EYE - Earnings call transcript Q3 2020 | National Vision Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the National Vision Third Quarter Fiscal 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. Instructions]. [Operator like conference now today, your hand Mann. David to would to the speaker I sir. ahead, go Please

David Mann

Thank morning, and XXXX you, good earnings third National call. quarter Vision's everyone. Welcome to

Executive today Joining the Financial are Officer; and Reade Officer. me Patrick call Fahs, on Chief Moore, Chief

release of the which Investors Our the and replay our referenced website, issued will on available audio morning call. are the be after of the call nationalvision.com, page the both this archived webcast the be and earnings presentation, during Investors on will section a

presentation we let and are Exchange results materials to subject Private XXXX. supplemental and the forward-looking in differ the to and factors defined risks Before begin, that include, presentation. These The of projections. me our our measures and actual are measures. the in uncertainties are statements risks Commission. materially remind limited in release from earnings includes and in Securities Securities to, you the Act statements include our Litigation filings the included identified uncertainties not today's Reform release today's Reconciliation of that expectations in also with presentation and These certain cause as these our non-GAAP could release but in

attention We statements additional in information would and to about non-GAAP to also draw today's like your forward-looking X Slide presentation for measures.

presentations As a website. reminder, reference investor for or the certain expects on section to materials National our Vision supplemental Investors of provide

Reade. call to the turn me over let Now

Reade Fahs

in third times. you're that challenging for Today, staying the safe. you, quarter us Thank healthy everyone. morning, hope exceptional business of like our highlight are you David. Good all results sharing model strength we joining thank these I'd today. I to all and

and would been acknowledge care team's we customer that without to patient over execution great these want the Before and last the months. not great I few have results great thinking, possible begin,

importance mission eyewear something throughout more continues to on eye affordable has in Vision to focused grow that our National Our accessible, and team make America. remained care and

Our to and store health well-being pleased firmly continuing quarter and our key the we protocols of our these report our teams, third priority I'm safety with intact. patients customers. accomplished remains our results

be the early to put year. to to position this earlier first, our quick of financial and the days costs. act safety strengthen people Our many protocols manage decisions tied pandemic clean in We and developed our our We We results can made our enhanced position were us our to and and the during us disruption. with during pandemic, enabled advantaged decisions that made these operate on and continued in safely believe an optometrists, this period placed have associates customers. reopen a long-term actions of we that store to focus

Slide Turning in briefly me trends quarter. touch third to the on X, let

$X.XX navigate the to public my comp store company. in Vision. the comp a more the net deliver minutes. QX few quarter. for year, versus a I years to sales witnessed EPS continuing record While increased XX speak increased Adjusted increased last I'll we quarterly to growth to in with quarters. of $X.XX National XX%. the is in trends have established Adjusted as our over which quarterly our best XX.X% revenue comparable profit managed one pandemic, best a This

the Beach, During Deerfield Florida. in including XX Best America's our store we X,XXXth location quarter, in opened stores,

contract with last XXXX. noted extended we As call, on investor we our our Walmart until

and our at Vision our we continued the these associates we Regarding Vision, how Philanthropic generate around August, Impact through including the in details network transforming is also doctors, which published after thank second and stores significant the people to years. generosity Walmart contributions would quarter, the for In in National board the of category to Nate strategic five like love I our model, the XXXX service unrivaled. of five and first-ever Nate with added recent while lives tenure. date. and our to digital additional Report, we partner and Centers member take XX years. the sincerely has newer and the Chairperson contact is results our outlook U.S. board the was perspectives of insights his Randy strong the Taylor executives. institutional our minutes, and and in brings and been are who appointed technology for lens Naomi Both detail. our brings in world-class strong with during orientation. outlook. expertise through is that two accomplished data branding of appreciating analytics addition fiscal a and QX members, in Peeler Board our past a our and Kelman and independent operational reinstating our of our off of background Randy In the from business marketing, understanding Susan Johnson. replacing few and Naomi and Susan are Based more mission the Board, on QX transformation. and a strengthened a We healthcare rolled business world. positive XXXX great his Board memory the chairmanship will longest-serving Board you his us brings members. We His performance fresh confidence Somersille Patrick results

Turning to Slide X.

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micro long-tenured to management I demand. the We macro results sales reported our be levels to by QX strong immediately successful teams. our operational that field that comps June from given we our economy of note our following and low-cost value do state the Our offerings believe want helped the pent-up reopening. continue moderated navigation by the and also combined and

difficult current The value trends share continue While remains on quarter demand better hastening through we we retailers year. fragmented, data, the Vision. grown our highly the industry to the this the is demand that is that to expect industry Based predict, duration favor confident normalize we've of believe capitalized third larger, National and we that comps moderates. like environment to pent-up market as pent-up further are optical

there us optical locations U.S. we were than continue see opportunity there the potentially be even larger to opportunity fewer to in X. year next over to prior the believe in large before. We Shifting an of and will also front than Thus, COVID. a Slide

