Q2 2025 National Vision Holdings Inc Earnings Call
Good day, and thank you for standing by. Welcome to the National Vision Holdings, Q2 2025 conference call at this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session to ask a question during the session. You'll need to press star 1, 1 on your telephone. You will then hear an automated message, advising. Your hand is raised.
To withdraw your question. Please press star 1 1 again.
Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first Speaker today. Tomorrow Gonzalez, vice president investor relations. Please go ahead.
Thank you and good morning, everyone. Welcome to National Vision second quarter 2025 earnings call.
Joining me on the call today are Alex Wilks CEO and Chris Laden CFO.
Our earnings release issue this morning and the presentation accompanying, our call are both available in the Investor's section of our website National vision.com. A replay of the audio, webcast will be archived in the investor section after the call.
Before we begin, let me remind you that our earnings materials and today's presentation include forward-looking statements as defined in the private Securities. Litigation Reform, Act of 1995, these statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections.
These risks and uncertainties include but are not limited to the factors identified in the release and our filings, with the Securities and Exchange Commission. The release in today's presentation also includes certain non-gaap measures reconciliation of these measures is included in our release and the supplemental presentations.
Looking statements and non-gaap measures.
Further. Please note that all Financial measures in today's commentary are based on a continuing operations basis, unless otherwise notice
As a reminder national Vision provides investor presentations, and supplemental materials, for investor reference in the investor section of our website.
I will now turn the call over to Alex Alex.
Thank you tomorrow, and good morning everyone. Thank you for joining us today to discuss our second quarter results. I'm excited to be speaking with you for the first time a CEO. Having officially stepped into this position on August 1st.
before diving into our results, I'd like to express my sincere gratitude to read for his tremendous leadership over the past 23 years and for his continued support as executive chairman
I feel privileged to lead National Vision at this time of significant transformation and accelerated growth.
We are thrilled with the continued positive response. We are seeing with our customers and throughout our organization to the changes. We're making to rapidly, modernize the company.
Our second quarter results demonstrate that our initiatives are working and progressing at a faster Pace than we had planned. We attribute this ongoing early success to the commitment of our teams who are enthusiastically delivering results.
We have a few exciting initiatives underway for the back half of the year. Last week, we introduced our new National Vision, branding. And next week, we are launching a transformational campaign for America's Best.
Every I deserves better and we're excited for you to see it. We believe that this modern positioning of our largest brand along with implementing, a powerful new CRM platform will serve us well, to attract new customers and retain our existing customer base.
Give it our strong, year-to-date performance. We are raising our full year outlook. While maintaining a prudent view on the remainder of the year against a noisy macro backdrop.
And now, on to our Q2 results.
We delivered the highest second quarter results that we've seen in recent years, including the 10th consecutive quarter of positive compstar sales growth.
This quarter. We saw stronger than expected top and bottom line results with adjusted comp store, sales growth of 5.9% and adjusted EPS of 18 cents supported by a 69% year-over-year growth in adjusted operating income.
This resulted in 180 basis point adjusted operating income margin Improvement to 4.9%.
Top Line.
Performance and adjusted operating income expansion are primarily related to the pricing actions. We took earlier in this year are improved product assortment continued efforts to improve our customer experience and are focused on driving cost efficiency.
These actions drove overall comps store, sales growth, offsetting a decrease, in average transactions. As we anniversary last year's promotional activity.
We continue to see strengths within our managed care business, which delivered low double-digit, comp growth bolstered by strong growth in both ticket and traffic.
Our cash pay business. Also continued to deliver positive comp growth and the low single digit range driven by ticket which was similar to cash pay Trends, seen in q1 even while anniversary last year's promotional activity
Importantly, while we've experienced average ticket gains across the business, we continue to see exam to eyeglass purchase conversion, Hold Steady in this quarter, we saw our net promoter scores increase.
A key to our success is how we deliver exceptional Eye Care and the strength of our doctor Network, doctor coverage remains healthy. We've continued to expand our doctor coverage and improve appointment availability.
In our remote exam, technology reached a significant Milestone. This quarter surpassing 1 million exams conducted
I'm sharing all of this, our brand Evolution, enhanced capabilities, and strengthened, Doctor Network, to underscore the sustainability of the strides we're making as we capitalize on the incredible runway for growth ahead.
We shared that our strategy and models heightened segmentation personalization and digitization in our messaging product assortment pricing architecture and consumer experience.
And we spent a lot of time talking about the great opportunity and progress, we have made with expanding our Managed Care, customer cohort, but we're also making strong progress and expanding our addressable Market with progressive lens wearers and outside our ex customers.
Those who bring prescriptions from other providers.
As we progress, we expect to continue to sharpen our product assortment in store, experience and marketing, approach to better attract and serve these customers.
We continue to evolve our product assortment to meet their needs Managed Care. Users have benefits allowing for frame purchases that averaged $130 and yet only 20% of our frames were priced over $99 at the end of last year.
