EYE - Earnings call transcript Q1 2021 | National Vision Holdings, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the National Vision's First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. to Mann, conference Relations. Vice like speaker to now David today, President would hand over the your I of Investor go ahead. Please

David Mann

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

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

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

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

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

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

let Now, call the to me turn over Reade.

Reade Fahs

I'd us today. I staying Thank safe. healthy all like thank joining Good for hope you, to David. morning, you everyone. you're all and

last industry from many that been has results. the we've been saying a and X June Turning trends to Slide QX of years. hastened We've since COVID reopened that benefiting for we summary

The nearly growth for our delivered our increased XX% XX% we to further We are year. demand XX.X% income increased rose XX X.X% teams, who generate quarter Eyeglass increase serving sales nearly last Net low-cost XX%, another comp our five record Legacy stores XX% X,XXX by that of and established last and segment a count growth contact in to QX the the increase. $X.XX, store public operating adjustable QX the combined added profit comparable us. another eye Adjusted a results new Walmart Our XX.X% quarter made comps at had and and year. execution XX.X% lenses increase Best the a for glasses two revenue World Vision locations in evidence brands. challenge quarter of increased with delivered led increased continue for quarter during first of increase outstanding with positive again EPS additional ended America's the our exams, we Centers for store increased versus which nearly the store adjusted to company. and as a This great once opened with this. results

ESG quite Finally, our Most and our Corporate simply we framework on ESG on we exceeded expectations. our shared to section Responsibility progress continue a website. recently our launched QX journey.

confidence to more us our will updated In detail. and While XXXX Patrick few the a raise our our minutes, results in through gives our you year-to-date year over, pandemic full not QX momentum outlook is outlook. take

Turning Slide to X.

optical and like larger we confident highly the Vision. strong history outpace chart interplay due to that believe share. We're better-capitalized challenges. of of industry value resilience variety National business we which helping with helped are hastening of this we're external by have trends As The a trends industry long a factors: for pleased that the several consumer us believe First, demand. strong These the continued we shows industry time results fragmented pent-up continue has retailers the remains a been were comps of and and and grow market consistent to favor our continued economic strength through likely quarter, the and our

were the our of our safety we and a with mindset patients been aided stimulus performance protocols government by safety-first strong results our additional have believe and the believe and rounds resonated and customers rigorous Second, pandemic. that factor have finally, our in during we

we customer last more call, on from severe recovered in the As lost March, weather-related than noted in weather our however, disruptions. sales February, impacted negatively traffic we these

medical a the QX over are to to and April. customers operating demonstrated off eyewear. where start our and the low-cost tied stores in we've is eye to more As attracted highlights purchase robust at category sales strong our with continued of far, choosing Thus momentum to this care visit a benefit necessity. is the in levels, ever years, Patients a

of the duration expect Shifting of we difficult to time. moderate remains X. heightened demand Slide it level would to predict, this to While over

momentum our Let's drivers of we how plan our further and review our capitalize core growth strengthen and to advantages. on competitive

opportunity with store the total current stores as double a to see primary New to remain footprint. a potential whitespace we focus sizable our continue

We over last network a return June. performing improved at opening plans and the reopening our since in company. optometrists Eyeglass strong Eyeglass of we XX The us XXXX. level continue World, this success are associated off openings specific we currently about X,XXX brand stores profile locations both performance for into role to and consistent year our XXXX. the in especially the XXXX. Eyeglass plan in brands, open attractive first in been to extremely and had confidence the have strong quarter with play have very to accelerate Optometrists with key America's in XX We a solid a for a two and We're modestly Best World to of an ongoing start growth high World, of fortunate and have great engines to gives pipeline have

and would possible their to Our strong not patient care. work quarter performance commitment this been without tireless hard have

high With strong coverage, patient to able for rates in the always continue doctor retention approach. we our with retention to our As the record more and use eye and meet keep we levels. in demand to said can recruitment we're optometrists I've past, exams invest safety-first near optometrist programs healthy

marketing new presentation. on our the our and Foxx. Revaux customers are in Jamie new and Revaux QX. In to via factor terms typical In to driving of television Prive features marketing, this launched customers progressing We're with be April, in digital acquired we many stores. a to attracting a spend have investor Prive advertising assortment. key our marketers both quarter, full-funnel campaign link actor commercials and Co-founder of the last website exclusive we're and of The viewable ever to a our pleased continues we to page traffic new on efforts and return highlight more be more our The level [indiscernible]

customers continued As their with and an Revaux products, and our their stylish reminder, partnership offer we prescription our to the last expanded fun assortment and a remain we year only year. value, America's can given to optical this optical Best Prive are endorsed offer retail exclusive U.S. that attractive at celebrity relationship chain pleased

key positive retail Another word care category optical is the of believe fair those driver comp take tend their is who best We patients a of where to win. mouth. customers that and

