Eyewear retailer Warby Parker (NYSE: WRBY) fell short of the markets revenue expectations in Q3 CY2025, but sales rose 15.2% year on year to $221.7 million. The company’s full-year revenue guidance of $872.5 million at the midpoint came in 1.5% below analysts’ estimates. Its GAAP profit of $0.05 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

Warby Parker’s third quarter was marked by robust top-line growth but a notable shortfall relative to Wall Street’s revenue expectations, prompting a sharp selloff in shares. Management identified a mix shift toward lower-priced frames and moderation in contacts growth, particularly among younger consumers, as key factors weighing on performance. Co-CEO David Gilboa explained that “periods of broad strength across consumer cohorts” were followed by “a moderation in average order value or basket size in categories that skew younger.” Despite these pressures, the company delivered improved profitability and ongoing customer growth, with leadership emphasizing the adaptability of its omnichannel model and operational discipline.

Looking ahead, Warby Parker’s revised outlook reflects both cautious consumer sentiment and management’s focus on operational efficiency. The company plans to maintain investment in AI-driven initiatives, expand its physical footprint, and launch new products such as AI-powered glasses in partnership with Google and Samsung. Co-CEO Neil Blumenthal noted, “Our ambitions have only grown,” but also acknowledged a more conservative stance on revenue expectations due to persistent macroeconomic uncertainty. Management remains committed to margin expansion through disciplined cost control while navigating a dynamic retail environment.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to a combination of shifting consumer preferences, strategic investments in technology, and ongoing retail expansion.

• Younger consumer softness: Leadership reported that younger and lower-income customers were more cautious, leading to a shift toward entry-level $95 frames and smaller orders for contacts and glasses, especially as economic uncertainty persisted.
• Older customer resiliency: The company observed steady demand among older, higher-income customers, particularly for progressive lenses and premium add-ons, helping offset some of the softness in younger cohorts.
• Retail store expansion: Warby Parker opened 15 new stores during the quarter, including its first five Target shop-in-shops, and noted that markets with more store locations often saw increased brand engagement and higher e-commerce growth.
• AI-driven efficiency and engagement: Management highlighted the growing use of artificial intelligence for both internal productivity and customer-facing tools, such as the Advisor feature for online glasses recommendations, which has driven increased conversion rates.
• Strategic product adjustments: The company retired its Home Try-on and Scout private label contacts programs, redirecting resources to in-store experiences and a broader assortment of third-party brands, aiming for greater operational agility and alignment with customer preferences.

Drivers of Future Performance

Warby Parker expects ongoing macro uncertainty and evolving consumer behavior to shape performance, while emphasizing AI integration and retail densification as growth levers.

• Macro-driven demand variability: Management cautioned that economic uncertainty could continue to dampen demand among younger consumers, contributing to a more conservative revenue outlook and necessitating flexibility in both pricing and promotional strategies.
• AI and product innovation: The upcoming launch of AI-powered glasses, developed with Google and Samsung, is viewed as a key differentiator for the future, with leadership confident that technology will enhance both customer experience and operational productivity.
• Retail footprint and insurance partnerships: Warby Parker plans to expand its store count, particularly in suburban markets and through Target shop-in-shops, and to deepen insurance integrations, which management believes will increase customer acquisition and retention, especially among high-value cohorts.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) the adoption and customer response to AI-powered glasses and digital tools, (2) the performance of new Target shop-in-shops and continued suburban store expansion, and (3) the ability to sustain margin improvement despite macroeconomic headwinds. Execution on insurance partnerships and customer acquisition strategies will also be important signals for future growth.

Warby Parker currently trades at $16.85, down from $19.05 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).

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