E-commerce And Aging Trends Will Expand Eyewear Markets

Key Takeaways

• Automation, AI, and premium private labels are driving margin improvements and may yield stronger earnings growth than market expectations.
  
• Subscriptions, in-store adoption, and advanced retail tech support higher recurring revenues, stronger customer retention, and accelerated omnichannel expansion.
  
• Mounting competition, ineffective marketing, sluggish market growth, operational inefficiencies, and regulatory challenges threaten Mister Spex's ability to achieve sustained revenue and margin improvement.

Catalysts

Provides and markets eyewear products in Germany and internationally.

• While analyst consensus views the €20 million annualized profit impact of the SpexFocus restructuring and cost optimization as a baseline, Mister Spex's adoption of continuous improvement, automation, and AI-driven operational processes could yield significantly greater net margin expansion and sustained EBIT gains, especially as overhead and SG&A ratios structurally decline.
  
• Analysts broadly agree that the launch of premium private label lenses, like SpexPro, and a higher mix of in-store sales will uplift margins, but recent data suggests adoption of SpexPro is rapidly scaling (already 35 percent in stores), which, along with the subscription model, could double average order value and unlock higher-than-expected gross profit improvement across both online and offline channels.
  
• With the introduction of Switch (the eyewear subscription), Mister Spex is uniquely positioned to create dependable, recurring revenue streams and deep customer lock-in. As yearly eye health checks become standardized, this will likely boost both frequency and average ticket size well above peers, accelerating top-line growth and driving revenue predictability.
  
• The ongoing integration of advanced retail tech, including AI-enabled virtual try-on and personalized product recommendations, is poised to supercharge online conversion rates and overall customer satisfaction, capitalizing on the accelerating migration to e-commerce and supporting much faster revenue growth than currently forecasted.
  
• As Europe's population ages and awareness around eye health rises, Mister Spex's strong omnichannel network and scalable processes position it to capture disproportionate share of the expanding optical market, supporting a revenue trajectory and long-term earnings power well above conservative market estimates.

Mister Spex Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Mister Spex compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Mister Spex's revenue will grow by 1.4% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -38.5% today to 1.1% in 3 years time.
• The bullish analysts expect earnings to reach €2.5 million (and earnings per share of €0.07) by about August 2028, up from €-82.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 84.7x on those 2028 earnings, up from -0.8x today. This future PE is greater than the current PE for the DE Specialty Retail industry at 20.1x.
• Analysts expect the number of shares outstanding to decline by 5.5% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.19%, as per the Simply Wall St company report.

Mister Spex Future Earnings Per Share Growth

Risks

• Intensifying competition from e-commerce giants and online eyewear marketplaces continues to pressure Mister Spex's online market share, as evidenced by a 13% year-on-year decline in overall revenue and particularly sharp declines in international sales, which underscores ongoing risks to future revenue growth and pricing power.
  
• The company's high reliance on digital marketing is becoming less effective, with deliberate cuts in marketing spend leading to lower store traffic in some regions, making it harder to drive profitable offline sales and potentially squeezing revenues and net margins if acquisition costs stay high or new organic channels fail to compensate.
  
• Slowing population growth and uncertain consumer sentiment in key European markets like Germany, along with political and economic volatility and no expectation of near-term consumer tailwinds, threaten to reduce the long-term addressable market and dampen Mister Spex's ability to return to sustained revenue growth.
  
• The closure of all international retail operations and the persistent underperformance of a significant number of stores (23 still not EBIT positive) reveal ongoing struggles to optimize the omnichannel model, raising the risk of sustained operating cost pressures that could negatively impact earnings and EBITDA.
  
• As stricter EU data privacy regulations emerge, Mister Spex's move towards more personalized and recurring revenue models such as subscriptions may face challenges in efficient customer targeting and retention, heightening customer acquisition costs and potentially compressing net margins over time.

Valuation

• The assumed bullish price target for Mister Spex is €6.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Mister Spex's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €6.0, and the most bearish reporting a price target of just €1.4.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €221.5 million, earnings will come to €2.5 million, and it would be trading on a PE ratio of 84.7x, assuming you use a discount rate of 8.2%.
  
• Given the current share price of €1.86, the bullish analyst price target of €6.0 is 69.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.