National Vision Holdings, Inc. Q2 FY2026 earnings call

• Strategic Core Progress

  • The company is executing a long-term strategy focused on shifting customer mix to higher-value, more profitable transactions, increasing premium product attachment, and expanding average ticket, rather than relying solely on low-value transaction growth
  • The strategy is designed to build a durable growth flywheel: stronger customer mix → higher premium attachment → margin expansion → increased profitability
  • Adjusted EPS increased 38.9% year-over-year to 25 cents per share, and first half 2026 adjusted EPS grew nearly 37% compared to 2025

• E-Commerce Replatforming Milestone

  • Completed full implementation of a new modern e-commerce platform, a foundational technology milestone that created a short-term 150 basis point comp headwind over 6 weeks in Q2, but now enables long-term unified commerce capabilities
  • The new platform delivers faster, more intuitive shopping, improved online exam booking conversion, and supports future AI personalization and full online purchasing, a first for National Vision at this scale
  • Early benefits already visible: higher online exam booking completion rates, and the platform enables a seamless end-to-end optical journey connecting exams, prescriptions, product selection, and purchase

• Product and Assortment Initiatives

  • Expanded premium branded frame assortment to include Versace, Burberry, Persol, and Costa, alongside strong ongoing performance from Ray-Ban, attracting higher-value customers
  • Launched Nikon Eyes Stellis premium branded lenses, which have exceeded early adoption expectations and driven meaningful mix shift to higher-value products
  • Smart eyewear (Ray-Ban Meta and newly added Oakley Meta, available across all 1,200+ locations) is the company's fastest-turning branded SKU category, with average transaction values among the highest in the portfolio; National Vision holds a structural advantage via in-store prescription fitting by licensed optometrists and managed care benefit support
  • Premium lens attachment is growing across all categories: anti-reflective coatings lead growth, followed by premium progressives, then Transitions lenses, all outperforming internal expectations

• Store Segmentation Rollout

  • Completed rollout of 5-segment assortment segmentation for America's Best at the end of Q2 2026, with 3-segment segmentation on track for Eyeglass World by Q4 2026
  • Segmentation tailors assortments to local customer demand, income cohorts, and lifestyle preferences; early results show average ticket lift across all segments, with the strongest lifts in stores allocated more premium SKUs
  • Management expects segmentation to drive 100-200 basis points of additional ticket growth over the 12 months post-implementation, with sustained benefits into 2027 and beyond as store teams acclimate to the new strategy

• Eyeglass World Transformation

  • Completed three foundational changes for Eyeglass World's next growth phase: 1) finalized a new brand identity that will launch online in Q3 2026, 2) transitioned in-store lens surfacing to a centralized lab (enabling expanded premium lens offerings, while retaining same-day single vision service for consumers), and 3) segmentation rollout on track for Q4 2026
  • The repositioning will move Eyeglass World to a more premium, differentiated market position separate from America's Best, justifying the continued multi-brand strategy

• Financial Operational Highlights

  • SG&A as a percentage of revenue leveraged 200 basis points in Q2, driven by store labor efficiencies, lower variable incentive compensation, and a timing shift of marketing spend from Q2 to Q3, delivering 50 basis points of leverage in the quarter
  • The company completed $20 million in opportunistic share repurchases in Q2 2026, with $30 million remaining in repurchase authorization as of July 2026
  • Net debt to adjusted EBITDA (trailing 12 months) is 0.9x, indicating a strong balance sheet; the company generated $69.8 million in operating cash flow year-to-date, with $39.8 million in capital expenditures

National Vision operates two core retail brands: America's Best and Eyeglass World. For the overall company in Q2 2026, net revenue grew 2.5% year-over-year to $499 million, with adjusted comp store sales up 2.2% overall. Excluding the temporary 150 basis point headwind from e-commerce replatforming, America's Best delivered slightly over 4% adjusted comp store sales growth, driven by 7.1% overall average ticket growth that offset a 4.9% decline in total company traffic. Eyeglass World posted 0.4% adjusted comp store sales growth in Q2 2026, as the brand completed foundational operational changes ahead of its upcoming repositioning. The company's overall adjusted operating income increased to $31.6 million from $23.8 million in the prior year quarter, with adjusted operating margin expanding 140 basis points to 6.3%. Premium categories (anti-reflective coatings, Transitions lenses, polycarbonate lenses, premium progressive lenses, smart eyewear, and branded premium frames) grew meaningfully, contributing to average ticket expansion. In Q2 2026, the company ended with 1,281 total stores, 9 net new America's Best openings, and inventory up 37% year-over-year to support store segmentation and premium assortment expansion.