That is why we're moving our assortment of frames priced over 99 to proximate 40% this year through the new brands, which we are launching.
Our recently launched designer Partnerships are performing really well with both cash, pay and Managed Care customers.
The lamb and Ted Baker collections are turning at above average rate, validating our strategy of offering designer options.
And this quarter, we're excited to launch Jimmy Choo which features high-quality and glamorous styling, and Hugo, Boss known for sophisticated and modern designs.
A torment, evolution is just 1 Factor contributing to our growth.
Another significant component is our approach to the in-store experience and may we conducted comprehensive lifestyle training. Across our entire organization, this wasn't just a training exercise. It was a significant inflection point for our field team. We conducted immersive training for our Associates in this new approach and it's created significant drive and energy throughout the organization.
This training is focused on selling to the lifestyle needs of the consumer while still being an obvious destination for Great Value. It's a subtle Nuance but a very important 1 for how we are addressing our business.
Together, these initiatives are already showing results, as we've seen growth in each target customer cohort group.
In addition to these tactical changes, we are also refreshing our branding overall during the quarter, we made significant progress with the launch of our refresh branding for National Vision that you see featured in this quarter's earnings presentation.
This new identity is more than a visual Evolution. It's a powerful expression of our purpose, our people, and our momentum. As we enter a new chapter for our business, our new identity, reflects in the National vision of today and tomorrow, a modern agile, purpose-driven company committed to helping people see their best to live their best.
But I'm especially excited about America's best fresh new look that you'll see launch next week.
America's best was in need of a brand revitalization that speaks to the consumer segments that we are targeting, while staying true to our strong value positioning.
With the brand new position that every eye deserves better. We're introducing a new look and feel. That's reassuring modern and joyful.
These launches have energized our teams to rise to the occasion, and meet our objective to helping people see their best to live their best.
Take a look at our national Vision website, to see how we've elevated and modernized National Visions corporate look and feel. And in our second quarter presentation, you'll see a sneak peek at how America's best fresh look but customers and their eyes front and center while staying true to our heritage of value.
The work we are doing to redefine our communication and brand platforms is just the beginning and we're excited with the path. We see ahead as we modernize and create a more personalized experience for our customers. To that end we're making rapid enhancements to our digital marketing and Omni Channel capabilities.
We are making good progress. Upgrading our CRM capabilities, with the support of our partnership with Adobe
We successfully migrated our customer database launched all of our pre-existing campaigns in the new system and are actively testing the new Journeys being developed with the first launching. This quarter,
This new platform will allow us to create new personalized Journeys, for all our customers and significantly enhance their experiences online.
The new system is designed to greatly improve, targeting precision, and audience selection. We look forward to updating you further. On the progress we make,
while much of our current work is focused on America's best. We are driving improvement in Eyeglass World.
Earlier this year, we made a leadership change that is bringing the right focus and urgency needed for the brand.
Since putting in place, the new leadership. Team Eyeglass World saw its best first half performance since 2021.
We recently made an important strategic decision to modify our Docker model in Florida to enhance the patient experience and provide greater access to care.
We are excited about the transformation. Just beginning at egw.
Initiatives are gaining Traction in our brand, revitalization is energizing Associates.
Our customers will soon. See a fresh and modern America's Best in our strategic, focus on key customer segments is driving improvements, in our comp sales.
Before I turn the call over to Chris, I want to thank our team again for their enthusiasm and focus as we deliver on our initiatives. I'm confident in the steps we're taking to rapidly modernize the company and accelerate growth.
Importantly, we're doing this. Things are customers, want to create a joyful, shopping experience with the products they love and we are just getting started. We have years of Runway ahead to continue to evolve the business. The Investments we're making are phased over the course of this and subsequent years and we believe we will strengthen our position and increase shareholder value for many years to come.
I look forward to unpacking, our strategic vision and more detail at our investor day on November 17th. With that, I'll turn it over to Chris Chris.
Thank you, Alex and good morning everyone with a full full quarter. Now under my belt, I am even more energized by the progress. We are making and our clear path forward as a team, we have an unwavering commitment to deliver on our stated objectives. Operate the business with enhanced discipline and drive sustainable profitable growth.
As part of this commitment, we are focused on driving efficiencies across the business leveraging, our cost structure and ongoing customer value creation resulting. In ticket expansion, that we believe has a multi-year trajectory, as Alex said. We look forward to sharing more on this during our upcoming investor day.
Now I'll turn to our second quarter results as compared to the prior year period.
please refer to today's press release for reconciliation of non-gaap financial measures to their most comparable, gaap Financial measures
For the second quarter, net revenue increased to 7.7% driven by adjusted comparable store sales growth of 5.9% and growth from new store sales.
The timing of unearned Revenue benefited Revenue in the period by approximately 60 basis points.
During the quarter, we opened 8 new America's best stores and closed 5, America's best stores. We ended the quarter with a total of 1,240 stores.
