IPO Watch: Warby Parker & Olaplex line up public debuts

Two fresh IPOs together worth a projected $13bn come next week as Warby Parker and Olaplex start public trading. 

IPO trading – stocks to watch 

Warby Parker 

First up is Warby Parker which is expected to launch on the New York Stock Exchange on September 29th. 

The direct-to-customer e-commerce eyewear brand is forecast to garner a $3bn valuation when its IPO lands. 

Recent guidance and results for 2021 so far suggest Warby Parker is in rude health. Its first half results saw a 53% year-on-year increase in revenues for a total of $270.5m. The business did incur a $7.5m loss during trading but said this could be attributed to Covid-19 lockdowns at the tail end of 2020. 

Full year projections put revenue growth at 35-36% for 2022. Revenues are forecast to clock in at between $532-537m. Additionally, the business is hoping to expand its bricks-and-mortar offer in order to support its core online business by opening 30-35 new stores. That would bring the total number of locations up to 160. 

According to co-founders and joint CEOs Neil Blumenthal and Dave Gilboa, Warby Parker is targeting 25% revenue growth for 2022. 

In a statement, the pair said: “The outlook we’ve provided underscores our belief that delivering remarkable customer experiences, making a positive impact on all stakeholders, and living our core values will lead to continued long-term sustainable growth.” 

There’s plenty of reasons to be optimistic – but as ever there are lots of reasons to be cautious too.  

The e-commerce format where Warby Parker made its mark is not the most lucrative for eyewear manufacturers against the broader industry. According to Forbes, online sales of eyewear and glasses has grown at a CAGR of 4% against 18% for e-commerce as a whole. 

It seems shoppers may still prefer to purchase their eyewear in person. It is true that Warby Parker is committed to growing its physical store numbers, as mentioned above. There are still question marks over the sustainability of its online business, despite recent successes.  

Is a $3bn valuation an over optimistic target? 

The US eyewear business is notoriously fragmented. As a $35bn a year industry, it’s big fairly big business, but it’s made up of a wildly different variety of independents, mom-and-pops, and smaller firms. No one business has really been able to dominate. Of course, that does present an opportunity for Warby Parker which it is not doubt keen to grasp. 

At the moment, Warby Parker controls 1% of the market space. Vision Source and Luxotica control 8% and 6% of the market respectively.  

Olaplex 

Olaplex, the premium hair products brand, is forecast to launch its own public offer September 30th. 

Despite challenges thrown up by the COVID-19 pandemic, the business reported a 90% increase in sales across 2020 for a total of $282.3m. EBITDA rose 98% over the same period to reach $199.3m. 

In its IPO filing, Olaplex reported first half net sales had reached $270.2m. Things are looking good for the Advent Capital-owned luxury brand. 

The filing also revealed Olaplex’s initial offer plans. 67 million shares priced between $14 and $16 each to retail customers once public. At the top end of the range, Olaplex would raise $1.07 billion in the IPO.  

Olaplex was acquired by Advent International in 2019. The filing shows Advent would control 79.6% of the combined voting power of our common stock, or 78.2% if underwriters exercise their options in full. Prior to the offering, Advent owns 89.3% of shares, followed by 6.8% owned by Mousse Partners. Emily White, the President of Anthos Capital, owns 3.6% of shares.