Coastal Contacts Generated Record Revenues of $50.3 million in Q3

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VANCOUVER, British Columbia—For its third fiscal quarter ended July 31, 2012, online optical retailer, Coastal Contacts Inc. (TSX: COA) (Stockholm: COA) generated record revenues of $50.3 million. Gross profit for the third quarter of 2012 compared to the same period of 2011 was $21.4 million or 43 percent of sales compared to $21.1 million or 43 percent of sales.

Additional highlights of the quarter included:

• Total order volume of approximately 584,000.
• Total glasses shipped was approximately 248,000 units.
• Glasses shipped into the U.S. market increased 77 percent to 126,000 units, representing 51 percent of total glasses shipped.
• Total glasses sales were $11.5 million with gross profit margins of 48 percent.
• Total contact lens sales increased 3 percent to $38.8 million with gross profit margins of 41 percent.
• Coastal’s in-house eyewear brands comprised 70 percent of total glasses shipped.
• Coastal initiated investment in a second production line to manufacture free-form progressive lenses in-house.

Year-to-date highlights included:

• Total pairs of glasses shipped were 706,000, an increase of 27 percent.
• Overall revenues increased 8 percent to $145 million.
• Glasses revenues grew 20 percent to $34 million.
• Contact lens revenues grew 5 percent to $111 million.

Roger Hardy, Coastal’s founder and CEO, commented, “We continued to make significant progress in Coastal's key strategic areas throughout the third quarter. Our core contact lens business continued its stable and predictable growth, generating strong operating margins greater than 10 percent on a consolidated basis, which the company is using to fund growth in the glasses category. Contact lens revenues grew 3 percent during the third quarter and 5 percent for the first nine months of fiscal 2012. Our glasses category grew to $45.4 million in the 12 months ended July 31, 2012, compared to $34.3 million in the preceding 12 months, an increase of 32 percent.

“Our early stage online glasses business in the U.S. experienced a revenue increase of 71 percent, while glasses units grew 77 percent during the third quarter, as a result of our strategy to drive customer adoption. We are encouraged by our growth and remain committed to building out the online eyewear segment in the U.S. Replicating the successful Canadian business model in this large and highly attractive market remains a key focus, and we plan to continue investment spending in the coming quarters in order to further accelerate our growth and market penetration. We focused our investments on the core North American glasses market. We are taking a similar focused approach in Europe as we shift investments from multiple markets to those where Coastal has leadership positions,” Hardy said.

Founded in 2000, Coastal Contacts services customers in more than 150 countries through its family of websites, including Coastal.com, ClearlyContacts.ca, Lensway.com, Lensway.co.uk, Lensway.se, ClearlyContacts.com.au, ClearlyContacts.co.nz, Contactsan.com, Coastallens.com and its newest site, Lensway.com.br.