Coastal Contacts, a Canadian-based company that claims to be the world's largest online optical retail store, raised its total sales by 24 percent to 50.1 million Canadian dollars (€30.2m-$48.5m) in the fourth quarter ended Oct. 31. While its sales of contact lenses rose by 12 percent to C$38.8 million (€28.8-$37.5m) [see above], its sales of eyeglasses jumped by 88 percent to C$11.3 million (€8.4m-$10.9m).
The company feels that it is changing its customers' buying habits. Its shipments of spectacles jumped by 197 percent to a total of 789,000 pairs in the past financial year, and in the latest quarter, one-quarter of all the customers were 55,000 former eyeglass customers who had returned to the website for more. Proprietary brands represented 53 percent of the eyeglass revenues.
Founded in 2000, Coastal Contacts started off as a supplier of contact lenses on the internet, and it still works with the three major companies in the sector. In 2008, it expanded its reach beyond contact lenses, capitalizing on its database of over 3.3 million customers to market other relatively low-priced vision care products, with a focus on contact lens solutions, sunglasses and other eyeglasses.
Also in 2008, the company expanded its geographical coverage to the rest of North America and to Scandinavia. It has a company in Sweden called Lenslogistics. It also has subsidiaries in Australia and the Netherlands. It recently took over Lensway, a British online retailer that is also incorporated in the Netherlands.
It also expanded its business to New Zealand and Japan, and it built lens edging facilities at its two continental distribution hubs, located in Vancouver, Canada and Stockholm, Sweden. Each hub measures about 5,000 square meters and stocks more than 2,000 different styles of frames. As of the end of October, the company employed 616 people, 449 of whom were located in Canada and 167 in Europe.
After its acquisition of Lensway.co.uk in the U.K. earlier this year, Coastal announced a few weeks ago the takeover of an e-commerce operation in the U.S., Justeyewear.com, whose sales have increased sharply in the past two years. It will benefit from Coastal's marketing, logistics and production.
Today, the group services customers in more than 150 countries around the world through various websites. In addition to Coastal.com and Lensway.co.uk, it trades through websites called ClearlyContacts.au, ClearlyContacts.ca, ClearlyContacts.co.nz, Coastallens.com, Contactsan.com, Lensway.com and Lensway.se.
With its recent investments and its discount-oriented approach, the company is losing money, however. While the gross margin remained constant at 29 percent, Coastal reported a net loss of C$1 million (€74.2m-$96.7m) [see above] for the latest quarter, against a profit of C$1.4 million in the year-ago period.
For the full financial year, Coastal posted a net loss of C$4.9 million (€3.6m-$4.7m), in spite of a slight improvement in the gross margin to 30 percent. The loss was attributed mainly to higher advertising expenditures of C$26.6 million (€19.7m-$25.7m) and higher selling, general and administration costs of C$29.0 million (€21.5m-$28.0m).
The company reported total revenues of C$184.0 million (€136.5m-$177.8m) for the year, up 20 percent from the year before. Only C$51.3 million (€38.1m-$49.6m) came from customers located in Canada. The rest came from other parts of the world: C$34.4 million (€25.5m-$33.2m) for Sweden, C$19.2 million (€14.2m-$18.6m) for Norway and C$27.7 million (€20.5m-$26.8m) for the U.S.
While sales of contact lenses rose by 8 percent, reaching C$144.5 million (€106.6m-$139.1m), eyeglass sales soared by 103 percent to C$40 million (€29.6m-$38.7m). The company launched a new exclusive brand of contact lenses called Splash.
The number of “active customers” increased by about 15 percent to 3.3 million in the past year. They placed 2.2 million orders, 37 percent more than in the previous year. One-third of the orders were placed by new customers.
Before the end of the last financial year, the company already purchased and canceled a total of 20.4 million of its common shares. As of last Oct. 31, it had a total of 55.5 million shares outstanding.