Adjusted comparable store, sales growth, in the period was driven by an increase in average ticket of 6.6%, which reflects the impact of price increases implemented in late 2024 and q1 of this year, as well as the benefit from our refreshed merchandising mix in new selling methods.
The increase in average ticket was partially offset by a 0.4% decline in overall customer transactions as we anniversary last year's promotions.
Overall, I exam conversion to eyeglass sales remained consistent with prior quarters, signaling customer acceptance of our new merchandising and pricing architecture. And we have continued to see strong results in Managed Care supported by both positive ticket and traffic trends.
As a percentage of net revenue costs applicable to revenue decreased approximately 100 170 basis points.
The resulting increase in gross margin. Reflects growth in average ticket as well as optometrist and a tech cost Leverage.
Given the gross margin expansion. We have seen to the first half of the year, we now, expect gross margin to expand slightly for fiscal 2025.
Adjusted sgna was 240 million and increase from the second quarter of fiscal 2024.
We have continued to benefit from the cost actions. We took earlier this year. However, the increase in sgna dollars was primarily driven by higher variable compensation, expenses related to revenue and profitability performance During the period as well as higher healthcare costs.
as a percentage of Revenue, we leveraged our core expenses including compensation and benefits, however, total adjusted sgna de-lever, 20 basis points, largely driven by fewer, non-gaap adjustments taken this year compared to the prior year,
For the year, we continue to expect adjusted sgna to Leverage.
Adjusted operating income was $23.8 million compared to $14.1 million in the prior year.
Adjusted operating margin increased 180 basis points to 4.9% Due primarily to the factors mentioned above.
Continued margin rate. Expansion through delivering consumer value. Remains a primary focus for our team.
Net interest expense was 4.2 million compared to 3.2 million in the prior year, driven by lower interest income, on our cash, balances with a settlement of our convertible notes. In May
Adjusted EPS increased to 18 cents per share in the second quarter of 2025 from 15 cents per share a year ago.
Adjusted comparable sales growth of 5.7%.
Adjusted operating income margin expansion of 140, basis points and nearly 20% growth in adjusted EPS compared to the prior year.
Turning next to our balance sheet, we ended the period with a cash balance of approximately 48 million and total liquidity of 327 million including available capacity from our revolving credit facility.
In may, we settled the remaining 84.8 million in convertible notes through cash on hand and liquidity from our revolving credit facility.
As of June 28th, our total debt outstanding, net of unadvertised discounts was 272 million and for the trailing 12 months, we ended the period with net debt to adjusted ibida of 1.3 times.
Year to date, we generated operating cash flow of 87 million and invested, 32 million in capital expenditures, primarily driven by investments in new and existing stores, and remote exam technology.
We continue to maintain a strong balance sheet and healthy cash flow to support our growth and capital allocation priorities.
I am also happy to announce that we successfully implemented, the first phase of our new Erp focused on Finance and Accounting in Q2.
The implementation of this platform serves as a proof point of our ability to execute on a modernization of our business.
Moving now to our Outlook based on the successful execution of our initiatives, we are raising our expectations for the year.
We now expect revenue between 1.93 and 1.97 billion adjusted comparable, sales growth of 3 to 5%.
Adjusted operating income between 85 to 95 million.
And adjusted EPS of 62 cents to 70 cents, which assumes approximately 80 million weighted, average diluted shares outstanding.
As a reminder, this Outlook incorporates the benefit of a 53rd week, which we estimate will add approximately 35 million of net revenue and approximately 3 million of adjusted operating income for the year though, it will not impact adjusted. Comparable store, sales growth, which is calculated on the 52 week basis.
We expect to continue to benefit from our previous pricing actions and have not assumed additional pricing actions in our guidance.
We will continue to evaluate the consumer response to our evolving merchandising, assortment and selling techniques together, with the pricing, we've taken and use these insights to inform our next steps.
As we've mentioned pricing strategy is an important component of our annual cycle and we expect to share more on our plans, on our next earning call.
Our guidance assumes that second half traffic Trends are in line with our Q2 performance. Given the continued uncertainty in the macroeconomic environment.
We remain optimistic about the launch of our new CRM platform and America's best brand assets. But we believe it's proven to wait until we have proof points of their impact on consumer behavior before we incorporate any potential benefit in our guidance.
With respect to costs, our outlook continues to incorporate $12 million of expense savings from actions taken earlier this year and now incorporates higher expenses related to variable incentive compensation, as well as increased healthcare costs based on updated trends.
On our last earnings call, we committed to monitoring the evolving tariff environment and to mitigate the P&L impact created by the new regulatory environment.
The latest tariff policies. As of August 1st has significantly reduced the anticipated impact on our business, from our q1 estimates, and our raising guidance includes both the anticipated impact of tariffs and our mitigation strategies.
We are very pleased with the progress. Our team is making in partnership with Accenture on our cost optimization strategy.
We recently completed our initial analysis and identifying key areas of cost opportunity and as we begin to implement actions in these areas, we will provide a more comprehensive update on the potential savings opportunities. We have across the organization
Now turning to our expectations for Capital expenditures.