available Best comprehensive offers as a extreme believe brands, attracted and for Eyeglass such growth we two to optical exam eye our values, pandemic, World the - are same that at even free our two including at for two day. for America's introductory $XX consumers the with more full glasses $XX a During

in customers comfort programs our on security. vision in a revenue the of think safety great ongoing the an mouth and opportunity here, partnerships growth patients the word driver. care give protocols relative continue also and the stores to our managed continued positive underdeveloped see Participation go Strong remain copays elsewhere. to in tied further to remain We comp these category first dollars than net and quarter. and to insurance We as tend

a volumes provider. inventories are be well the to supply lab by significant port our the we To not in been network's well first that record chain quarter. despite elevated solid lab consumer the disruptions to remain reason key we're demand that impacted slowdowns positions low-cost to Eyeglass have and any impacting supply handle our trends. capacity a during other position our We rallied sectors. Regarding efficiency chain, date its continued as us able handle or teams believe sales Merchandise a remains

efforts initiatives, the patients journey, to to insights see throughout our customer from of and progress to capacity digital engagement expand terms updated well customer by improve supported opportunities In omnichannel all as to as research. we consumer continued market and

and Our encouraging. efforts continuing are remain medicine remote in

a the the one in turn call care in very store we're let over commitment I to environment, this execution performance and one to their to level our me and is Before patient of performance our service store customer say every that core, day at every QX patient customer testament safety, and Patrick, with a time. course, our at its teams of pleased

with variance our to COVID the appreciate at time, recovery. potential that vaccinations, hopeful same environment the continued we ahead, can with way that what with we volatile normal we uneven on remains are of risks progress look new remain like. a economic At a establishing Looking

continue and We well to and the build business positioned our in confident an that the industry believe for ability are attractive we're to growth strategies in long-term.

Patrick. the I'll turn Now, to call over

Patrick Moore

good We're ahead note starting be performed Thanks expectations. everyone. XXXX of fiscal Reade, morning, well our positive business the and to as on excited a such

temporary compound to XXXX. fiscal comps. will year, some XXXX more to our the believe week indicative calendar growth week let results discussion. affected by be revisions one by store upward comparability a year the closures share our of the results annual that the help color year begin item first rate reporting to today's this caused on shift first forward two-year further in with Thus we frame sales especially compared XXrd Before fiscal sales outlook, half, strong to the our one last and at for and our I this in XXXX me and The quarter reported look this in

Now let's X.X% World Best a America's in in or and turn year. Eyeglass stores store quarter new with to the past X,XXX opened We stores two count XX increase in stores Slide the X.

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

the The increased store growth last chart a XX.X%. of XX.X% cash adjusted increased comps America's the by brands on Best comps openings and Our our presents and during the second quarter store XX.X% Eyeglass pause year. was was growth store new Same-store temporary quarter World up growth calculated our during in sales sales basis. comparable rate at impacted

rate the represented compound were sales comps driven over growth QX basis, Looking by adjusted in to extent high-single We increase comparable components, an a XXXX. and growth increases comps to at average by in digit annual categories. in same-store Shifting comp contact experienced QX a positive ticket. transactions ticket in store primarily lens unpack two-year on both in customer average and sales transactions customer lesser both increases eyeglasses and a our with

statement income on to highlights Turning Slide X.

in X.X% XX.X% for to QX well X.X% service-based in the points momentum business were business at our temporary again Net quarter operating unearned year traditional increase percent on which of today's from XXX second last was last percentage deleveraging. last increased net QX this leverage versus compound XXX and this nearly year of trends net of revenue, as growth and of Adjusted in of mix the revenue Net of model revenue quarter. strong we the the year. margin our Cost increase growth adjusted points revenue well million and higher expense compensation. increased Otherwise, payroll increased a margin basis of operating XX.X%. the amortization. of factor more significant quarter leverage XX.X% this strong offset we impact in Our how approximately store rate The XX a net cycling the increased compared recognition. year. timing SG&A unpack the comp XXX reflect sales eyeglass percentage and closed. lower basis was or unique of continued increased the last $XX.X experienced was income key in points depreciation earnings help of performance-based increased a in both Appendix versus sales results by resulted the as unearned unearned year. optometrist explanatory which of lower of eyeglass as we quarter which included continued expenses and at XXXX in Adjusted temporarily when decrease higher retailers, as adjusted our to expenses first margin the to increase of revenue eyeglass strong is decrease the a behind more basis stores reflects On somewhat revenue advertising the closures versus To of eyeglass basis, from reduced end a store a costs, two-year as have or net reflected XX% X.X% than driven applicable operating an basis revenue The the higher sales end in revenue to year-over-year and strong slide section revenue an near fixed annual The revenue unearned as to increase as mix margin to XXXX. over revenue costs, the growth The unearned lower the points incentive due presentation. half revenue.