Let core me our update initiatives. growth provide an on

pause that given expect new stores primary Vision XX XX We stores a additional focus, from five Walmart stores stores open to Year-to-date, new sizable XX a transitioned Centers after we we've opened openings brief or this pandemic, and opened last space include the remain white when XX First, you of our opportunity. now about new in quarter. this quarter. total year,

the XXXX, pipeline As out look to of looks we strong. locations

sales to Turning comparable growth. store

eyewear play that care our the throughout demonstrates success mission important deliver low-cost our and in America. to optometrist role performance quarter's and This eye

programs. optometrist continue our invest recruitment retention to and We in

our doctor demand of retention helped performance strong meet levels, Our for high The near-record rates possible optometrist optometrists. record was eye remain healthy coverage work network to of not and tireless our commitment the at hard exams. pent-up without and

values demand, necessity. nearly as attracted invest for glasses two not two did growth fact offer we a eye medical in year. marketing, and reminder at offer are to services a extreme prior products believe our $XX that at the in much optical comprehensive strong brands, of organic America's World, as terms experienced Best, available the such same our essential In introductory and quarter Eyeglass for the exam are two as free We consumers for that of this day. including we $XX.XX with We optical our

remind to have that marketing for quarter, their expect to optical consumers plan we needs. for higher don't return they pay fourth As to normalized investments prices the more to we

We minority Insurance revenue to our we the continue revenue, thus, to and growth revenue tied Managed Care to a relative net Vision to category. our experience tied underdeveloped strong remains of remain partnerships. Net

an stores than We our ongoing further Managed as elsewhere. see opportunity here dollars continue to to in go Care and tend co-pays

Regarding our this working volumes supply teams our have and quarter, of hard their been lab proud elevated the chain, to business very efforts. we're handle

provider. and reverted relief low-cost Our lab back from China key the temporary for level. frames expired to on we reason In a the that a XX% September, network imported are remains tariffs

as our ongoing continue last tariffs the year, we tariff will efforts. mitigation nature as of Given continue developments the progress to well fluid to monitor over

perspective, From this increase continue we to to initiatives, terms a we've also in our significant noted orders year. levels. an In omnichannel compared orders pre-COVID ship-to-home e-commerce digital of experience acceleration an in

as medicine remote progress. pleased pilots and with their are our Lastly, continuing are we well,

of Before as within that But ahead, that veterans environment quite to potential the as initiatives million we team let resilient still look liquidity me in and reporting a side this downturns this fairness even quarter. say to that previous an with call end, our the of are including I in that the rigor. happy we has quarter And Patrick, confident the that the strong operate low business turn such opportunity have both tremendous proven we essential COVID safety operate medical cash a other over a results we seller for operate be well of $XXX necessity and an see strong place, a we're healthcare uncertainty. Yet to we I have positioned am pandemic. duration with in on as That the throughout been protocols pandemic. of price larger thoughtful of position, retailer, optical as we of an executing

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Patrick. to Now

Patrick Moore

and good Thanks, Reade, morning, everyone.

with delighted pleased performance, exceptional navigate to cash and and by are in. our ability strong generation flow demonstrated and this our quarter our We execution

Turning in host dive X,XXX one Americas the opened location. count closing let's into in to to stores store the or Slide with new We quarter stores, ended the Walmart X.X% was Center which closed past in eyeglass We the world and results. our year. store due one right best increase Walmart of XX X, a Vision

Eyeglass Best XX growth America's brands combined, X.X% increased and our the growth over last For months. unit World

X,XXX Best our Same-store the of excited chart the we comps and during store at passing sales was comparable increased presents our celebrate milestone Reade a XX.X%. cash As were increased quarter. World up The America's growth At calculated on adjusted XX.X% brands, noted, quarter. store comps growth this sales XX.X% to basis. Eyeglass

with at are We reopening performance post Eyeglass the especially World. pleased robust

children in especially and to consistent a an average influenced and prices were average in higher transactions fewer have contact back-to-school category our in experienced We transactions, which more transactions increases industry. this trend premiums. customer performance adopting comps a a impact strong increasingly growth sales lens continued in carry which we that increase positive were the contact and we that believe ticket the was This quarter's with had and, lens, tend average experienced especially see our was customers as average in in positive muted newer category, are driven ticket driven in eyeglasses. by ticket a same-store lens by ticket will the our Eyeglass customer trend quarter. across as ticket by pumps By which turn, to lower both on we continue. average contact season, is average expect The technology lenses eyeglasses ticket, at growth

segment income Slide on to Turning highlights X.

Adjusted release, As lower percentage of net eyeglass of The points in last as since change increased revenue reflect versus June. results as SG&A impact the costs. this a third was in in reflected see a profitability a quarter the strong was net revenue Net to with press of well And business investments. of net QX the both revenue, applicable net percent quarter. or revenue as this optometrist of mix growth revenue decrease XX.X%. a momentum and XXX as as our decrease today's revenue year. margin higher percentage decrease revenue. terms consistent last this of lower last behind continued a basis Cost not decrease and increased points unearned third The the basis X.X%, the versus or key factor in expenses quarter year, to advertising eyeglass X.X% you from XXX was year. quarter increased material Thus, our

in XXX $XXX and appreciation $XX.X company the of million, XX% for quarter basis mix as XX.X% strong increase margin was increased driven lower our to nearly margin front-line to of expenses incremental supply. the doctors fixed of XX%. $X increased XXX% Additionally, margin points in $XX.X comp in adjusted by to primarily margin and million as quarter. the the eyeglass points EBITDA Adjusted adjusted XXX onetime to million basis and of operating operating well The operating acquisition and costs, to network Adjusted increased eyeglass income incurred the increased COVID-related EBITDA leverage bonus adjusted PPE advertising. and higher over associates the

factors, last As increased unusually year. these a Adjusted of $X.XX diluted was the quarter flow-through result EPS versus to $X.XX strong. this