As you will see, in our press release, capex has come down a bit to a range of 87 to 90 million.
This change is largely driven by our expectations that we will now open a proximately, 32 new stores. This year as certain projects have shifted into fiscal 2026.
Considering plan closures for the year. We expect to open 12 net new stores. This includes 17 America's best stores, open through the end of Q2 and an expected remaining 15 openings to be largely weighted in Q4.
In addition to these new stores, we expect to close 20 stores in total this year. This includes 3 store closures expected in Q4.
In today's call Operator, we are now ready for questions.
Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press *1 1 on your telephone and wait for your name to be announced to withdraw your question. Please press *1 1 again.
Please stand by while we compile the Q&A roster.
And our first question comes from Simeon, Goodman with Morgan Stanley, your line is now open.
Hey, good morning guys. This is a good quarter. My first question is on Managed Care expansion. Can you talk about is their visibility in the number of you know the percentage of of new plans that you could get into as we go through contract renewal season maybe that's done and any framework of the you know, number of plans or percentage new plans and then where you are in penetration by plan. So we can get a sense of what the runway looks like in managed care. Thanks.
Hey, Sammy. Good morning, and thanks for the question. Yeah, again, we're really happy with our Managed Care growth in the quarter. Uh, we, we grew Managed Care up in the low, double digit range. So, continue to see a nice traction there. You know, we haven't really talked and we won't talk specifically about individual plans. And plan participation, I will say that, you know, we are we are continuing on our our Northstar of Managed Care growth and mixes around the 50% range and we're continuing to to push right along that path.
Okay. Um and then thinking about the cache customer is, is there a line of sight on getting volumes to positive? Not just or, you know, ticket I'm sorry. Traffic, not just tickets. How do you think about that? Yeah, no great question. So, you know, there's a couple Dynamics to think about here, 1 is the cash. Pay cohort, is continuing to shrink as more cash, pay consumers, you know, become Managed Care customers. So, you know, our data would suggest, there was about a 2% mix shift, from from the cash pay cord into Managed Care, uh, year-over-year. So that's 1 Dynamic to, to think about. So, you know, that being said, you know, we're looking to control our own destiny with the cash pay cohort. It's, you know, primarily 1 of the reasons, we're we're Reinventing our America's best approach to marketing both our our campaign assets and our purchases CRM is really rooted in this idea that we're going to control our own destiny. On the cash pay consumer that has not been as resilient as the Managed Care customer
Kind of in the postcovid period. So you know our our we're pleased with what's occurring. We're pleased that the cohort of cash pay is comping positive. Once you you know aggregate both traffic and ticket and we're looking to drive our like I said Drive our own destiny as it pertains to that cohort through our marketing activities.
Okay, thank you. Good luck.
Thank you.
And our next question comes from Michael.
With UBS.
Good morning. Thank you so much for taking my question as you unpack, the America's best comp from the second quarter. How much of the growth came from, like for like price increases on same SKS?
how much came from elevating the assortment to a greater percentage of your your
Excuse me, above $100. Did the first two factors contribute to the traffic decline that was experienced in the second quarter? Thank you very much.
Hey, good morning. So as we look at, uh, both Q2 and year-to-date results, um, you know, we're seeing improvements in ticket driven by both, um, the price actions we've taken and mix, uh, the majority of the impact was driven by a price actions, but keep in mind that we're continually refreshing our assortment so we haven't had a lot of these, uh, the springboard assessment in place for the entire quarter. Um, as we think through the second half of the year, you know, we expect to see a continued evolution of of that mix.
In terms of the traffic impact. Um, you know what, we're the interesting that we're seeing both on men's care, and on Cache, pay is that consumers are actually trading up into these, uh, more premium frame assortments as well as some of our more premium lens assortments. So, you know what it's telling us is the the the changes we're making are resonating with both cache pay and uh, Managed Care consumers and we don't have any reason to believe that. Um, the assortment changes we're making, are, are uh, getting cash. Pay customers to opt out.
Okay.
Track to be 4 and a half to 5% this year. Historically, the company has achieved an operating margin in the 6.5 to 7% range. So how quickly do you think
You can recapture that 200 basis points of gap between what you're expecting this year, and where it's been historically and should we think about the historic Peak as a, as a Upward Bound of where National vision's marching can go, or alternatively just given all the actions that have been taken along with uh the elevated assortment. There can be a new Peak margin opportunity on the horizon. Thank you very much.
Thank you, look. I think um, margin expansion is a primary focus for this management team. Uh, we're really excited about the margin expansion. We saw through the first half and, and what we're guiding to, you know, without speaking to kind of multi-year outlooks. Um, what I can say is that, we'll, we'll provide a little more context in our investor day, coming up here in a few months. Um, but the actions, we're taking both on the assortment changes on, uh, some of the CRM activity on the cost, controls that we're implementing in our partnership with Accenture, are all hyper focused on expanding our operating margin rate.