through. using a a delivered $X.XX remarkable of another the the on experienced impact all of XX% these shares, By increased count flow quarter EPS of result Adjusted accounting. of As to method convertible of factors, the unusually we if-converted diluted fully which reflects company the strong a senior notes quarter. converted diluted $XX million share measures,

from million million or At year-end. the Now the increase let's end quarter, of total approximately $XXX debt our of balance turn our to $XX was an first Slide XX sheet. and

last tied feature regarding notes convertible accounting the reclassification adoption for notes to represents from our As and equity quarter, is convertible tied to to of the of conversion increase accounting new debt. early noted we our this standard balances

the represents X% capital and new current top outlook balance now intensity an relatively been the progression cash million efforts for capital aligned XXXX sharpened with our formally was continued a from as Our quarter, line strategic in invested range our income compensation the last approach in plans $XX XX% net times operating project and which these net investments have our million to $XXX our primarily $XXX quarter adjusted as times to first intensity, approximately on store to metrics. incorporate XXXX. company, $XXX CapEx, our stable a year Net from to invested focus in expect and on have of we we growth performance capital million for to capital X.X our decrease debt million In revenue. XXXX return was public $XX leverage lowest point company. public of or increase EBITDA and of adjusted CapEx allocation and now XXXX year-end expenditures, more X.X With we as a incentive In decline million. or

our account proxy measures in the XXXX evolution our outlook outlined of As took new published and these Directors of public and transitioning from the performance in Board feedback stockholders statement, recently reporting metrics. into to fiscal

We balances of remain our We continue from and strength our to nearly liquidity competitive a very financial $XXX believe a financial strong our and capacity in invest ability advantage. be available million position from with cash revolver. to that our

stated we period sheet this conservative the As credit capital favorably in exploring regard, year, balance markets we to are uncertainty opportunities proceed will that a our improvement. continued facility. of look cash of balance posture amend key to our this In with priority we amidst

based to on Today, now we fiscal our in XX. our outlook on April, Turning strong raising our XX XXXX are Slide and QX outlook. and performance

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

volatility no related result business to driven the in government regulations. pandemic. or anticipate currently outlook outlook significant assumes potential The Our material COVID, the ongoing current company's expected deterioration by a the related to operations COVID, currently as we impacts however, actions reflects of uncertainty

period As what the comparing a reminder, is the to backdrop in XXXX, we know of fiscal XXXX today. against XX-week

million, adjusted $XX notes XX%, the and over adjusted assuming outlook if-converted under now growth revenue to in treatment diluted projects increase represents $X.XX At the adjusted $X.XXX of and midpoint $X.XX nearly million the XXXX million reflecting EPS XX% our method. and XX% the between between a this average outlook, convertible diluted of weighted of $XXX $X.XXX EPS. shares Our income XXXX our range $XXX comparable operating sales store adjusted between billion net billion,

first our to and changes our half year. and to compared revenue expect continue material the profit back not reflect strong of for growth does in XXXX view guidance in the We net half the

we half reminder, second with to sustained. reopening we from project net challenges growth continue Thus to revenue our comps be a second double-digit expansion rollover in not decline face and profit be following generally meaningful that will significant the expected a to metrics. exceptional As in margin record stores of flat the half is

in quarterly cadence be with to to modeling XXXX. we more the results of continue For purposes, expect line

As half would start Reade project comparisons, to to we the demand in April, quarter strong negative second continued with comps year-over-year of first a off we moderate noted, heightened to the expect benefit to continue to momentum underlying we're from while further time. over level

year full to outlook compared versus last revenue, For XXXX, to applicable we to basis XX to XX initial decreased our to a of as percentage increase. net of XX points expect a basis cost point year XX revenue

some shifts in benefited with Our record pressure half. in we cost to expect normalize XXXX that the XXXX, expected product mix performance in from second

assume to from import we China. continues outlook on Our that products tariffs XX%

QX, expect For we over to XXX closures. applicable by down affected as revenue we basis be to points store period to costs a XXX grow

that to expenses, marketing percentage in to expect in of net of a previous to The half we XXX performance-based we as In primarily continue tightly increase is XX incentive return basis of revenue adjusted inflation will the terms reflects and net our back compensation wage manage to increase in would projected the more SG&A expenses. SG&A of levels our higher Against year. points QX, outlook versus in percentage spend this to outlook. corporate of a normalized growth higher revenue backdrop,

midpoint and of estimate we above margin result, our or above the of approximately XXXX points approximately basis at basis XXX an a As operating guidance adjusted X.X% approximately level the points XX range XXXX.

depreciation million. to expense the amortization $XX million and $XX range of in to million and $XX continue interest project of We approximately

occur may in tax and to to approximately consider exercises stock XX% due benefit tax be estimated Our fiscal impact rate the is does that the fiscal not option XXXX of XXXX.

