What Warby Parker Isn't Disclosing

Warby Parker (WRBY) has done a brilliant job building its eyewear brand along with its self-described 'do good' image... This is driven by the company's longtime slogan and program, "Buy a Pair, Give a Pair." This has become such a prominent part of Warby Parker's strategy that it's the third sentence of the formal four-sentence […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] What Warby Parker Isn't Disclosing By Herb Greenberg Warby Parker (WRBY) has done a brilliant job building its eyewear brand along with its self-described 'do good' image... This is driven by the company's longtime slogan and program, "Buy a Pair, Give a Pair." This has become such a prominent part of Warby Parker's strategy that it's the third sentence of the formal four-sentence "business description" in the company's U.S. Securities and Exchange Commission ("SEC") filings... For every pair of glasses or sunglasses sold, the Company helps distribute a pair of glasses to someone in need through its Buy a Pair, Give a Pair program. There's just one problem, as I see it... Warby Parker doesn't explain how much it donates to the program in detail – not even a footnote. And that leads to a bigger question... Should companies that intentionally market themselves to investors as best-in-class in environmental, social, and governance ("ESG") factors be required to detail how much they spend for the greater good? After all, if it's significant enough to put front and center as an investor come-on, shouldn't it also be material enough to disclose? And make no mistake about it... Warby Parker went public last September as an ESG company. As Warby Parker says in various SEC filings... ESG is embedded in our core value and vision, including but not limited to the administration of our Buy a Pair, Give a Pair program... The company also took it one step further... Just months before its initial public offering ("IPO") last year, Warby Parker elected to become a so-called "public benefit corporation" ("PBC"). Thanks to a change to Delaware law in 2020, which made the conversion easier, Warby Parker wasn't alone. By my count, at least 10 other companies did the same thing. As PBCs, companies are supposed to put employees, customers, suppliers, and other stakeholders on equal footing with shareholders. There are no audits or certifications to make sure the companies comply. As [this FAQ]( from the law firm Cooley points out, marketing is often a driver, with the PBC becoming "an integral part of the company's branding and storytelling." In August, an article in the Harvard Law School Forum on Corporate Governance was more to the point (emphasis added)... To the extent an IPO issuer already has a strong social purpose, formalizing that purpose in its charter may help it stand out from the crowd and attract interest from institutional and retail investors for which that is a focus. Based on a comment from an analyst from Cowen & Co. during the first question on Warby Parker's first-ever earnings call last November, it's apparently working. "Warby," the analyst said, "is one of our top ESG ideas." --------------------------------------------------------------- Recommended Links: [Read This Before Buying a Single Stock in 2022]( Full disclosure: 2022 could be one of the worst years in history (if the experts are right). But for you, it could be the most lucrative year ever. [Tune in on January 25 to see why](. --------------------------------------------------------------- [The Biggest Innovation of the 21st century – Steve Jobs (Hint: Not Apple)]( Just before his death in 2011, the founder of Apple said that the biggest innovations of the 21st century will be at the intersection of biology and technology. Exactly a decade later, one little known company is doing just that. The company already has million dollar deals with fortune 500 companies. And Steve Jobs' biggest rival Bill Gates has already invested millions in this company, which has the potential to become "[America’s Next Big Monopoly]( --------------------------------------------------------------- Like any company focused on ESG, Warby Parker gives rich detail into its ESG activities, including an '[impact report](... The company even defines Buy a Pair, Give a Pair, saying the program is... [E]ither (i) working with nonprofit partners to empower people to administer basic eye exams and sell glasses at ultra-affordable prices or (ii) directly giving vision care and glasses to those in need, via cross-sector partnerships. In other words, if I'm interpreting it correctly, Warby Parker either donates money or glasses, identifying VisionSpring – a nonprofit provider of affordable glasses around the world – as its "primary partner." All in all, Warby Parker says it has donated more than 8 million pairs of glasses. But the company doesn't disclose how much it gives to VisionSpring, or Buy a Pair, Give a Pair. The closest it comes is under accrued expenses on the balance sheet, where charitable contributions totaled $5.1 million for all of 2020 and $4.7 million in the first nine months of 2021. It sounds like a big number... But assuming that those are the full amounts, Warby Parker was on track last year to donate a mere 1% of revenue. And IRS [Form 990 filings]( provided by VisionSpring do little to fill in the blanks. As recent as 2019, they show that the biggest contributor gave $2.1 million. The next-biggest one gave $750,000... and the one after that $500,000. But here's the kicker... Warby Parker isn't the only eyewear retailer making big donations to VisionSpring. National Vision (EYE), whose brands include America's Best and Eyeglass World – and which is four times bigger than Warby­ Parker ­– lists VisionSpring among its "charitable partnerships." Not only that, but two of its top executives, including its CEO, are on VisionSpring's board. Nobody from Warby Parker is. And yet... National Vision isn't a PBC, and it doesn't bill itself as an ESG play. And while it has beefed up the corporate responsibility part of its website, the company simply doesn't make a big deal about it. And that's the point... National Vision takes an old-school approach to philanthropy, and like most companies, it doesn't disclose what it doles out... because it doesn't have to. But if public companies like Warby Parker put its philanthropy up in neon lights – all in the apparent name of making itself a magnet for investment dollars earmarked for ESG – I believe it should be held to a higher standard. If Warby Parker goes so far as to promote a cause – with a slogan, no less – it would seem that the company should be required to disclose what it gives... and to whom. One other puzzling thing about Warby Parker has nothing to do with philanthropy but everything to do with disclosure... In recent years, the company has been reverse-engineering its business model... from entirely e-commerce to building a network of brick-and-mortar stores. Warby Parker currently has 145 stores, with a goal of 900. That's a big number, and investors generally like the potential tailwind of store growth. But investors also like to know how stores are doing... and unlike most retailers, Warby Parker doesn't disclose comp store sales. By contrast, National Vision, with more than 1,200 stores, does. The lack of transparency is exactly the opposite of what you would expect from a company that prides itself on good corporate governance. I sent several questions to Warby Parker's investor relations department but never heard back. Speaking of public benefit companies, how have their stocks done? The chart below of the class of 2021 tells the story...  Yes, the market is down. But they're down considerably more than the market. All of which means... Just because companies say they "do good" doesn't mean their stocks will do well. Some of these may wind up being great investments, but it will be because they're fundamentally sound and well run, not because of how much money they give away or what causes they support. They should be doing that, regardless. As always, feel free to reach out via e-mail by [clicking here](mailto:feedback@empirefinancialresearch.com?subject=Feedback%20for%20Herb). And if you're on Twitter, feel free to follow me there at [@herbgreenberg](. My DMs are open. I look forward to hearing from you. Regards, Herb Greenberg January 21, 2022 If someone forwarded you this e-mail and you would like to be added to my e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2022 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 601 Lexington Ave., 20th Floor, New York, NY 10022 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](