Our next question comes from Paul Leger with City.
Hey, thanks guys. A couple questions. Can you talk about what your actual average? Price point is for the cash paying customer and what it is for the Managed Care customer and how each
situation changed.
Year of the year. What you're seeing, uh, this quarter and I guess even bigger picture. Do you think the cash Pay customer is pushing off purchases, or are they shopping somewhere else, period? That you think you might be losing share to someone in that, um, demographic? And then last, just if you can talk about, any Regional differences, strengths weaknesses, strengths
Yeah. Hey Paul. Good morning. So yeah. Yeah, first and foremost, you know the we we do see that the Managed Care. Uh transaction is generally a higher transaction than than the cash pay transaction. I mean, these are folks that generally have you know, a higher degree of benefit that also points them to leverage their benefit and use it against, you know, some some higher higher quality lenses and some higher quality frames. So yeah, so so the ticket on the Managed Care consumer generally, outstrips that of the cash Pay customer. Uh, and certainly we think that's a significant tail when in our business and again 1 of the reasons that we're so focused on that on that Managed Care, consumer cohort, you know, 1 of the things as a
Wait for the cash pay consumer and Chris touched on this a little bit. You know this last quarter. We actually chose not to anniversary our promotion from last year which was really a a promotion focused.
At a a heavily value-seeking cash, pay consumer. So with our small decline in traffic, we're actually really pleased with that result. You know, given the choice to not chase. That, that really, you know, um,
Low-end kind of cash pay consumer with a with a a really sharp promotional message that we have last year so I think you know all in all a really nice result there. You know, that being said, you know, we still see like a like I mentioned a little bit less resiliency on that cash pay consumer from a from a purchase cycle perspective. It hasn't changed marketed from from previous quarters. But again, this is why we're making the Investments we are in in marketing and acquisition to once again, you know, kind of control our own destiny. And, and reactivate that consumer that has been a bit more a bit more latent.
Thank you and then just the regional any differences to call out. You know, we don't see really any, any sign, any significant Regional differences? Uh, you know, I said this before related to, you know, kind of seasonality in this business, we see we see Mogul is not mountains. I think the same thing holds true for Geographic, uh, differences. I mean, there's some minor differences related to, you know, different uh, managed Vision Care plan participation in different socioeconomic.
Product by market and we do think that will that will play again. Not really a strength or weakness by geography, but I think it certainly speaks to our opportunity to be a bit more hyper segmented to where, uh, you know, individual kind of consumer. Uh, consumer wants and desires lie.
Yeah, just just 1 follow up. You you mentioned a 130 dollars. Um I think spending power when you talking about the Managed Care customers. Did I hear that? Right? And I was just trying to understand where your average ticket is with that customer relative to that number.
Yeah, so um the 130 is kind of the average Mark of what plans pay for uh allow allow Managed Care consumers to to get where there's zero out of pocket on the frame component of the transaction.
And, you know, again, I mean, it's the, the, the path on this is pretty, pretty straightforward, right? The average plan pays $130. The, um, the 20% of our mix was $99 and above, and we're moving to 40% of our mix being 999 and above to more closely match. Our mix of Managed Care consumers and basically you know, serve them better frames as at a price point, to let them take better advantage of what their what their plans allow them to enjoy.
Thank you. Good luck.
Our next question comes from Adrian, ye with Barclays.
Great, thank you very much and congratulations on the great start to the year. Um, my question is, you know, typically, uh, the Eye Care, The Vision Care sort of from an annual, or bi annual basis is pretty sticky. You get kind of people who have their doctor or wherever they go. How are you actually targeting and marketing? This 75 to 100K cohort. Um, where are you doing it? How are you reaching out to them? Um, and how easy I'll put that in air quotes is it to kind of get them to transact to move, kind of, you know, the records and all that stuff to to kind of America's best and then secondarily. Um uh, can you comment on sort of like the the dark dim locations sort of how you've been able to incorporate the telea health and increase the capacity utilization of the optometrist? Thank you so much. You got it and Adrien thanks so much for for the for the commentary. Yes. I mean this your point is spot on and it's 1 of the reasons we are significantly Reinventing
How we approach marketing within within the company. Uh, historically we have done really, really well at, you know, advertising on linear TV and pumping a bunch of money into search marketing. And that was a, a good strategy for a time when we were, you know, chasing the cash pay consumer. And when, when a large majority of our customer was not in that cohort group that we're chasing today. So, as we shift, our campaign strategy to be a bit more elevated to be a bit sharper to be more joyful, to be more modern. We're also going to be shifting our approach to to Media, so we're a historically. We've, we've spent, you know, I like to talk about the, the marketing funnel kind of historically. We, uh, we invested in the shape of a barbell, right? So a lot, a lot and upper funnel and a lot, lower funnel and we didn't do a whole bunch in mid. You know, this new campaign is going to allow us to do more in Social. It's going to allow us to do more in digital and that's specifically the, you know, the channels that we believe those.