QX our at least partially would expect year-over-year the XXXX. to unearned reverse approximately timing $XX remind in million would in everyone the that can of quarter-to-quarter we We in affect unearned revenue second quarter decrease recognition of revenue comparisons. Lastly,

we understand As our business. underlying business. of remain say communicate the summarize, always, this effectively Reade. accounting momentum navigate confident we emerge fiscal turn the that timing investors that are We how far so cash XXXX. an impact this will with clearly positioned back like to call I'll always To challenge well would to XX-day can stronger momentum to in to seven At point, thus are as pleased the we I and even

Reade Fahs

Patrick. you, Thank

ESG initiatives approach. progress Slide our to formal of our last Turning efforts. This that's more made employees G, further spelled might a and an now these have we + We for structured which significant we've pillars expect from framework, retailer, represents responsibility far as framework ESG XX to key SEE corporate Moment supporting The Since environment. call, our developed Mission. SEE pillars our a of on optical G you is the three call, and focus foundation governments. social

of We problems work for planet, to address simple by public of could focus everyday We can who as with many York eyewear we the that mission. of by health afford the providing you've Times affordable our is try lives largest lack the But in social it pair to billion philanthropic with our to eye X.X be New on work which this impact have provide who the vision to corrected to referred off, our a groups operate crisis world people our never and starts roughly eyeglasses Our heard improve a would able throughout affordable communities through and be our variety to and otherwise is to to not sight extend we where business. and care glasses. the other access access those the partnerships. what

around the in efforts Our America world. and partnerships extensive both involve

free a through with For Vision longstanding free the and Americares half to classes via instance, collaboration million intend recently Americans announced in which our low-income we to clinics hopefully Restoring new Americares partner throughout we provide country. America,

a internationally which now, a initiative of a through to most with from for Mexico. to them and people in outside hundreds Our hope Impact in to poor just Africa gave We've last in been we of over a frames low-income recent frames Impact of getting mentioned we variety X Madagascar, called Grace while quarter. collecting of in This and thousands million group use role recently industry Grace new new serving has year, Ghana, partnership connections for around glasses Nigeria, world. Tanzania a clinics for play the to for been the

because better work Internally, way is doctors The fund second three-part make more associates $X they literacy and framework takes just Vision. us. National but always forms crisis This this word our we an think variety associates employees for about much The financial a that billion in optical of lives since distributed associated years employees. so and to use fun of its emergency training ago involves development two and section that associates, we from of with founding to need. relief we our live the want to effort acronym are the shy to has

in For our now, pillar over in optometrists of of network effort our initiatives. Interestingly, focused a while DEI and on BIPOC. we associates this XX% XX% identify as

had I the to fully of Just action week most already which up place. for in inclusion last diversity we protocols, committing pledge signed a recognized and of CEO set

Our this were Forbes in included by Best for XXXX. Magazine of efforts recently their Employers area who in us Diversity recognized listing independently in

Governance elite purchases leadership safety a future our an baseline year. the our initiatives, practices came quality, and to based identifying The In of third and an Office us is assess with this greenhouse a when chose pillars to impact three our as area, purchasing in framework. involves Depot conducting best we're green customers regard in fact measurement in foundation were this accolade way their implementing provide focus promote on surprise us initial of is eco-conscious XX% the to inventory more compliance. last a that gas largest area award the This and of environment. recently standards new in

corporate from to through our to understand certain proposals remove transition recently proposals formalizing commitment launched these about These efforts. where National to the website dedicated information better of Board you We titled the our includes issues strategy Vision a the statement our supermajority de-classify our many following responsibility, help example, proxy stakeholders on framework. find and initiatives, To more ESG the provisions. further area XXXX communications sunset and Board's + the of SEE ESG and these can For follow G equity private we're charter track ownership.

with Industry quarter. value to We had a I'll offerings. favor that, trends So a just heck our continue summarize. of

stores Our for and our store our executing and optometrists keeping us teams patients customers. safe and are well and

brands continue and growth tremendous to store success Our stores potentially is overperform think increase share. the since reflecting World of to market build win reopening. our there We're number XX count. their double months still starting Eyeglass we'll modestly to We whitespace over the past

Our the and fronts. ESG call feel the success of recognized, efforts variety are poised the really I'd kicking to being we turn like well back for that, operator on of call. future and into start gear a question-and-answer to to portion With the

Operator

Thank with of line Jefferies. Instructions] first Wissink comes the Steph you. Our question from [Operator

Your line is open.