Management updated full-year 2026 guidance, raising the profitability outlook while narrowing the top-line range to reflect prudent expectations for lower-value transaction re-engagement:

• Net revenue guidance is now $2.03 billion to $2.08 billion, with adjusted comparable store sales growth expected to be 3% to 5% (the top end of the prior range was reduced by 100 basis points to account for ongoing deferral of lower-value transactions)
• Adjusted operating income guidance is now $119 million to $139 billion, an upward revision that reflects better-than-expected cost execution and mix shift, with midpoint guidance representing ~120 basis points of adjusted operating margin expansion vs 2025 (excluding the 53rd week in 2025)
• Adjusted EPS guidance remains $0.94 to $1.09 per share, assuming 80.9 million weighted average diluted shares outstanding
• Capital expenditures are expected to be $72 million to $76 million, with 30-35 new store openings (tracking towards the lower end of the range) and 15 store closures, resulting in 15-20 net new store growth for the full year
• Q3 and Q4 2026 are expected to deliver flat to modest adjusted operating margin expansion, as the company plans to reinvest the $5 million expected tariff refund (recorded in Q3) into incremental back-half marketing
• The $10 million annualized multi-year cost savings plan remains on track to be fully realized in 2026, with all initiatives already in place
• Interest expense is expected to be $11 million to $13 million, and the effective tax rate is expected to be ~30%
• Long-term guidance remains unchanged: mid-single-digit comp growth, with 50-150 basis points of annual profit accretion; management expects near-term (through 2027) growth to be driven more by ticket than traffic, with store growth acceleration expected in 2027-2028 that will drive traffic gains

• Macroeconomic pressure has led to ongoing deferral of purchases by value-seeking consumers purchasing at lower average transaction price points; this dynamic is the primary source of uncertainty in the full-year comp guidance range, with risk that deferral could worsen if macro conditions weaken
  • The e-commerce replatforming created short-term traffic and comp headwinds in Q2 2026, though management expects these impacts to be fully behind the company as of Q3 2026
  • The shift to a higher-value product mix has resulted in modest gross margin rate dilution in the near term, as higher-value products have higher input costs
  • Inventory is up 37% year-over-year to support segmentation and premium assortment, which creates modest incremental obsolescence risk, though management's centralized inventory model reduces this risk by allowing slow-selling SKUs to be rotated to appropriate store segments before markdowns
  • Long-term growth depends on sustained consumer willingness to opt into premium products, and on successful repositioning of the Eyeglass World brand

Q: Can you detail the impact of e-commerce replatforming, when pressure will end, and why was full-year comp guidance lowered? / A: The 150 basis point Q2 headwind was measured via a test/control comparison of pre- and post-replatform customer acquisition. Disruption lasted six weeks from early April to mid-May, after which new customer acquisition and customer acquisition costs returned to normal levels. Early benefits are already visible, including higher online exam booking completion rates, with long-term upside from unified commerce. The top end of the full-year comp range was lowered by 100 basis points solely to account for ongoing uncertainty around when value-seeking consumers with deferred purchases will re-engage; all ticket-driven initiatives remain on track.

Q: Excluding replatforming impact, traffic still declined in Q2. Is this deferral of lower-value transactions or another factor, and what drives the upward AOI guidance revision beyond the $5 million tariff refund? / A: Traffic declines are concentrated in value-seeking consumers (not specifically low-income consumers) who only purchase entry-level bundle offers. Data shows a two-week lengthening of the purchase cycle for these consumers, confirming it is deferral rather than permanent share loss, while traffic for transactions above the median average ticket is up. Beyond the tariff refund, the AOI increase is driven by better-than-expected cost execution, specifically targeted store labor adjustments that matched supply to softer Q2 demand, as part of the $10 million annual cost savings plan that is fully on track.

Q: How much of current average ticket growth comes from mix shift vs price increases, and can ticket growth from premiumization sustain for multiple years? / A: Year-to-date, over half of ticket growth comes from mix shift (consumers opting into premium products), with less than half from price increases. This is a shift from prior years, when ticket growth was predominantly price-driven, which management views as a much healthier dynamic. National Vision still has significant long-term runway for premiumization: the company remains meaningfully below category average transaction values, with multiple years of initiatives (store segmentation, new premium product launches, improved in-store training) to continue driving mix shift, while still remaining the leading value destination in the optical category.

Q: What is the focus of incremental back-half marketing, and what early results have you seen from the newly rolled out America's Best store segmentation? / A: Incremental marketing spend will go to connected TV, social media, and search, with content focused on the company's core growth segments: managed care, out-of-prescription, and progressive lens consumers. For the first time, the company will also run broad marketing to drive direct online purchases (beyond just exam booking), enabled by the new e-commerce platform. Segmentation has five tiers for America's Best, rolled out five weeks before the call, and is performing as expected: average ticket lift is seen across all segments, with the largest lifts in stores allocated more premium SKUs. Management expects 100-200 basis points of total ticket growth from segmentation and Nikon Eyes over 12 months post-launch, with sustained benefits into 2027 and beyond as store teams acclimate.