Contents consumer cohorts set. So new campaign will allow us to be better sharper in mid-funnel marketing which we haven't historically been. So that's that's 1 component to it. The second piece is around, you know, when I, when I talk about CRM and the evolution that it's, it's going to allow us to to take
Historically our CRM messages have been 1 to many. If we have 10 consumers, uh, step foot in our door historically, those 10 consumers were getting the same message. Uh, when they were kind of due due to be in the, in the repurchase cycle, go forward, we will have better information about customer demographic, their income demographic, their purchases to allow us to be much more targeted and personalized to their specific, uh, needs to their purchase history and to their individual segments. So,
In regards to dark dim locations, you know, we're we're super happy with the progress that we've made there. Our dark and dim is within the prior range. What it was in q1 from a doctor recruiting perspective. We, uh, as in previous years are, uh, recruiting over 10% of the graduating class and as it pertains to Dr. Retention, actually, our doctor retention numbers. This last quarter were the best in recent memories. So from an OD perspective, you know, we think we're in a really, really good spot. And we're confident where we, where we set
The new paraphrasing, meaning the China 145 to 30% because I think that happened right after you reported like a week after. So previously you had said 10 to 15 million dollars of unmitigated and it was not included in the Outlook.
Now that it's at 30%.
Is this now um I guess I guess it it's kind of inconsequential. Um is that a fair way to think about it?
Yeah, that's exactly right. The, uh, you know, between updates in the regulatory environment, as well as like, the conversations with our strategic Partners about what tariff impact on our supplies and that we would, or would not be willing to accept, um, that it's really something that we've, we've Incorporated in the guidance, its fractional compared to our last estimate. Um, and we've put in place a few
Cost mitigation strategies and our Outlook uh, to offset any impact of the incremental tariffs.
Fantastic. Thank you very much and best of luck.
Our next question comes from, Kate McShane with Goldman Sachs.
Hi, good morning, thanks for taking our question. Uh, we wanted to ask about Eyeglass World and I know it's a smaller part of the business, but you mentioned in the prepared comments, there's been some new leadership changes there and we're just wondering how you think about this Banner in the context of the transformational strategy and and what goals do you have set for for that Banner?
No great. Great question, Kate. And again, I'll I'll you know.
Re-emphasize how we couldn't be more pleased with the change in direction, we're seeing in Eyeglass World, uh our new leader of that brand has just working with an incredible urgency. He has a team rallied and is making the significant changes and has a great roadmap for the next couple of years to drive improved results. So you know, a second quarter positive comps of 2.8 at Eyeglass World. It's the the best first half of Eyeglass World that we've seen since 2021. Again I think a proof point that it's it's working.
uh, we we've recently
Made a a significant shift and change to our our doctor model in Florida. To Florida is about 40 40 of our 120. Or so Eyeglass World locations, where we had a doctor model concentrated, with kind of 1 Master sub lease and we've changed that doctor model to more closely, mimic what we do, uh, at America's Best in terms of having a a, um, employee employed structure. So we think all of those things have really positioned Eyeglass World. Well, um,
As I said, you know, we we're launching new America's best campaign next next week. And uh once we kind of get that under our belt and stabilize and we feel good about all of our creative assets and our brand Direction there. You know, we've asked the agencies to, to their next. Uh, remit is to look at Eyeglass World and think about the brand. Think about how do we modernize Eyeglass World. How do we think about our, our positioning, how do we think about where we invest our media dollars at egw? So again really nice progress, great kind of early Innings results, super happy, with what we've seen in the first half of the year and with layering on additional uh, Investments and additional uh, thought into how the brand evolves. Just feel great about the direction that Eyeglass World has.
Thank you. And as a a second question we just wanted to ask about going forward real estate strategy just as you think about moving your business, more towards a Managed Care. Customer can we expect any kind of meaningful change in terms of how you Source your real estate locations uh versus what you have already built out today?
yeah, so uh I I wouldn't say it's going to
Board. But in terms of types of real estate and where we look to invest, you know, we're still focused on, you know, Regional power centers anchored by, you know, strong National Retail brands, that will not change. We think obviously, those are are great centers to be co-located in. But, in terms of where we might expand into markets and additional geographies, certainly, we will be considering concentration of Managed Care lives as 1 of the as 1 of the factors in our in our decision criteria.
Thank you.
Our next question comes from Dillon carton with William Blair.
Uh, thank you too, for me 1. Just curious on the closures. Kind of what kind of storage you're closing in the the sort of strategy there as far as how many more.
In the fleet you think you can rationalize and the the demand environment, you know, where where you think we are in the repurchase cycle has that recovered?
And I guess the context for that question is, I feel like there either is confusion or risk of confusion as to whether or not you're walking away from kind of a core.
Lower income consumer, and it sounds like there's more deliberate action in which you're keeping that consumer, maybe yielding them up to some capacity. Um, anything there would help. Thank you.