Steph Wissink

question Good a you. everyone. morning, my Thank real and then housekeeping I question. have

driven more average Can just talk transaction tinkering this is I understand a suggests bit And just one, expecting for that which question a first up share World, new how from by and was quarter in that break picking point is internal you're like wanted a apart us Patrick really the and customers, and that your you where the that where script, of which comp of then that transactions quite and little of Reade better? to growth. to the probably bit number I you to quite stimulus. coming a you bit I the it bit model think, first confident was a on sounds a the The a on think a best market little value compared about you was for Eyeglass you your think bit was mentioned expectations, when I the for surprise, - maybe in your just given accelerating quarters feel

just give in are So that to measured stores Thank us KPI's more a can the you. have rolling way? the changed, you that within you are what remind start aggressive you model out conviction that being operating those what

Reade Fahs

all for questions, to right. just to make those Steph take I'm it Patrick. both easier going

traffic check-in of of of course was So factor both last and course a year. traffic closings versus

encouraging. So still I to to get mean guess you're the were but traffic, going both

We that benefits and seeing new our pockets. fact getting consumer are customers ticket more growth customers and average their has to from returning are in we money the nice relating

is past, preferring lenses lenses and seem be sort prescribing contact think it seem So with that set of value. in more - again be as people as optometrist I and said also, to contact premium and be people that we've the seem both pieces to helps the of transaction to

On the have feeling World Eyeglass shoot about Eyeglass reopening of strong. very front, really I we since yes, out World ago, so right months great came XX just the been

what generally a think within engines. ever as projection. been of in day bigger we'll that's and you XX together with We've to ever we've just safety where counts higher the been team day for nice We just our our all a of stores. feeling plane in their nice that consistent and It's coming the to get has that plus everything further confident sort Eyeglass encouraged operations with comes of stores just growth going ROI It's now stores. little with sort associated so keep and store, same shopping range extra on more of We've we're the think June right been we're store latest moments America's and sort we efforts COVID a same think the been our as I two again have on a have resonance nice place our XX, Best, focusing of World really more together we and for in - refine be few building is gotten happened right Eyeglass concurrent that of been so since. be again has and a really marketing mentioned, And of I those It's service of so sort in double benefits into that timing of World tons well. to versus right of able years, had getting the us people also of building the came reopening. think the to out resonance shoot I

Patrick Moore

to of incurred last is you we're seen nice that expansion you Hey tinkering, about Steph, way couple years, the say in that's a it. in it's What the add would have and brand. of over I and has occurred EGW. explicitly that like to summary margin we've general, think all I in growth like don't robust see the But seen

now been So margin us even expansion, same easier ROIC on of And returns it's of we nice a capital. for as we've to the grow very zone AV, invested place consider making in on seen us in to it that's superior the terms two in quarters them have are top brands. essentially different comp a of growth, brands that you put in little

Reade Fahs

to the off great operations way. on that It's team. to team there. off and been the to the in them team Hats Hats marketing strategy

Steph Wissink

Very you. Thank helpful.

Operator

you. Thank

Our Yih is with Barclays. from next Adrienne question

line is open. Your

Adrienne Yih

you Patrick stellar David quarter. much. Thank morning, Reade, very congratulations and Good and on another

the my being is, the like pretty adjusted first time. exam might Reade, booked would of to utilization question all they and reported seems XX XX it be the that time, comp. close capacity So the seem optometrist It maybe aspect,

I we long-term be should were a much of Pre-pandemic, LRP. of digit then demand solid far you about So I my - these longer quarter we and is question margin. different structural How out know to margin for - is the consecutive it double-digit margin is hours kind mid- for service guess keep how an high-single staffing is system, thinking margin. structuring of haven't you kind at my op going? and given And of that question are third longer and looking Patrick, to you

So about just of you. early that? Thank days thinking

Reade Fahs

Good.

to I these you, a to great center the many Adrienne. just numbers up takes Again want the have mean, achieve to sort historically. fronts, keeping execution labs I out So thank point just strong really of distribution on

We that do per seeing hours, constraints on we helping industry of are of a data optometrists exams for we're hours, that efficient to as some been your possible there focusing there all patients, the is and be many so think always cleaning we you pieces, store sort As less we but reduced of we we continue along of we're and levels, the independents eye flow the industry we choosing growth. think mentioned the think exams people do get way. from very of sort we're aren't that's much to capacity with reduced they they have to different do do far those numbers. which benefiting is a poised capacity strong of at and social mindset at well and we're We we have far the and have are that as what We feeling greater is but have exams their But store make the ongoing - a can store the lot working as them the think and think ways masks through hour our cleaning still growth is great sure think lot safety-first eye distancing doctors continued do met and the our constraints, sort especially - capacity. cleaning capacity many us. and helps in do one on have good not still tremendous been for seeing need there we reduced high to is best,

