As a reminder, in 2022, we opened up stores in just five new markets and across those five new markets, we’re seeing very consistent performance across the dimensions that we talked about.
Operator: Our next question today comes from the line of Mark Altschwager from Baird. Please go ahead. Your line is now open.
Amy Teske: This is Amy Teske on for Mark. To start, you noted that productivity trends were a 102% in the quarter, which implies some moderation from where you were tracking at the end of February. I was hoping you could speak to some of those trends through the quarter. Second, if you could comment on learnings from your recent marketing investments. It seems like the eclipse glasses campaign really drove a lot of buzz. So, wondering if you’re seeing any direct correlation to new customer acquisition yet?
Dave Gilboa: To productivity question, we typically see that number fluctuate over the course of the quarter. When we talked about that number in February, it was closer to 106%. The large reason for that was because we were comping against a period where we had bad weather and some easier comps. We also had some fluctuation in that number over the course of Q1, given some bad weather in early January, which normalized. The 102% number is more in line with the intra-quarter visibility that we’ve given on previous calls and we view that as a positive indicator of the performance of our store fleet this year versus last year.
Neil Blumenthal: On the marketing front, we did see the solar eclipse activation really drive a lot of traffic and sales, some within Q1 and then some into Q2. It actually drove our highest retail traffic week ever. We were distributing hundreds of thousands of these eclipse viewers. And this comes from sort of a tradition at Warby to do fun things to engage the community and our customers. We first celebrated solar eclipse back in 2017 and included a big block party in front of our shore in Nashville that was in the path of totality. We took those learnings and applied it to the great North American eclipse on April 8. Also, in the past, we had the Warby Parker class trip, where we purchased an old yellow school bus, took out the seats, replaced those with oak shelving and basically had a mobile store that traveled across the country.
We share these as examples of some of our brand marketing initiatives that you’ll see us continue to engage with over the course of the year and next year, as marketing spend has now sort of normalized. We’ve also been able to diversify the channels across linear and streaming, paid social, direct mail, creator and influencer. We’re finding that this diversified approach is leading to stable acquisition costs that give us confidence in our ability to continue to drive customer growth.
Operator: The next question today comes from the line of Mark Mahaney from Evercore. Your line is now open.
Mark Mahaney: Hey, thank and congrats on the customer momentum. I wanted to ask wanted to ask about insurance channels. Can you just bring us up to date on where you are in terms of being able to access more customers through those channels, getting more coverage?
Dave Gilboa: Thanks, Mark. Yes, we continue to make good progress on the insurance front. The partnership that we announced last quarter with Versant MetLife, the integration there is on track. We launched a very small pilot earlier this month, but the vast majority of those lives will be integrated in the coming months and we expect that the incremental 15.5 million lives will be able to use their in-network benefits by the end of the year. I should note that, we haven’t included contribution from this partnership into our guidance, given that those lives are not integrated just yet. And then, we continue to see positive trends from our existing insurance relationships with increasing utilization over time, as employees understand that they can use their in network benefits with Warby Parker.
We find that kind of awareness grows, the longer those relationships are in place and continue to see strong utilization trends. We also believe that the investments that we’ve been making to scale our business, and in particular, continuing to open stores across the country, continuing to hire lots of eye doctors, make us a natural and attractive partner to other insurance carriers and such, are excited to make progress there and in particular, are excited to welcome lots of new Versant MetLife members to Warby Parker later this year.
Operator: The next question today comes from the line of Janine Stichter from BTIG. Please go ahead. Your line is now open.
Janine Stichter: Hi. Thanks for taking my question. Question for Steve. I wanted to ask about the gross margin guidance in the mid-50s. Just how to think about the range of outcomes there? If we continue to see the glasses offering outperform. And then also, I was just looking for an update on in-store telehealth, which I think you launched last year. Any initial learnings from those tests?
Steve Miller: Thanks, Jeanine. I’ll address the question on glass — gross margin and then turn it over to Neil and Dave for an update on what we’re doing in telehealth. We’re still very comfortable with the guidance that we’ve given to be in the mid-50s from a gross margin perspective. We are very pleased with the leverage that we saw in Q1 driven by the acceleration of glasses growth. We are still operating in dynamic macro environment, with the level of uncertainty that still persist with the optical industry. We are growing faster than others in our category and taking share, which gives us optimism, but at the same time as we project our business for the remainder of the year, we still want to maintain a thoughtful and prudent stance as it relates to the growth of glasses and the recovery of that category.
We are still seeing very strong momentum and growth as it relates to contacts and eye exams. And so, as we potentially see those two categories make up a greater portion of our product mix in Q2 to Q4, we are still maintaining a conservative approach as to how we’re modeling gross margin. It’s still in the mid-50s, assuming glasses margin persists, it could be on the higher end of that range. But for now, I think we want to be thoughtful and maintain a very consistent level of guidance as we did last year to be within the mid-50s and perhaps toward the lower end of that range depending on the ultimate mix we see glasses, contacts and exams the remainder of the year.
