Warby Parker Starts Trading on NYSE

The stake in eyewear maker Warby Parker Inc. is set to open Wednesday morning and will be a direct listing to test the market appeal of direct-to-consumer brands.

The New York Stock Exchange has set a reference price of $ 40 per share. This is just a signpost to where it can be opened.

At a reference price, Warby Parker, which is unprofitable and earns about $ 535 million this year, is worth nearly $ 5 billion.

Unlike traditional initial public offerings, companies that go public through a direct listing bring their shares to the stock market without the banker setting an opening price and lining up buyers. Warby Parker is one of the few direct listings to watch this year, following the gaming company Roblox. Ltd

, Streaming platform Spotify Technology SA

And cryptocurrency exchange Coinbase Global Ltd

Direct listing allows registered shareholders to sell 77,700,000 Class A shares, but the company does not receive any income from these sales.

Co-founders and co-CEOs Neil Blumenthal and David Gilboa said in an interview that the motivation for listing was not to raise money, but to raise the profile of Warby Parker and have a positive impact on the company. He said it was to show that he could succeed.

“Our motivation is to have a lot of direct positive impacts, but it’s also to encourage other businesses and entrepreneurs to think in line with the same policy,” Gilboa said. “Being public and staying transparent about our business to the wider market is an opportunity to do that.”

The company is a shoe brand, Allbirds Inc. And food maker Chobani LLC are one of the plans to enter the open market this year with a “mission-driven” approach to for-profit businesses. Warby Parker has helped distribute more than 8 million pairs of eyeglasses through the “Buy Pairs, Offer Pairs” program.

Nevertheless, potential investors will probably focus more on the company’s performance. Warby Parker reported revenues of $ 270.5 million and losses of $ 20.4 million in the six months to June 30, according to a filing with the Securities and Exchange Commission. In 2020, the company lost $ 55.9 million and generated $ 393.7 million in revenue. Eyewear makers reported revenues of $ 370.5 million and losses of $ 57.5 million in 2019.

Warby Parker was originally one of the direct-selling brands, but now eyeglass maker sales are split almost evenly between over 140 physical and online stores. WSJ’s Charity Scott explains why this split is a secret source for Warby Parker.Photo: Adam Folk / Wall Street Journal

Founded in 2010, Warby Parker sells a selection of eyeglasses, sunglasses, contacts and eyewear accessories. The retailer launched as an online-only brand and then expanded to physical stores. According to the company’s filings, there were 145 retailers as of June 30.

Half of Warby Parker’s total sales came from digital channels in the first six months of the year, according to the company’s filings, compared to 60% in 2020.

The company spends a lot of money on marketing, with selling, general and administrative expenses accounting for about 70% of its revenue. We are also facing competition from leading eyewear distributors such as Ray-Ban, LensCrafters and other brand owners, Essilor Luxottica SA.

Even Warby Parker’s governing structure is relevant to its mission, its leaders said. According to SEC Filing, both Blumenthal and Gilboa own Super Voting Class B shares, which give 48% of the company’s voting rights when the retailer goes public.

“It will ensure that we live our values ​​every day and on our way to accomplish our mission,” Gilboa said. “We do not expect to use that power to make decisions that are against the interests of our stakeholders and shareholders.”

Public companies whose founders have preferred stock are isolated from pressure from other investors. Lyft Ltd,

Facebook Ltd,

Google parent alphabet Ltd

And snap Ltd

Is one of the public companies that has established a supervisory system for its founders to manage.

Warby Parker raised $ 245 million from retail investors last fall and received a $ 3 billion valuation. The company said in a SEC filing that it had previously sold its shares in a private transaction for $ 24.53 per share. According to FactSet, the brand has raised $ 527 million in venture capital since 2011.

Warby Parker will be listed on the New York Stock Exchange under the ticker symbol WRBY.

Write to Charity L at Scott

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Warby Parker Starts Trading on NYSE

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