Patrick Moore

there, I'll up from Adrienne. And pick

contact we that from yes, stores. when we've a our tickets expansion period that advertising that to now. of We've from seeing mix as have we are weren't demand, benefited There robust continuation essentially much where due of we benefited period stimulus, has much benefited partially So reopened margin exceptional rather time from closer we've normal a moved started elevated was eyeglass versus lens. to a

the terms What QX it But it terms so advertising going lift, where I to is And did comment and business we we and to - incremental even would corporate in our remain cost that think XXXX, a been as a we got factors expansion. April strong that to incremental meaning margins two. from some strategic points, great been first - seeing remain some quarter QX benefits and they margin be remains our year a then is additional expecting basis comps productivity, say, that comps overhead. think our I the we that ticket in deal remains lab margin were are has time, operating back have come parts delevering this we're they see focus. been in then I going got some expect we as we have or benefits in the don't April. part versus of opportunity we do through to elevated, want So model, and guide rent of very what have of improved XXXX and some of through to of elevated. or there looking we and The strength forward nature transitory XX highly don't of of obviously XX on potentially that remember where focused seen, we for margin flow-through normalize, begin of expansion of over more that to to are folks is really we those moderation think to want we always

still transitory some that some that. we're margin getting beyond the I opportunity see exceptional think and impacts felt I to of focused we So more on

Operator

Thank you.

from line comes Stanley. Our next the with question Gutman of Morgan Simeon

is open. line Your

Simeon Gutman

I'm of cover, place, is category a trends in expecting looking nice across Hey, little mix so they and a the throughout make Can the remind positive stay margin ones revert? not question rest quarter. do asking why year. retailers XXXX, on your think to the in product it around there? shifts curious all because good mix cross-section and and the are sort we why different reversion lot us My assumptions of the and of most a mix sub-segments lot the the your of you were really or first assumption morning, what - they shifts of you everyone

Patrick Moore

certainly Reade and few then I'll in. comments add a Hey, can weigh start

our time the during contact we really As the doors, online just selling about eyeglasses drove we open, we when that think what were period stores had the mix still started we shift. closed, some were were were of lock would shift there so lens,

of a so a just We long. normal a for general, a of eyeglass time seen higher norms. mix is but follow fairly function bounced our managing higher mixed And consistent to where over reverts little, periods air closer in of time seen some degree it substantially mix. as have for We've does around assumption much the business

closer about that where So as expecting mix. we approaching second standard think back we of to the were in see we to half terms are

Reade Fahs

you happy. Yes. our buy that shut, store about I and sort front also in to And the say we're and And just were of glasses, into buy the up lens ever you a as call wasn't we even all time course, screens supply wanted and were bought doors think building us, I'd And computer of terms mix, blue you - so of as chains too. when can glasses on just that future spending some people little contact can like that, things disruptive. just of finding things we're need like we light insecure go online from in and more

factor of all also, eyes very sales blue they're that's frankly, our this light sure their are the as to protecting their in smaller looking factor been well. going so lenses best, a strong and screen, so on and best And their people seeing a want even that's make and

Simeon Gutman

what the of But half. year, this the like it revenue year happened a you outlook follow-up the have guy reverse to if the like into the retain, is some half of said, like then And like the the good helpful. you quarter. catch deferred that's of for looks Okay, for rest still up inclusive you flattish quarter, the back second it - back looks guess margin I P&L on, in the

retain the be talk still that been would you overall can Why bump year, doing two-year volumes in the a are historically? you reason inflation business guess the your higher you've wages because in the come you any volume the back flow-through overall most reversal mentioned has of some business? this just to I in the higher, similar margin, stack the be since half, is why be of back will got - If better costs about what but little prior up, that bit to shouldn't there there's in going et levels cetera

Patrick Moore

say would comps better, better and Yes, although planning our visibility, with we pre-pandemic. the it's environment it is had say we on have Simeon, certainly like still position I starts nothing and sales

prudent So posture we towards a continue to planning. take

store you last about growing think are closure we year. the over As half, from first second periods the -

The we're over second half, robust growing growth.

raise today, QX So the then a expecting of was for lift is we terms on we're what were in that yes, back QX books. where of now And little versus in in result February. the guidance a that's

but ticket that to comps, pre-pandemic thanks so a we're plans And we where maybe cautious to that in were. always that. at were levels, In and Second double-digit maybe see to incremental we'll comps half, little general, stimulus not we've of assume normalization for we're in being still highs of that, holding see not Maybe we normalization pretty kind exceed those like expect negative revert back our Yes, half, some to fully as normalized of our benefit, the aside. margin with ten-day and our least revenue, than comps, plug then, for has close general, for a certainly on some profile QX But to we'll the and approach not experienced. plans the the quarter do I some expect the but QX second this like always normalized start more a that at that I margins a look second become positive always at we mix. reverse but more business putting of talk degree seven about to high to we it to in a timing that, time them more and thing, reapproaching

Operator

Thank you.

comes Paul from of question Citigroup. next with Our line the Lejuez

Your line is open.