Yeah, great question, thanks. Dylan. Uh, look when we think about our store closures, we're rationalizing. The fleet looking at uh a couple of areas a just overall ability to generate profitability um and whether that crop was a creative to the portfolio, in general b, right? Is is um demographics are shifting as populations are shifting. We're looking at, are we able to recruit a doctor um in that location uh to provide the best experience possible? Um,
And then see. I mean, we're really just looking at where do we want to be from a concentration perspective in the future so opportunistically as leases are renewing. Um, we're taking a look at is this the place that we want to continue to operate in the long term? And if it's not solving for, you know, being part of what we see, as our our aligning to our future initiatives, then we'll we'll take the action to close the store. Um, you know, these are all largely aligned to what we communicated in the Q4 of 2024. In terms of our rationalization strategy, we still feel great about the support that we have. So I wouldn't expect any massive changes or significant upticks in uh, the pace of our closures. Um, we still feel like the overall balance of the portfolio is very healthy.
Yeah. Hey and Dylan, I'll I'll take the 1 on the demand environment. So, you know, from a cash pay perspective again, you know, we're still not seeing that. That return to preco, uh, purchase cycle that we, we all we all love. But that being said, you know, our cash pay everything. We're doing is relating to related to Lifestyle selling. Assortment pricing is also having a strong benefit on the cash pay consumer. You know, we've seen the cash pay customers, raise their hands and opt into better product better frames better lenses and better lens attachment all coming through our kind of Lifestyle selling approach.
So you know your your point and your question around, you know are we generating additional yield out of that cash pay consumer? The answer is absolutely. Yes. And we're really pleased that that cash pay consumer is migrating along with the kind of holistic strategy that we put in place.
Appreciate it.
Our next question comes from Brian tankette with Jeffries.
Well, I I guess the question I had was your comps growth guidance. You pulled up for the second half, but after 2 quarters of comps growth in excess of 5%, um, it it seems like you're guiding towards a bit of a Slowdown. Can you talk about, like, what the back half? Looks like for comps growth and just what the driving Factor there is
Yeah, I'd say 2, main driving factors. Uh, first, you know, we want to be prudent as there's still, I believe a lot of noise in the macro macroeconomic environment and what that may, how that may impact consumer Behavior? I mean, look, we feel confident that we've got a right to win when the economy is strong and we feel great that we've got the right to win when the economy is not strong. Uh, but at this point we just want to be very prudent about uh, our expectations for the second half.
Um, now on the on the demand side, uh, trying to be pragmatic, we are really excited about our new CRM capabilities that are coming online in the second half of the Year. We're very excited about the new America's best brand assets. And frankly, I want to see proof points that those are driving consumer impact. Uh, before we take the step of of rolling a potential benefit into the guide, uh, on the second piece on the ticket perspective. You know, we've uh took our price increases largely Q4 and q1 of this year. Our guide currently does not assume that we're taking any incremental price actions in Q4 as we anniversary the timing of last year's price increases. Um, we're going to sit tight evaluate how our new merchandising mix and how our uh pricing architecture to date has been impacting consumer behavior. And as we have a few more months of of data
Down the road belt will take a decision as to when the next step is for additional pricing actions.
Thank you. And then, as a follow-up on the comps growth, it's founded like, America's best comps growth was, mostly price increases, but you saw low double digits on, managed care, and it was positive, both from volumes and pricing, can you talk about the split there on the Managed Care book? Uh, and comprar
Yeah, so no, you're you're exactly right. The Managed Care cohort group both from a, uh, a footstep space and from a ticket basis. So, again, nice, nice growth. You know, there again, if you break it down further, obviously then that leads us to the cash pay consumer that from a ticket perspective was up. And then from a traffic perspective was was down. So again I don't think we're we're going to break out specifics regarding the composition of that uh but Direction that's absolutely right traffic growth on the Managed Care consumer, ticket expansion, on the man, Managed Care consumer ticket expansion on cash, pay and the footsteps on cash. Pay remain largely in line with what we saw in q1.
Thank you. Congrats on the quarter again. Thank you. Thanks.
And our next question comes from Matt kuranda with Roth capital.
Hey guys. Thanks um so just curious to get a little bit of a deeper dive on the the pricing discussion. You guys have had so far. Um you mentioned sort of the optimized assortment and and sort of the goal of getting to
40% of the mix of frames priced above $99. I guess our checks would suggest you're kind of already there in America's Best.
So maybe just curious about sort of Is there further iteration at the other banners that needs to happen. Um, maybe a little bit more there and then how do we think about sort of lens pricing optimization and and other avenues for for price over time.
