National Vision Holdings, Inc. Q3 FY2025 earnings call

• Delivered 11th consecutive quarter of positive comp store sales with adjusted comp growth of 7.7%. - Achieved 90 basis points of adjusted operating margin expansion supported by higher average ticket and refreshed merchandising mix. - Managed care business continued strong with low teens comp sales growth; progressive lens wears and outside Rx also performed well. - Launched 'Every Eye Deserves Better' campaign for America's Best, boosting unaided awareness. - New CRM platform and in-store selling tools enhanced customer engagement. - Rolled out Meta-enabled smart glasses in 50 stores, planning to expand to 250 more in the fourth quarter. - Aim to have ~40% of frames priced at or above $99 by year-end. - Cost optimization efforts underway, focusing on SG&A leverage. - Doctor coverage remains healthy with innovative recruiting and retention strategies, and remote exam technology provides capacity flexibility.

Net revenue increased 7.9% in the third quarter of 2025, driven by adjusted comparable store sales growth of 7.7% and new store sales. Costs applicable to revenue decreased approximately 40 basis points, leading to gross margin expansion. Adjusted SG&A was $242.3 million, leveraging 10 basis points despite health care cost headwinds. Adjusted operating income was $19.8 million compared to $14.3 million in the prior year period, with adjusted operating margin increasing 90 basis points to 4.1%. Managed care business had low teens comp sales growth, while progressive lens wears and outside Rx customers also showed strong performance. In terms of revenue contribution, managed care, progressive lens wears, and outside Rx were key segments driving growth.

• Raised full-year 2025 guidance: revenue expected to be $1.97 billion to $1.99 billion, adjusted comparable store sales growth 5% to 6%, adjusted operating income $92 million to $98 million, and adjusted EPS $0.63 to $0.71. - Incorporates the benefit of the 53rd week, adding approximately $35 million of net revenue and ~$3 million of adjusted operating income. - Q4 pricing updates, including surgical lens and package pricing changes, are factored into the guidance.

• Macro uncertainty around holidays may impact consumer spending in the fourth quarter. - State regulatory constraints limit remote exam deployment in some stores. - Health care cost headwinds continue to affect SG&A leverage.

Q: What signals are being looked for in merchandising and when might traffic inflect?

A: NPS and conversion rates are monitored, cash pay consumers are adopting higher price items, and traffic is inflecting in managed care, outside Rx, and progressive lens wear segments.

Q: What is the contribution from pricing expected in 2026?

A: Pricing actions in 2026 are expected to be similar to 2025, with average ticket growth deconstructed into pricing, assortment, and consumer mix components.

Q: What are the market share trends?

A: National Vision is gaining share on a volume basis, outstripping Vision Council exam growth data.

Q: How are cash pay consumers trending?

A: There is a slight acceleration in the purchase cycle, higher uptake of frames and lenses, and some cash pay consumers are becoming managed care customers.

Q: What about competitive pricing?

A: The category is growing on price, and National Vision is closing the gap vs past 5 years while aiming to be a value destination.

Q: Details on new customer acquisition and brand awareness?

A: Traffic is growing in the low teens for certain segments, unaided brand awareness has increased 19%, and brand consideration is up 10% since the new campaign launch.

Q: Information on lens pricing actions and Q4 comp?

A: There are surgical lens pricing changes, and Q4 comp is expected to decelerate due to lapping promotions and macro uncertainty.

Q: Plans for Eyeglass World's advertising and pricing?

A: Focus on rearchitecting Eyeglass World's campaign in 2026, borrowing from America's Best playbook.

Q: Insights on gross margin and doctor availability?

A: Gross margin expanded due to higher average ticket and optometrist cost leverage, and doctor recruiting is stable.

Q: Managed care penetration and advertising strategy?

A: Managed care penetration is growing, and media is shifting to mid-funnel digital assets to target managed care consumers.

Q: New store economics and remote exam penetration?

A: Details on new store economics will be shared at Investor Day, and remote exam penetration is north of 70% but limited by state regulations.