National Vision Holdings, Inc. Q3 FY2024 earnings call

• Third quarter revenues were driven by managed care results, offset by softness in cash pay and lower e-commerce revenue. Adjusted comparable store sales were 0.9%, with America's Best up 1.2% and Eyeglass World down 0.9% due to Hurricane Helene.
• Completed a comprehensive store fleet review: plans to close 39 stores by 2026 (21 America's Best, 9 Eyeglass World, 9 Fred Meyer), convert 4 Eyeglass World stores to America's Best by end of 2024, and temporarily moderate new store growth in 2025 to open 30 - 35 new America's Best stores in remote enabled states.
• Implemented traffic driving initiatives: introduced Wise Buys promotion at America's Best, launched Florence by Mills eyewear collection and Pair Eyewear partnership. Expanded optometric capacity via remote technology with over 730 remote - enabled locations, where remote exams represented 11% of exams in remote enabled states and remote doctors' patient seen per day exceeded in - store doctors for the first time. Also, added late day appointments and focused on improving optometrist recruitment.

For the third quarter, revenues increased 2.9% to $451.5 million. Adjusted comparable store sales were 0.9%, with America's Best comps at plus 1.2% and Eyeglass World at a decline of 0.9%. Adjusted operating income increased 22.2% to $14.3 million, resulting in adjusted diluted earnings per share of $0.12. America's Best contributed positively to comparable store sales, while Eyeglass World was disproportionately affected by Hurricane Helene. Revenue contribution percentages for the segments weren't explicitly broken down in detail but the focus was on the performance of America's Best and Eyeglass World brands.

• For fiscal 2024, reiterates revenue to be in the range of $1.82 billion to $1.84 billion, adjusted operating income to be between $57 million and $62 million, and adjusted diluted EPS to be between $0.45 per share and $0.50 per share.
• For 2025, plans to open between 30 and 35 new America's Best stores in remote enabled states, temporarily moderating store growth to allocate capital for enhancing the patient and customer experience. Expect fleet optimization to deliver approximately $4 million in adjusted EBITDA improvement by the end of 2026, with most of the impact realized in 2025.

• Consumer behavior uncertainties that could impact results. - Potential tariff impacts, with less than 10% of costs applicable to revenue subject to previous tariffs, but monitoring new administration's impact. - Store performance fluctuations affecting fleet profitability as part of ongoing real estate portfolio strategy.

Q: Michael Lasser asked about pricing strategies and tariff impact.

A: Melissa Rasmussen and Reade Fahs discussed balancing pricing between managed and cash pay customers, and stated that tariff impact was expected to be minimal with less than 10% of costs affected and progress in moving activity out of China.

Q: Kate McShane inquired about promotions and their effect on gross margin.

A: Reade Fahs and Melissa Rasmussen mentioned promotions like progressive offers driving traffic, and that promotions were offset by traffic increase leading to a gross margin impact.

Q: Zachary Fadem asked about exam capacity and store closure details.

A: Reade Fahs and Melissa Rasmussen talked about exam capacity expansion and store closure evaluation based on various store characteristics such as profitability, lease expiration dates, etc.