Our of senior notes impact the our the in of convertible for issued this history. money a all measures, diluted May, share count the this the quarter. were reflects stellar which By company, in best one in the was quarter

Turning to XX. Slide

X%, growth lesser impact last down the declined down the Adjusted diluted results extent, year-to-date timing adjusted after the Our business income Adjusted $X.XX store XX%. net to revenue. sales in XX%, a store first half our and revenues unearned year. declined reflect and strong of from EPS operating $X.XX recovery was of closures comparable

to our was million turning the cash was end and XX the the quarter. Slide $XXX during increase total sheet. At balance million, an $XXX our balance quarter, our Now of $XXX million of or debt

We this been Net from the generation Balance EBITDA flow X.X quarter. decrease public history extremely pleased time first mark times, in free X.X third a a crossed a for the quarter our the adjusted X.X to the year. as has at of $XX timing last versus our for last during of in times store preservation the in cash company sheet The strengthening this accomplishment. expenditures. with are generally CapEx I'm strong with investments. priority deployed Year-to-date, invested and we lower stated capital the level new results second cash and nearly key year from milestone proud pleased very including quarter, strategies company, debt capital million of

invest us Our that people We ongoing gives to make competitive advantage. business. remains our and the ability our a financial opportunity believe investments to in our

range that support to we to range million million up We in future from are $XX million, $XX be continuing expect our last of such, in noted projects As million to growth. $XX now we the our CapEx will XXXX invest quarter. total estimated the $XX to

successfully in revolver. At and the a balances our Turning in available of pandemic. million over from of our QX, liquidity We XX. cash strong position to navigate and invest our sufficient that to Slide end with manage business operations, are capacity $XXX we believe the to financial liquidity we have our from continue

a sheet this key balance from emerge we uncertainty, As period of priority. improvement will remain

the As as financial our noted for providing today, outlook press XXXX reinstating release and we quarter are fiscal in fourth outlook well.

performance While in our the us confidence operating and macro environments remain reopening uncertain, since business. our stores our heightened gives

impacts Our currently outlook COVID. to the reflects expected related

potent ultimate However, actions as business deterioration the in result no impact of remain assumes That uncertain. material company's operations the of current government regulations. a outlook and COVID

diluted the an generally unearned the expect the fourth fiscal is projected the will adjusted XXXX of to to National revenue reminder, week. a in minimal be to unearned extra the approximately EPS expected $XX and on immaterial XXrd week change the add We quarter. a year estimate in in revenue timing revenue XX-week million net profitability is with As to for breakeven Vision. impact net margin due currently We approximately

of high-volume sales last However, a more we swing versus a are its impact during in predict, year, little unearned see week difficult estimates. revenue our to and associated and the material could the

our XX details of slide and to Turning financial outlook. the

million adjusted XX.X million, and diluted growth on comparable net weighted between X% $XX million, EBITDA between the For basis, $XX $X.XX, adjusted EPS income to of revenue adjusted XX-week and in $XX diluted X% range to average million operating $XX store the shares. $XXX project and million $XXX $X.XX million million, fourth we adjusted of quarter, assuming sales between a

the strong the start And comp to quarter noted, As quarter. fourth throughout off are we continued momentum third to October. a Reade

macroeconomic uncertainties as and normalize However, remain, moderates pent-up our expect significant to further. demand and COVID-related we comps continue to

point For margin increase the range. adjusted midpoint at our fourth quarter, we XX-basis guidance of estimate a operating in the

revenue, as Our percentage last a in quarter the versus outlook following fourth factors: of cost quarter revenue more a the to year. assumes normalized should applicable rise the of due to modestly flow-through

to investment. in expect incur We an advertising increase

impact are extra year this well. QX We the comparison difficult comp year the cycling week more and of last from a as

to full year Turning our outlook.

to XXXX store sales between expect $X.XX. $X.XXX and revenue billion X.X% EPS net X.X% adjusted between $X.XX for and billion, negative $X.XX We fiscal of of and adjusted comparable growth diluted

pandemic $XX projecting COVID-related We incremental We $XX.X and costs are million million, approximately should on costs interest of approximately per XXXX and conditions. approximately depreciation be $X $X based million. ongoing around COVID-related of current of quarter million related estimate

to is be tax XXXX rate fiscal XX%. our estimated approximately Lastly,

reminder, a to this stock that exercises XXXX. of does may tax benefit As the consider guidance option not in the occur impact fiscal due

today's regarding details the accomplishments. summary, please In with performance proud XXXX and our pleased reference additional team's stellar release extremely this of presentation. outlook, quarter press I'm For or the

This and the to turn call strength this prepared quarter point, stronger competitive to health store generation, continue Reade. further the challenge we business. level highlighted execution navigate business emerge well I'll back model, cash strong flow At the as this even free our an and of effectively feel and to

Reade Fahs

Thank you, Patrick.