Paul Lejuez

grab it's the Two there questions. there that on those side guys. doctor the into changed curious towards anything Hey, as growth your leaning that if EGW, One to doctors is you're you I'm Thanks. versus factored using by employed ability on you're more accelerate ABC? seeing? independent versus and you're that's driven seeing more disruption those more question. sales in I a for that So then that little bit lines, the order guess is And up along first that demographic share the EGW by traction the market, and

perspective. what just plan the a of from curious marketing kind question, is Second

planning I of think just year marketing curious guys. point Thanks how how in EGW? it leverage that XXXX, ABC does you're this was versus compare a and

Reade Fahs

okay. Curious,

some that employed was modeling some stores we So that have simply in pretty not no a doctors doctors, a have have real stores leased agnostic. mix, were change to factor the doctor and EGW,

how at works. look but that laws we're the You as state of agnostic the pretty to of course,

so Eyeglass side new doctors' the of on And really news no World.

that overall Your all be non-malls, factor with to both are our traditional independence more from factor, grab of brands brands shift value-oriented. market for from expensive of from but would mean, EGW Yes, a factor - the Yes, I of to maybe smaller malls demographic, the of wouldn't surprised, more a if of the up or of the chains, versus hastening our larger to question share trends benefiting the I from probably

think America's Eyeglass our World that all of especially than - those for Best are and others. I businesses, factors So bigger

I'll a that store of from I just the between comments we're our benefits that the fact terms that in few our Having network year. America's and who America's normalizes. normalizing I digital America's us the Revaux that going with of we World frames, of believe that's you pleased of and know so watch advertising on that do more general, spend would guess particular, and when helps Best point world we that of open we exclusive other we the sort right the advertising more has hang heard Jamie mentioned to think do is expecting thing enjoy us and of in America's getting Paul, the and both to years, really we're for TV that. digital really getting balance our is back through a normalize now marketing difference Foxx orientation But our Best we've We're of for think brands biggest we I brand that, in Network the Best said for some Best call Eyeglass just as AB, in Prive been normal And now have think to levels. marketing we're one and please that of spend to marketing understand we our planning, the are people sort out that so In in benefits, and plus. ever live get ad,

Operator

you. Thank

of question with Ohmes of comes the next Robbie line America. Our from Bank

is open. line Your

Robbie Ohmes

guys. morning, good Hey,

So congrats great another quarter. on

maybe threat you are either follow-up a optometrists on you the forward, not and/or either the issues around wage And supply frames lot Just in the seeing yet side? maybe or look are Reade a pressures when for store lens but of inflation seeing associates? chain potential there the just side it also more significant

Reade Fahs

Yes.

thank Robbie. you, Okay,

answer backwards. questions me Let your

nice have we contracts cost to fixed lenses, long with Our them.

else seeing frames than labor time of terms the same of we're world is tighter in there. in everyone has well thing been COVID are moment both in we're tight compensated. that about like and This labor significant not sort folks Our particular to-date, inflationary sure the us. and of we does now to to pay was chapters forces We checks anything stimulus this in our chapter different operate chapters it and competitively and a at change make and

So that's carefully. something managing we're watching and

Robbie Ohmes

Great. Thanks much. so

Operator

Thank you.

of comes Goldman from with Kate McShane next the Our line Sachs. question

open is line Your

Kate McShane

morning. Thanks our good question. for Hi, taking

to advantage regards XXXX we of you starting are something favorable to maybe see with you one stores are rents, rents locked finally, kind do can favorable? was lower see when the And maybe rents? looking with any more towards to of then you quick relocations in in and take look potential and should more Just a already new to that or from XXXX us,

Patrick Moore

Good Hey, Kate. morning.

in renewals couple terms we've I'm ups. that some on rents. chapters. a what reset. really chapter rent benefits the renewals of a down had maybe We've market and flat where store in couple So now observed is the some in XXXX we new We a saw had of seeing even are

traffic it. held say types the value store spot. like after right not high a sweet even a expecting scale I better to moderated kind X,XXX far X,XXX basis square we to of of we on per is those the foot would to rents these have or because square up I'm So in shopper, feet of the size of be places

markets vacant of collapsed, former think there our have too. where Big So I are don't rents expect a not we're lot really stores and seeing Box

those are nine projects some duration. costs feel have we store of year from where so, build We last so declines the are still in this construction months many and our over about because cost or good year benefited seven to

those So are baked of lot a costs in. already

we're how XX for In cost of have to we real market. every general, out continue long put pleased that's time period stores and seeing the what viewing terms So of new expect been to there year profiles. of we're a in with kind estate

Kate McShane

Thank you.

Operator

Thank you.

line from Lasser next the UBS. Our of with comes Michael question

Your line is open.

