Has your B&M store grown by 21% over the last 3 month ???????????????????????????
Coastal on-line Glasses sales increased 21% ..............................
and we will not know how much the other on-line opticals did, as they are no public corporations.
If you can not match that figure in your business , (see other thread on Coastal), you very probably might have lost to one or more on-line opticals.
What are you going to do about it ? Are you going to make changes, or are you going to wait for more such news with even higher figures ?
Chris- your question is misleading. Not many bricks and mortar stores are public companies that raised $19 million in cash earlier this summer.
If I were an investor in Coastal, I would be disappointed with these results. On the surface, a 21% increase in year over year glasses sales sounds great, but dig into the numbers. Canada’s glasses sales went up 25%. But in the US, Coastal’s US glasses sales only increased 6% year over year. Consider all of the free glasses giveaways and the amount of money Coastal has spent on advertising in the US, yet sales only went up 6%. And this is working off of very low year over year comps.
Glasses sales for the quarter only account for $14 million of sales versus $41 million for contact lenses. In other words, Coastal is really a contact lens business. It will take years for Coastal’s glasses business to catch up with contact lenses.
As I said, Coastal recently did a stock offering and raised $19.2 million in cash. But consider the following: they lost $2.9 million for the quarter and $12.7 million in the first 9 months of the year. Through the first 9 months of this fiscal year, their operations have burned up $9.8 million in cash! They are spending big money in advertising and are nowhere close to being profitable. This is a huge deficit to overcome. Every dollar of cash they raise through stock offerings increases the amount of income they need to make to produce an acceptable investor return.
In businesses like this, it is a balancing act between raising money and investing in advertising in a hope to generate sales. As brand awareness grows, you get better leverage on your advertising dollars. Businesses at this stage should be generating annual growth rates of 50% or more. 21% growth is not going to cut it.
I still believe that the internet is a big part of the future in eyewear, but I do not look at Coastal as a model for success. One observation is that Coastal is a mishmash. What is their niche? They are part Zenni (giving away frames), part Warby Parker (trying to get into that $95 range), part Frames Direct (selling ray bans and other branded eyewear). Too confusing. You cannot be Walmart, Sears and Nordstrom on one website.
The sky is falling!
THE SKY IS FALLING!!!!!
So their "sales" are up. I "bought" a "free" pair of "glasses" from them last week. The "free" glasses "cost" me $18.
Now even though this "shipping and handling" fee of $18 probably just barely covers the real cost of "shipping and handling", I will bet DOLLARS TO DONUTS that the total $18 is booked as a sale.
I think that if you are given 10s of millions of investors money to go out and buy customers with near-free giveaways and can't do better than 21pc growth, considering the massive amount of marketing dollars being spent, you are in trouble.
This is not impressive to me.
Not to say we can't learn from their numbers. There is plenty to learn from CCs numbers and it should be a huge reality check for anyone who would write a cheque to invest in such a venture. Stay away.
The future for independent ECPs will be to BUNDLE services - EYE EXAM/GLASSES/CONTACTS complete package, all-included, same-day service. At a price that no one but independent ECPS can manage.
Optometrist/optician partnerships where the maximum value bundle is sold, eye exam included, all service/product included, in a way the internet cannot provide.
Just my humble.
Last edited by optimensch; 09-15-2013 at 09:46 AM.
oh,,,,and yes, Y-O-Y june-july-august, our B-M sales are up over 20pc.
When my company was 13 years old, yes, we expected growth of at least 20% per quarter. We were disappointed if we weren't growing at that pace. Now, almost 30 years into it, we occasionally see spikes in growth, but are happy with steady, sustainable growth.
I did learn, early in retail, that when I had a huge sale, our income would spike, but then when we tracked those patients, w/out another huge sale (which we didn't do), we would lose those customers.
There is a huge hospital in my area that is buying up every other hospital that it can. In the meantime, the competing hospital is gaining quality staff (they are leaving the giant in droves), and winning over patients with quality care. The giant is focused purely on growth.
Coastal growth is geared toward filling the stockholder balloon. Sure, the view might look good from where they are for a time, but when the hot air produced by given their products away ceases, it will all come crashing down.
Thanks to all for responding, everybody has a good point ............................
Originally Posted by Johns
Thanks to all for responding, everybody has a good point. However I picked Coastal because they are the only ones that have loud publicity department, while all others are very silent on their activities.
I have not yet seen one press release by Essilor on their on-line optical activities by their few companies, as well as all others.
Whatever amount their selling as a group, is not sold by the conventional optical retailers as it has been for a long time.
Yes
In the online world, there are two companies that are doing it right. Warby Parker and Frames Direct. Here is why. Warby Parker is building a brand. I would venture to guess that soon you will see other products branded Warby Parker. They will pick off other high margin businesses. One of their founders is already doing this with an online shaving supply company. Warby raised $40+ million from investors who know how to make money. They keep it simple: low cost acetate frames with low cost poly lenses edged and shipped from a big Essilor lab.
Regarding Frames Direct, they are using independent retailers as a free show room. They are picking off very profitable business by offering modest discounts that make the buyer feel like they are getting a good deal all while pocketing big margins. They offer thousands of frames and their buying power is backed by Essilor.
Zenni and Eyebuy direct may move big numbers of frames, but I cannot believe there is much margin in $6.99 glasses.
