National Vision Holdings, Inc. Q4 FY2025 earnings call

Alex Wilkes mentioned 2025 was a great year with enhanced leadership team, laid out transformational roadmap, drove mid-single-digit comp store sales and operating margin expansion. Strategic initiatives focus on four growth vectors: expanding with underdeveloped customers, evolving product offering, enhancing patient and customer experience, and new store growth. In 2025, shifted customer mix to more profitable segments like managed care, Outside Rx, etc., leading to average ticket growth of 6%. Changed merchandising strategy, introduced new brands, and deployed iPads and digital tools. Chris Laden discussed fourth quarter and fiscal 2025 results, including net revenue growth, adjusted comp store sales, and operating margin expansion. Also talked about fiscal 2026 outlook with net revenue range, adjusted comp store sales growth, and profitability expectations.

In fiscal 2025, net revenue grew 9% to $1,990,000,000. Adjusted comp store sales were 6%. Adjusted operating income grew 56% to $102,500,000 versus $65,500,000 in 2024, with AOI margin expansion of 160 basis points over 2024, landing at 5.2%. Adjusted EPS was $0.80 for fiscal 2025, compared with $0.52 in 2024. In the fourth quarter, net revenue grew 15.1% to $503,000,000. Adjusted comp store sales were 4.8%. Adjusted operating income was $17,600,000, with AOI margin improving to 3.5% compared to 0.7% in the fourth quarter last year, and adjusted EPS in the fourth quarter came in at $0.15 per share compared with a loss of $0.04 per share last year. Managed care accounted for 42% of revenues in 2025.

For fiscal 2026, currently expect net revenue between $2,030,000,000 and $2,090,000,000 supported by adjusted comparable store sales growth of 3% to 6%. Expect adjusted operating income between $107,000,000 and $133,000,000. Expect adjusted diluted EPS to be between $0.85 and $1.09 per share. Capital expenditures to be between $73,000,000 and $78,000,000, with plan to open approximately 30 to 35 new stores and close approximately 10 to 15 stores.

Q: Good morning. Thank you so much for taking my question. You're providing a lot of evidence that your strategy is working and leading a very effective performance. The key question from here is going to be whether there could be a pause in the trade-off between the growth you're getting from the insurance, more richer-pay customers versus the traditional customers that National Vision Holdings, Inc. has served. So are you seeing any evidence of that, whether it was the shape or cadence of the fourth quarter or what you've seen quarter to date, that there could be a disruption in this growth rate as you have that potential handoff over time?

A: Hey, Michael. Good morning. Thanks for the question. I will address a bit of the shape of the fourth quarter and step a little bit through what we are seeing in the first quarter and then provide a little bit of color on the cash pay customer versus the managed care customer. So, the fourth quarter certainly was an interesting quarter for us. We started October off actually pretty darn strong, and were happy with the results. November kind of as expected, but then we did see some slowing in December, in particular with the cash pay customer. An important nuance of December, though, was as soon as we cleared Christmas, actually, our week 53 was pretty darn fantastic, and we saw consumer demand come back. I think a little bit of that was related to the compressed timeline between Thanksgiving and Christmas where folks might not have been as much in the optical game as we would have liked, and there was a fair amount of macro noise. As we moved into January, that demand continued. We were super happy with our results all through essentially January 22 when winter storms, I think, put not just our business but a lot of other businesses a little bit on our heels with the winter weather that impacted, frankly, a large swath of the U.S. Again, super pleased with where we are sitting through the first quarter, two months in, sitting in the mid-single-digit range, seeing sequential acceleration in traffic. So really, really quite pleased with that. Now a little bit deeper into your question on the managed care versus the cash pay cohort. Again, continuing to see strength with the managed care consumer. The cash pay customer is still a bit more fickle than what we have previously experienced in years past. We did start to see a little bit of improvement last year, and then late last year, there was a little bit of continued macro wobble. But we do think that we will comp positively with the cash pay consumer in 2025. One of the interesting things that we have talked about is that the cash pay consumer has actually opted into some of the more premium products that we have rolled out at a faster clip than what we had anticipated, and that was also a contributor to our success in 2025. So, Michael, I hope I got to most of your question.Q: You did. You did a great job, Alex. So you expect cash pay to comp positive. What would that compare to the comp from that cohort of consumers in 2025, just so we have a relative frame of reference? And what have you factored in from both the tax refunds as well as smart glasses that will be fully deployed to your stores by the second quarter into your guidance for this year, just to help us assess the degree of conservatism that could be baked into the outlook? Thank you so much.

A: You got it. So on the cash pay consumer side, again, it is a combination of both traffic and ticket. As we are introducing more products and rolling out smart eyewear to more stores, we absolutely think that cash pay consumer is going to participate in that. We are still being a bit more conservative on our traffic expectations with the cash pay consumer until we start to see a bit more acceleration in the repurchase cycle of that consumer cohort. But, again, on an overall comp basis, because they are opting into the more premium offerings we are launching, we do feel positive about the cohort on a comp basis. On the second point on tax refunds in 2026 outlook as that relates to smart eyewear, clearly, we think having more money in the consumer's pocket is a good thing for us and a good thing for consumption of the category in general. As we step through the next couple months, we will hopefully see some of that flow through at a higher rate to our business than what we have even experienced quarter to date. Again, optimistic. We obviously think cash in the consumer's pocket is a good thing. But with our stronger resiliency with the managed care consumer, we are not necessarily as dependent on the tax refund tax seasonality now as we may have been in years past. As it relates to smart eyewear and 2026 outlook, we are super excited that we are going to be deploying Ray-Ban Meta to the balance of our fleet by the end of the second quarter. Again, this has been one of the really pleasant surprises of our business, that it is one of the hottest-selling products that we have in our assortment. We are ecstatic with the performance of Ray-Ban Meta within our stores. The transaction value of that consumer is significantly higher, among the highest of our consumer types. So nothing really but enthusiasm and good news for us as it pertains to that product category.