is ramping as expected and viewed as a multiyear tailwind, given insured customers typically spend more and repeat more frequently.
• E-commerce Momentum and ARPC Growth: The company expects its e-commerce channel to continue growing at low- to mid-single digits, supported by investments in AI-powered personalization and other digital enhancements that drove its highest quarterly e-commerce growth since 2021 in Q1. Concurrently, a modest acceleration in average revenue per customer (ARPC) is anticipated, driven by pricing actions and a favorable product mix including premium lenses and higher-priced frames.

Catalysts in Upcoming Quarters

Key areas to watch in upcoming quarters will include (1) the ongoing effectiveness of Warby Parker’s comprehensive tariff mitigation efforts and supply chain adjustments amidst a dynamic global trade environment, (2) the performance and productivity of new stores, particularly the initial cohort of Target shop-in-shops, and (3) the trajectory of average revenue per customer as selective price increases and product mix shifts take full effect. Progress on insurance partnership ramp-ups, the broader rollout of AI-driven personalization features, and the overall impact of macroeconomic conditions on consumer spending will also be critical indicators.

Warby Parker currently trades at a forward P/E ratio of 57.6×. In the wake of earnings, is it a buy or sell? Find out in our full research report (it’s free).

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