XX mission. has topic factors Turning as environmental, efforts well. continue The gained governance our much or to Slide moment and investing on based attention recently, our and social and ESG, of of we

we've focus. operated our on toward embarked to a formal developing approach a always this As year, a ESG's you know, strategy. company more mission-based has journey with And

critical need thought of mission. fast-growing have in success business fuels engine fast-growing meets ourselves long We a society as that a philanthropic a whose

integral we philanthropic we part have what efforts who are long Our and an of been do.

the you in to our invite via polish optical site Vision access was help ways was ecosystem. partner report we help America, the globally first diminished in published with in to highlighted many presentation. which and philanthropic people the details our to strive which QX. across link and report, commitment in children on report website We The National philanthropic philanthropy them impact Our the the with

to gender embodied our on Only reflected a with mid-cap directors. diversity in XX% U.S. the say can X% Board commitment We by as balance that. have of female the now companies

with happy quite pleased Board. and our are We

long continuing our reflect initiatives of a this to ongoing oversee to a ensure store communities serve. For tried our time, our establishment the enhance to of I'm leadership DEI support we and the quarter and that that senior support we teams the diversity, throughout organization, teams including efforts. and have central equity inclusion proud position

Optometry, University's We attracting optometry to in numbers successful summer considered of at are profession Salas and the to most enrichment of recent in of large proud one continue pledge minority optometry. to program program invest the college of that's our Pennsylvania reestablish been of the a students

committed are we Lastly, to practices corporate governance. best for

statement to proxy year commitment shared this earlier provisions remove these and Board's to issues Meeting. a at amendment our and the Our supermajority stockholder vote the Annual declassify XXXX board put

As noted, social to strategy and our will on philanthropic developing mission ESG that holistic a are build we efforts. identify opportunities

back I the to start turn the could months operator With the all of the quarter, entire information and of the as question-and-answer Vision summary, progress with The like bit call more I'd success tremendous formalizing we as accomplished. proud, process in of impacts, In are not look to we our our three to priorities, the our further portion year call. this in just forward of continue impressed be as stability journey. as to We resources performed, of and National they every ESG of consideration the including about several time, providing the how and and us environmental to combined events a as to and in our the that, our appreciative ensure our strong public past passed the future, is with company impact thinking team we societal strength our that last allows finances. belief anniversary on

Operator

first Simeon comes Stanley. Our [Operator Gutman with Instructions] from question Morgan

open. is line Your

Simeon Gutman

want to margins. first gross ask I about

some the on line, got business leverage of the against mix, it a that some cost. So fixed of of it lot

but comps, had, You've had as other with good this. not strong we've seen gross quarters never quite the as expand you've like margin

can, about them the by you down if buckets. more hoping expansion was how I some of breaking a about components, the think little And So to bit going maybe then you could forward. talk

Patrick Moore

Yes. Good do to that, Sure. Simeon. Happy morning.

we've points. costs. margins saw in And saw margin QX, So function and higher benefited mix up under outsized bit nice exactly the as a leverage we the on lift We little just really lower right, of as growth It is ticket right. eyeglass in gross a there. quarter XXX in seen margin. a well that you're of you're from optometrist And basis

pretty those factors. big So are

which season. that side, On of Typically, the that the that at vision. quarter. to very have partially effects saw ticket children's least in end really stimulus get large think are other is we and the very a some price. we we And picking options. this single related back-to-school a factor we blocks didn't affordable mix is They're Folks often lower muted are of glasses,

what And so weighed of those QX. there factors into all you in saw

to you cycling pretty As at we and bit. from moderate the look in up XXX ticket are strong I to last that we the guidance comps was we look a kind the if of provided, basis a are fourth And expecting quarter comparison year points. as, margin gross

XXrd million of I to understands last like revenue February that we week, can it the think company XXrd impact I in about we talked impact, in back pickup that haven't mid-XXs, think unearned delays that into but it the again. guided little incremental big be for make week on week, probably when play those year, the we purchased $XX week had really mentioned that revenue they our we guidance, accounting defer. odd is do that versus in of did but in comes customer that where want expect, a when last most XXrd in probably factor And revenue of unearned we sure to that will due it I everybody

quarter as was to the It fourth we're as the of results. were those about pleased And and factors the so well business those a quarter. nice the are to model, great with thinking of big it's testament see we kind the some how for really leverage,

Simeon Gutman

Okay. And follow-up. then a

new trends? you that percentage If compare think, driven you prior looks take what customers by versus the how share that XX you what was then can four and of comp,

Reade Fahs

mix this, new historical a existing in Yes, customers. consistent a new bit more new saw And customers. definitely of a Eyeglass at we're growth Best, we which new this in for generally that where the when, customers and growth backdrop versus sort and with a Eyeglass of we World. back-to-school had really gains and there believe. lower higher pleased last getting customers drives but a World especially in record of the period America's we level We're us against seeing trends At all investment, new comp customers, of With marketing muted season year of like industry, with the