Michael Lasser

where for from acceleration that much How from the much applaud first Big you timing really contribution of think there that have that, released question. in we April just starting not today? middle results, through was throughout the pent-up mid-March quantify my and remained morning. and the in stand your that the through stimulus you why May of what hard reason has and can strong to here. to mentioned in you check noted the Recognizing you Good how April, impact the industry do the demand business in it's taking in trends size extent, the that a was quarter is

Reade Fahs

has is pieces, up Let's see. going average to it driven. apart A started it hard last pick what gone few exactly the the is up, stimulus Yes, but sale June.

cash out economic think are consumers for there flush feeling again, a target is our now. all suggesting that So while especially pretty I and been has indicators consumer

low, Street very, historically. their Journal card this there's credit very think being talking lows, I debt all are they Wall time about

trends And that having years beneficiary than has pent-up to feel there. But used you do demand in eye months that I'd as factor eye exams of the all published, about to well, worse last last we're been were even start ten it be like a hard several a regularly I is course apart. was and QX picked for still a to big then restaurant think I you there meal us, giving much we it's April, So hastened, a just because March for always in mentioned we're believe us deal so and a snowstorm the but month been is think we does that We of that going aren't pick get internally they that that to and means, it's or call you similarly into model that last stays the person writing our parsing seems just March, I of it in you're midst week always reference for little do pent-up never we this we February then had April us to we've bigger and as they less came have and in dentist the sort Yes, that factor, going of exams bit give think similarly, surprised independent been are lost we that of the and because we also and the the piece we business going to, sector before. the snow yes to talking we demand is that dinner this if bad since public has went relates once the hastening - for the that so With the weather by ever of do on people have quarter before back issue do weather melts. past still I we writing restaurant that night's a you again. up come that mentioned week now, get

year pick for And that this tax is I factor another so is all March. then to of apart this there and question. course factor It answer the that all season and hard your hope was just it's this us in and of hard so sort with big going that's a IRS out a us given season on weird for year. the that tax is benefit one always of all to one's

the the number coming our I lately think, overall strongly just good like interplay lot sensible a us, of of, press just use together, a edificial forces there's we So interplay word and of in release days. number to of

Michael Lasser

same current the this open range you've to bigger, comfortable growth to come do actually level can need for is follow-up of hovered you My of is to question growth EGW, that you've the your feel is to just slowing to overall or America's expense of for of from with the the growth your a accelerate increased now that while, see that in contribution the growth increase overall absolute store the mentioned have an What you're from maintain you new base level stores? is not going and openings number presumably is Best. to at you stores, around what capacity XX start it of store going

Patrick Moore

Yes.

open our new So year. because We to versus was composition this a and stores we probably good point. little stores comping getting comp a as more you're on from saw impact many didn't quarter last that

XXXX, XX the We we doctor year, what opening good probably really so on have guided to not going that beyond that your about like to certainly about new at specific good cadence do about the to can real you open do very We're and getting XX take point, We've store machine. with determined estate, getting but can success. we're and a understand place it's our It's this very opening open so store in it's strong. store ready bank.

So it's XX this year.

we take certainly XXXX and those we'll year, factors beyond. all this about Beyond as account into think

Michael Lasser

much. Thank you very

Operator

Blair. with Thank Dylan of you. Carden question final the And from comes line our William

Your line open. is

Dylan Carden

your inflation and a of curious Great, just kind then to more At use just entry how in you just can permanent angle, the could mentioned the would from that if on to I'd couple Reade reduction of this sacred, it appreciate less strengthen come sort I'm follow more on of value pricing of think level market? up price know industry take at there. it. or Thank you. of how you. your and capacity. business to present, like you you is of us pricing of but to is sort remind much wanted Thank you proposition items you want I the you that I a sort much philosophy, different of or

Reade Fahs

Great.

that door from know made gut that at there industry we there, Hard to I a about there some you're of is gotten decline capacity there about industry the long-lasting are benefited before it's plug by than tell have outs than large that much But independents have more effect the if that how is closure. meter out did hard independents. numbers either doors probably so or predict, permanent. again So to less an or we of the talking because they X% the it's do decisions stat have

entry but been guess they've there's saved new sort who to our can't out the tend out versus closure a that pricing knows, who to is themselves, to places go, have know like predict door walk other pricing we lot customers other our we'd grown a philosophy, that I lot them - they I pace that that independents philosophy also of and that like pulled might of less for don't was here, major I in there, is there a of Best pricing you've actions, tend not be of to sort I to mentioned less we know a take suspect price out - noticeable we used as knows, well, We years great was saying that spent my we door and is, do for America's much to talk place at I XX level money XX is difference about. a our like maybe I think value. pocket, and to

time we was don't of frequently that last to our here general, package or customers that sort a of money us. and by to can make choosing that we about have very lens in saved we change and changing like But did Now XXXX you very sort much. there; sometimes peripherally that talk do

Operator

like the call Thank now to turn closing you. over to I back would comments. for Reade

Reade Fahs

you. Thank to all speaking Thank your like we're in very our morning we for all interest you when We're today. results. QX looking and for for your us Bye-bye. We'd attention to report support to proud Thank you quarter tick-off second continued you, much Vision. forward Amanda. again National thank joining you to and this of

Operator

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

now may disconnect. You

National Vision (EYE) 13 May 212021 Q1 Earnings call transcript