Yeah. No uh appreciate that Matt and and and yeah you know we've made a considerable amount of change to our assortment really throughout q1 and kind of really as we were closing out Q2. So some of the, the frame brands that we introduced were late in the quarter and this a little bit to Chris's Point earlier that, you know, super early stages and seeing how it actually pulls through. But obviously, we think the strategy is sound and we have a great degree of optimism there. That being said, you know, we do believe that there is further room to to go here. Uh you know, especially with the encouraging signs that you know, our cash pay consumers are opting into these products. The fact that, you know, the the products were introducing at a higher uh, Aur are turning at a higher rate than our historical inventory Norms. Again, we think those are all
Really good signs that we're on to something here. And that is that we can continue to expand our assortment both from an a raw price taking perspective and from skewing our assortment a bit more more premium. Um all of those things are working together, lifestyle training frame, Evolution and the consumer is raising their hand and saying yeah this makes sense. This makes sense for me. So again, super super encouraging.
Uh there as it pertains to lens pricing.
Uh, it's a much more complicated, um, much more complicated Endeavor than than frames, but we do believe we have opportunity there. And when we talk about, you know, long-term growth for evolution of mix and price, it certain includes our aspirations for what we're going to do in lens as well. And that's something we anticipate to be more that will unpack more in uh in future quarters.
Okay, pursue all the detail and then maybe just as my follow-up. Um on Star productivity. I'm curious how much runway you guys think we have for improvement there. Uh I assume the majority of its going to come from sort of the the pricing optimization exercise we're going through. But how much benefit could you also get from sort of trimming, some of the underperforming stores in in the base?
Yeah, look, I think there's still some Runway ahead in terms of optimizing our Fleet both in terms of, uh, you know, some additional closures as well as just the reinvesting and, and gaining leverage in the stores that we have. Um, the price changes are definitely going to help Drive 4-all store operating profits for us. Um, and look as we continue to, you know, we we've spoken quite a bit, uh, about our remote exam capabilities. We just celebrated our million. If remote exam, we feel great about where we're at and we still feel like there's uh Runway ahead in terms of improving the productivity of how we leverage that technology.
And and also, I kind of see that flow through the p&l.
And our next question comes from Anthony chukumba with loop capital markets.
Good morning. Thanks for taking my question. Uh, I guess my first question is on the, um, Rayban, uh, and the Nuance, um, you know, the pilots, uh, I was just wondering, you know, what the early results have been and and if, um, safe zones are a result, you're gonna, we're thinking about, um, rolling those products out to, uh, additional stores.
Yeah. Hey Anthony, great question and so far, I think we are live with these products in about 50 or so locations. And what we're seeing so far is super encouraging. Our, our Associates are are excited about the product, our customers are excited about the product, and from our data, we believe that we are selling at the same average rate that the category is even in these in these early Innings that being said, this is a completely different category of product to sell. And when we before we take it to scale, we want to ensure that we have the right training. The right talk track. The right ability for our, our team members to articulate, the benefits to the consumer. Again, this is this is a, you can imagine it's a completely new.
Category with new requirements, new, um, new approaches of of sales to the consumer and think about this, this first 50 really is not a, this is not a pilot of. Are we going to? It is a pilot of how do we figure out how to best? Take it to scale. We will absolutely be playing in this category we believe in this category early Innings suggests that we can we can win here. So we're using this as a test bed to understand, how do we best take this to scale and what can we learn, uh, to make that as smooth and and easy for our 14,000 team members as possible?
Got it, that's helpful and then just a quick follow-up. Um, so you mentioned, um, not anniversary ring a promotion. Um, I guess 2 2. Um, can you just remind us what that promotion was and then second secondly um you know, do you think obviously kind of a counterfactual? But do you think that if if you had anniversary that promotion you would have your, your traffic would have been positive? Um this quarter thanks.
Yeah, it was the it was the wise buys promotion, from last year, where we had dropped the intro combo offer uh by approximately ten dollars and that was uh, we know that was traffic driving in 2024. However, it was traffic driving of that kind of consumer cohort, that was coming in shopping exclusively for that 2 pair for 69 and the free eye exam offer. So from
Profit contribution perspective, it just wasn't that strong. So we do believe that it drove traffic in in 24 we intentionally chose not to repeat it based on the marginality of the of the incrementality of traffic that it it generated in 24. And again, we think that's also part of the the recipe of our success for the quarter and why we saw such strong basis point secretion at the, at the ebit line.
We do as well. I think, you know, Anthony honestly, thank you for that. And, you know, it is if you could just see the level of enthusiasm and excitement, not just you have a really the entire organization has about the new mark for National vision and where we're going with America's best. It is a super energizing time, uh, for our for our team members, uh, really embracing this kind of new visual identity and the direction that we're headed. So thank you, Anthony.
And this concludes the question and answer session, I would now like to turn it back to Alex for closing remarks.
Uh, thanks so much and thanks everyone for your time this morning. As you can probably tell we're really excited about the momentum. We have within the company. You know, we think there's lots and lots of Runway over the next several years. As we layer in initiatives, that will drive continued performance of our store base and of our and of Our Brands. I want to thank everyone again for their time and we'll talk to you next quarter. Thanks so much.
And thank you for your participation. In today's conference, this does conclude the program. You may now just connect