Operator

Our Fargo. from with Zack next comes question Sadam Wells

Zack Sadam

I'm is more a function of this or consumer any preferences that or curious Could Reade. in in strength color America's you memory. to World so mentioned if place we've outcomp seeing talk business a I little demand this more the customers you're Eyeglass for in wider initiatives as a at And don't by new this seen that think model at you've put about there, specific the that Any EGW you margin environment Best climate. there? recent

Reade Fahs

you, real Thank those world proud that A comp on few Zach. a Yes. there. Yes. XX.X% nice is that. We're are things

to that trends but post-COVID all wave that played here. role initiatives been have think are specific we riding put there's of brands our are of and a all, Again, sort that that out Eyeglass in numbers in of a about of don't there business, do like talk when point specific just for I First I just would happen. really think World initiatives, the of, we these we've the you number rest a

interest specifics both the I specifically, wave question reasons, think World sort much service has of execution, of team's I micro to and think Eyeglass that. For go sort we to of all thinking played is and same-day there sort really too of a thinking, But of movement into been of But there post-COVID competitive sort planning a that internal macro that to do and on role speed trip and has turnaround. helpful want communication in don't us of this. your about in planning, one

now. think do well living for the I is we're positioning the in Eyeglass World suited world So especially that

Zack Sadam

impact on deferred Patrick it. detail. of Got a then the in And revenue more for little

in that And QX. this As believe -- years? this how a expect this larger-than-normal positive But gross QX, SG&A? impact is normal for week week is to impact I could the with versus walk typically net we will should margin to you relative shifting through a maybe -- headwind QX

Patrick Moore

Yeah.

So year. your that. In normal expect year, a I a like statement, you in normal absolutely would

I assume in that. So a easiest pandemic week predict. right kind to as all lose. constant, they're and make they're This held to typically benefit the other year week world. That the many using we're it not of year, doing is big week factors to going Zach, last you're any think sales customers It's of patients sure

quarter probably So I think as being a have we you're year. expected normal in we as think immaterial another think this And we're year, that deferring, careful impact right third in but well. to about to indicated that, I fourth quarter it did

defer the that sales of you revenue, revenue that cost goes the Now with and unearned the revenue. we about think when

margins. deferring the the and you're So revenue

business occurred. in The other costs the have

it's and such And gross swings margin helps. so with that recognized the EBIT -- in. swings it's that's why in high-margin you to lumpy been margin quarter margin Hope the whatever revenue can to and very get even you're impacts because unearned

Operator

Thank you.

Lejuez question from next Citigroup. Paul Our with comes

open. is line Your

Paul Lejuez

Hey, thanks strong guys. as owned Curious, as your but was not remember legacy positive, host segment businesses.

operation, curious if stores also performing. all give Walmart can in talk update if limited on So maybe been you speak an just of the just in in saw have ticket trends converted hours of Were traffic how you And business? could the that terms that business. you that to you at

Reade Fahs

to lot we've store return of little a are of business have the enter legacy performance got sort safety-first harder much we levels. we want, And of where we it sort things of pre-COVID because very you up operating sort thank our to Paul, way to a mentality. in in make the a

So stores. on five QX, there five itself. make and knock I big great to that stores, sort in The our out all generate And the positive door, up be temperature to you to, to point the have it at we Vision factor of are to you that, in a on extensions because which close new door in results, let essence, closed one so did continuing If Center that this. sort is almost. box legacy future all in of we that's I and have group, did the those see for they're potential want guess and and

Walmart and to store close So the also. closed, had we, therefore, big

that that explains, So piece.

Paul Lejuez

we been whacking Okay, optometrist. talk we Are a of margin? how as that And recruitment days efforts period? past on going item within And you maybe about have the thanks. during if just just follow-up gross could of about kind line deleverage this think

Patrick Moore

take that, it's Patrick. growth rate to and yet. of first part a then I'm the scene. Hi reported. in not cost a Reade I'll a which quarter, the see in ready we optometrist We trend can that call the did less complete Paul, of

over we optical a there less which help demand. and be time, could open, few doors think supply Although will

then lessening of it Reade... If We you that the of, say see probably theory, efforts would recruiting a wage the that to leave ready call some but for pressure the trend economics see optometrists, quarter. glad I'm you in to not could yet. And were

Reade Fahs

Yes.

just us sort side that pre-COVID have in we strong of to all us that, coverage but overall And the of the feel out me use delivered is for again, So we've, near-record the you retention this. stable And hastens of mall to post-COVID, always and other high we've we have of we makes since levels of decline at good course, went sort market segment traditional including Recruitment going share there. optometrists. sort results said trends the been trends you day segments. And public, these I of out seeing the be don't the again, a are do benefiting optometrists. the hastening deliver for trends. as if of that remains we're coming think don't just more And can that of

Operator

Thank you.

Our Lasser UBS. next from comes question Michael with

is Your line open.