Like I said in a previous post, Coastal is mishmash. They do many things but none of them exceedingly well. They are trying to create their own brand, "Derek Cardigan" but they sell similar frames from luxottica and marchon. They don't have the frame selection of a Frames Direct. They do not have a cool brand like Warby Parker. They do not have the low production cost of Zenni. The only thing they seem to do well is give away free glasses.
Last edited by Stan Tabor; 09-15-2013 at 03:48 PM.
I often wonder if Chris has a financial interest in, or is involved personally with Coastal and benefits financially from the continual posting of the happenings of the company?
Is Coastal a big costumer of his companies products?
Would that be a motivating factor in his continual posts of the companies performance or lack there of?
Really ? How could you interpret it that way ? It's more likely that Chris would lose a customer from his postings!
Stan, there is one other thing they do really well, they essentially deregulated British Columbia, quickly and efficiently.
Chris,to answer your question , they are going to wait and do nothing, and the licensing boards will shake their heads raise their hands palms out and shrug their shoulders then proceed to make on liners legal. The fees that licensed opticians pay will not be used to protect the public in ways meaningful to the cost and price legal opticians paid to educate themselves while supporting the Colleges and the public.
- Another highlight of 2nd quarter results from coastal contacts:
Adjusted EBITDA was a loss of $1.9 million compared with a loss of $0.1 million during the same period in 2012.- For clarity - their eyeglass sales increased by 21% but their losses were 19X greater? I guess they lose money on every pair of glasses they sell but the plan is to make up the difference in volume......
Is Coastal a big costumer of his companies products? ............................
I love to see Stan Tabors post's, always nicely written with a good sense for business and good logic, and I hope he is right.
However Fezz who claims his "Location: to be Living in a van down by the river", is of the opinion to steer this thread another way.
So I will make some clarifications to clear the air.
Being an independent business owner who started out to supply optical retailers with new consumable products, mostly our own design and ideas over the years ,we have made a living.
2-3 years ago we felt a slowdown in business activities for which I have been blaming the on-line optical sellers. I have checked their website ratings for some time and have seen nothing else, than that their ratings are only on the upward trend, for the last few years, resulting in that every pair of glasses sold by them is not sold by the B&M opticians or optometrists.
I have seen many businesses disappear over the last few years from retailers to large optical manufacturers. However all the on-line opticals are still all there, and I have never sold anything to anyone of them.
Furthermore, I do not play the stock market of any kind, I prefer real estate and so far have never lost a cent.
Thanks idispense .........................I made up for the general slack in the optical by getting into other industries, as automotive, electronics, electric, instruments and cinema/photographic supplies, and the effort seems to be working.
Last edited by Chris Ryser; 09-16-2013 at 01:02 AM.
Chris, your optical business is not down due to internet eye glass sales. In fact, every segment of the optical business is up, from manufacturers, to wholesalers, to labs to retail, all are up. If your optical supplies business is down, it's from a change in products and the market place. The truth is most of your products are to enhance older technologies that have been supplanted by newer/improved/perceived better technologies. Using my locations as example;
Tinting: This has been replaced largely due to our increased use of polar lenses along with the outdated "fashion" tinting that was popular some years ago. We don't tint even 1/2 of 1 percent of our orders...
AR treatment: There was a time when only top dollar AR's came with an olio/hydro layer, now most house brands come with it at less than 1/2 the price of the *name brand* flagship coatings of the larger parent companies.
UV tints; Many of us have moved to materials that naturally filter UV's like Trivex.
Poly treatments; The same for poly. Many of us have moved away from using the material regularly, replacing it with Trivex/Tribrid.
SR coatings; CR is the only material that doesn't automatically come with an SR coat, and it's usage continues to go down along with the increase in AR sales along with the superiority of lacquer type coatings make in house coating kind of obsolete.
Commercial PAL marking removal products; Many opticians have found inexpensive alternatives that work just as well with no damage to the lenses we dispense.
Chris, I'm not trying to be a contrarian to you, but these are the facts on the ground. The marketplace has changed over the last few decades along with products retailer wish to offer. But your offerings have not. Once again Chris, this is no personal knock against you or your products. You've been very innovative in the past. But we (as an industry) have moved away from a need for most of them. I'm glad you've diversified into non-optical areas. I wish you the best!
Everyone keep in mind that the "big Box" mentality and online sales has taken over just about every industry you can think of. Grocery stores, and butcher shops went out of existence decades ago. The loss of some opticals to these forces should be no surprise to us.
I've posted before that the whole Warbly thing is tied to the current meteoric geek-vibe. I can't see the "brand" working long-term.
I changed my business model to a PD model only at Chris Ryser's suggestion. I sold all my frames and equipment off and advertised that I will take your PD so you can buy your glasses online. I have had to let staff go as my business has gone down 2500%. I eat Kraft dinner every day.
Good point. Not only because of the product, but also because of the purchasers. They're like a school of minnows, darting from one new thing to another, but never staying in one place for too long.
So, to sum up your post...are you saying that I should be making something else to supplement my buggy whip handles? How about a buggy whip holder that would mount on the sideboard?
Look at the bright side = you are still eating name brand dinner!
maybe he is on to something!
Aw, quit yer braggin'!
As Henry David Thoreau said, "Simplify, simplify, simplify." It seems you've done that quite well.
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