Michael Lasser

Good stores morning. Thank taking you've good a much necessity. say you you through? think constantly pent-up the the medical all question. the you time my portion of worked already demand were like do for How closed for is of Your

demand the time. of presumably back just So period go doesn't over comes a away,

quarter. think the were double-digit worked and continued Presumably you the indicated how up that have the rate quarter? it much quarter. slowed comp the through your low should teens, to the to teens into to end high exit how low you So start already we had about range what that current Is trends and

Reade Fahs

time But it's in back are that that at are sure, who the are do out of are people of Again, consumers our say there also getting about. their surge market. people thing. are just just just we sort comp sitting who comps a customers who their out thing the the the always show sitting talked record of don't are pent-up of we home, I'd for sitting So worse. they're leave of There that some and plenty of sort is, that or, show But just When demand for initial house period, that. to sort know sort normalizing. want eyes stores,

have get to since you We we worse and are, night's or I later. think our a again, with you it last snowstorm, eat a us, been, metaphor it's like went there's address has eyes restaurant. never your not public sooner If but dinner

So eventually. to that come us will, they'll

Michael Lasser

quarter, pent-up you're In that the given you point, then factors question about Is and and seeing on be expanding gross And talked was expected unique you're SG&A we're follow-up period my and third Wouldn't margin a as have much. in, is drove leverage. the going and there maybe just now going anything the Reade, to demand being higher-margin learning to on in run if experience were Or the this is both fourth don't you're released? function advertise what the of business can follow-up traffic in where you how you that you more quarter into of efficiently more you situation that my, just such the to need a come a that better structurally then to the situation question. have of your that it? my out degree than comp of I'll the some

really more utilization can so of give You shouldn't out a into optometrist and your little read we it?

Reade Fahs

deliver can't you Yes, in my like certainly half, will half. When here. best the remember Patrick and XX.X% the quarterly the a I'll comp, quarters take years first take I've any been XX second I comp this. of life the

do like we You bit. think think lot comparing we to we I stimulus, to that. pent-up got don't June, a it of XX% you're in we've demand sort to see of the by But frustrated sort the have and generally a remember, back-to-school business August, sort a that The and of normalizing I not did stimulus a did dissipating surge XX% our helped saw in and government and see of industry lot, has government the always also. there get

gone environment such, momentum we we're in protocols. we're that. darn many comp has and with pretty with as operating this that, XX.X% crazy pleased pretty October need so safety also through where the to with yes, happy So We're that fact

Patrick Moore

question. what is pandemic. consistent the the more would growth the on then way to been And that. And revolutionary. and has I worded inside model Michael, evolutionary business we've really you adapted like strong, operate That a of margins, great I say

good bit things in bad us tells haven't in the chapter news. hurt before been sub-standard COVID. news, news fact, way this, this we is now through maybe the our good probably are little a a of chapter. by So anything The And major we've doing found incremental right cost that being margins

the So exceptional the came period has it, that pandemic time. model during adapted into in business

management as Now as We focused of and to supply OD margin factors demand well kind about for longer out term, cost. improvements. remains availability on eke talked very continuing

on then loss we overhead. small wage think forward, everybody which talked opportunity ledger. corporate advertising a could but quarter. We of the wage I the positive and But headwinds, our call to leverage And states going we have, at There's see to minimum Each them be not estimated for side incremental some do all we year, inflation. and some degree, gains and of leveraging. rent doctor productivity million the it's get about wouldn't labs our about $X inflation, typically in in determined some during business of maybe of friendlier we are a I for this cost enacting advertising -- doing pandemic, incremental degree hikes.

so in, levels. maintaining continue balance good try And service to we that to

some the the and across focus ways to period to future. can those large on on been exceptional still that fine see paint kind we trajectory. improve margin assume here. is do But focused management resuming click So there's But gains we found I format I really opportunity now this and of think don't

Operator

[Operator you. next Our Instructions] question McShane Sachs. Goldman comes with Thank Kate from

Your line is open.

Kate McShane

We question. any ticket Hi, good showing impact taking you give contact color start can morning. in lap wondered Thanks investing strength? when of me the to from higher-priced for that more brands some the us been that the you've growth my that you're on are selling. And you

Patrick Moore

trend morning. see and selecting in we customers now. take lens And Patrick. years It's our content little a higher for I'll two Good do first. little patients that a the price, higher-performing probably

duration to expect We continue that as lower modalities. to they shift time

playing general a I this that know there's that, say a is to don't I that as we're that's lapping our set for and business in well. it's showing -- would So forward looking trend of just our out customer

Reade Fahs

all need secure are like consumers occurring. position, think things emblems that working our terms in in stores, a that our and enter people's America's to with standpoint stores. price I comfortable really price in that with position from in speed looking XX.X% without lot, are are are It very of people is in appropriate? being shop We're are all shopping benefit in marketing. these growth especially who, Eyeglass looking and like for much with safety, what And with growth a when what there back-to-school, to for little any a just businesses, and feel way our safety with World, Yes. our our around Again, a Best, comp are comfortable less like operations of brands consumers a consumers Are precision masks our makes our teams one-stop on trend trends environment results we the demonstrating And positioning. we pandemic this executing Eyeglass -- that World, me comp, XX.X% are with brands. says protocols that are

Operator

Thank you.

question with comes from Adrienne next Our Barclays. Yih

line open. Your is

Adrienne Yih

the Good Eyeglass COVID country? my the low saying my Reade, comfortable of really of And that's guidance ramping the it product. utilization then over sort for carryover America's double strength initial advertising, have the question return It's you you're lab Eyeglass that morning. Thank fill the all that throughout of for impossible, first notwithstanding Best my maybe So quarter, What utilization? that strength, October is with sense typically surging X% of of that annually. that some sort of it with question. everybody X-day taking return rest World? World quick. in make Patrick, XX% to on of kind a ability Is we have secondarily, does is the fourth not you taking rate advertising to digit, I logistically quarter, guess to the are the to spend? the Are

relative you ramping and the give notion of can us Thanks from, in we are to much. so how So the what X%? was about we that it should third quarter a think that

Patrick Moore

take the Reade, why the the third comps one, that. in question hit I and don't first and advertising the

Reade Fahs

Okay.

Patrick Moore

Adrienne, morning. good

comps slight the So quarter. see on across expecting comps, to we some moderation the are in

been about remark business based moments start We're to not few see there. pent-up spend. we've the a turned conversations it days, we we been to our we've And almost some pretty October how assuming the then that completely. XX that, advertising strong So continued ticket, as And line. that over back flat ago has did But there. demand moderation on, relates very on titrating QX, we're lot our that past on of we've in advertising, a in not assuming the judicious

a We continue at to that level. market-specific at look very

to be So be would ramping I where going that it switch not will to goes levels. a There's X. say back from normal to X

that seeing, are are ramp we to So we expecting back.

Reade Fahs

at a it living first don't or by are seem like as to question. a a doesn't us politics, someplace. getting ma'am, where lot country. we're in the we wildfire that week ramping on because between either we there's thrown COVID what And good point just goes an and day environment prudent Also, with and age have this hurricane It's stuff to and in national Patrick's a deal be a of to

folks America's you very be when they're out were sort Best of We Best, to what there's I When and model. over World talking And Eyeglass who systematized with America's So, question. efficiently of for somebody one of have which be market centralized an Eyeglass is just our ability that another. an were to model It's urgent has thought based often to America's World. does they centralized and the of the have really, need, particular stores really low-cost friendly out I that sort in about from utilization. of lab possible make World the our and simple able World great Eyeglass Best and so does took the Best, figures on that Eyeglass to involves to mean, lab of point we send sort as about your a and And did most America's synergies. that to I away your That's relative well algorithm really the a labs low-cost job. is at labs, to are, source much low-cost processes as process-oriented. efficient to on model fixed maintain think

complexity that not Eyeglass and So adds has doing nearby adds think we our of really that. really, Labs World in of Best, for terms that, using cost sort we're America's mind. always complexity We in

their who speed. So serving have for a way, own need consumers both but there's for friendliness run

Operator

Guggenheim security. Our from Bob comes question next with Drubl

Bob Drubl

maybe guys. give competitive you closures could that. morning closures, I if square could wondering on, Thanks. thoughts I in was industry wonder or you I help just whether think, us latest the the store Reade, good it's if your with us footage? Hi,

Reade Fahs

Yes.

and we just right, seeing we more pre-COVID. that that now through the trends. mall trend going there forward by believe a is when occur Again, are was some There there next are these as than operators, some less over rapidly changing, doors toward several that stated has industry been went and benefit it public, we is be and trends than expect coming the to And we thought here ever. but we years, the new occurring. the we us were firmly traditional of this already and hastened So will pieces, of that

growing we share. confident are market are We

overall. And confident are we'll less doors are they're are per slowing books. They're If January, less We seeing significantly exams they're year, many than their before. taking less February doors that hours doors patients. less hour, that next open those the down they, of opening have

and doors, less standpoint, from mall again, still benefiting purchase this stores-based to we'll a continue are that, that. are see there from to a competitive host So it's are, be less from some benefit as we traditional especially and and stores, consumers clear that doors going

Bob Drubl

the people if follow-up, they mentioned I could. you a that I might results? just we're as Reade, straining wondering thought election you in just for in. demand if see eyes from I have their that you surge was times Great. a watch the

Reade Fahs

us that, from, forward. of short-term We We believe both we will quite are and that strain, large all screens, at from We we eye do is spending staring that will are nature. in believe lot can't from think a and small. going believe trend that, of more that heck that a time be benefiting to another benefit contributes benefiting now,

and in they talk near-term light mental well. about the desires lens talked as will blue you on mid-vision, on it's our that sale wind with, talk another pieces. they and the strain, the is probably And outlook a people's election yes, those eyes interact people they'll about and side, ask and again, Just impact all about will

Operator

from comes question next Jefferies. Wissink Our Steph with

open. line Your is

Steph Wissink

I'd remiss didn't I appointment. Reade, on Board you Thank but, Most our questions if you. be compliment been of everyone. the asked, Good morning have

for actually that. relates So it. bravo My question directly to

of have time marketing about some data that spent been talking and You the talking on these sets appointed the women call skill digital transformation, analytics. about

how you. the strategy. strategies how your customer and cash areas? help some connect preservation about those can of And you're about data, cetera, shifting investments think you marketing, think cash we then forecasting if from around in deployment, wondering et as digital should Thank you So to that to data,

Reade Fahs

is the first Patrick, So although you'll -- part, there. I'll take take this second part the

be Although traditional be internal -- purchasing have the of with both category business. more ongoing of more other to our categories, a to the we this parts -- than committed the committed experience will consumer digitization slow-moving consumer-facing been and is continue to

But come great finding be options questions asking maps digital better be we're to make probably to to for move in both We think already faster these with that consumers seem ways great to out Susan happy we're I been laid give and they process of and a brick-by-brick and this that will us with that. doing sorts have sort years that insights And do this we'll that of have steady and to skills and place. directions. Naomi taking in even all road and stimulating come.

forward. of finding order those done and the we a a another of in our Patrick, input. traditional piece. omni-channel committed stores to how about and some a our we're are our -- areas talk is of that having our are people that you being And even aspect things ship-to-home going lot and affects can winner from And things both and like digital get But

Patrick Moore

the investing been omni keep we we've Steph, a and last few progress have the while. not Pleased to quite years. No that. analytics doing made, for e-commerce, over plans data especially in with

As important retailers And they we've looked optical where those no a exception, store-based investing customer be we'll be will e-commerce places and inside met. with omni strategy we the have at business have see Successful all of planning, our as and we that as in. and multiyear to complements. to portfolios Reade said, still want retailers this meet

to projects. in so invest those we continue And

Reade Fahs

and I And internal think think we've especially as internal is business feel, a dividend are that the your We Just in of sort have we'll we area ability understanding so that of processes, and as that data longer-term my and as in time to able been, consumer this dividends future. the of of When to our working. business in other analysis pay sort one us good do strong -- more are really been management sophisticated the were pre-COVID. analysis, ours we to ways processes sales the into our than focus your visualization piece. thinking a piece spend of mind, our our that to have data long ways I of about now you and

Operator

our from Chukumba Loop Anthony Thank with Capital. you. next comes And question

Your open. line is

Anthony Chukumba

boss' quarter. a America's question. to your lenses. contact item I Congrats so Thanks strong on got And much in because for taking contributed I'll my I that another comps Best, my say

But wanted lot... to a that. just mention So

Reade Fahs

good. Very

Anthony Chukumba

Most had been have question. questions answered. one my good questions. of lot a I So of quick just

there a color a sounds about that. optometrist Or supply of And leveraged optometrist any little that Thank grew you helpful. it's compensation I color fact be at could bit you. Was demand additional the wondering your that comps the just provide talked compensation? like just, was provide growth you of some dynamics? can I XX% slower. sort kind Or you so around You fact is little was if would

Patrick Moore

Anthony. Sure,

We're optometrist That You leverage of principally doctors the was is for They rate of them happy a full model, it. a the model. good seen. retaining little our cost. ready business salaries competitive And to The business lower growth nailed attracting I'm component to we've are was call a that again, central just trend. doctors. and pay not than to

comps. in we that in yes, focused leveraged a so the really part is have than And QX, past. the more that little of we And on outsized

and the to so model to pressure and there, So important wage I wage see again, business important expect to degree there. to of some inflation continue so But retention. recruiting

Operator

you. Thank

We for more Molly with have of one time America. Bank question. Baum

Your line open. is

Molly Baum

one for for, on call question. I'm Robbie. had Hi now. taking He's guys, just my question. right for call thanks another thanks earnings I But on the

when if because of with anything you've a of increases about kind broader built comp the drop was pent-up September indication impact pick seen up spending, flows more round guidance some guys when expiration seen. we stimulus about in how of serve quite little of Have that any the at program look and related similar an with You Act, for some stimulus? seen an of kind again up another talked to bit here? the just would with have the saw talk well, as CARES to from driver? a government programs you driving demand FEMA we Or that or the in stimulus holding been into you. has is wage Thank And a that, comps could from other lot upside loss August that ebbs we've of big of curious I'm you a big distributed.

Reade Fahs

Yes.

business money a are send consumers. when that benefits to we So always governments

pre-COVID go You that more about in always when out. times. times talk sort refund comes normal and We tax rush checks the of

pockets some of sort the, stimulus. cash in we're and consumers' related June there was was what much very so when And our seeing in to of July government

there more in guidance So stimulus that, our projections said on based to that stimulus. the be helps our we Having nothing any are, we, that business? thought future will or have break

So us be that for sure would helpful. be would encouraging and for

Operator

to At you. final I'd Mr. over any for the Fahs time, turn Thank back this like call remarks. to

Reade Fahs

your thank I and report for of appreciate like the to Vision, all all questions Thank you you, you for continued in much. fourth Norma, National we to this and very and forward again we quarter speaking you results. support there. joining when Thank good interest our look us with We'd all morning,

Operator

you Ladies and gentlemen call. this today's Thank for concludes participation. your conference

You wonderful day. a have may now disconnect. Everyone

National Vision (EYE) 7 Nov 202020 Q3 Earnings call transcript