EYE - Earnings call transcript Q3 2021 | National Vision Holdings, Inc.

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Operator

Good day and thank you for standing by. Welcome to the National Vision's Third Quarter Fiscal Year 2021 Financial Results Conference Call. At this time, all participants are in 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. now today, hand of David would to conference Investor I speaker your Mann, Instructions] like the to over Relations. [Operator Vice President ahead. go Please

David Mann

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

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

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

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

to like information today's presentation about to draw for would also Slide We 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

everyone. joining us today. Thank I'd to for and all you, like David, good thank morning you

with safety-first and patients for challenging ever heartfelt Vision commitment approach their work during appreciation hard begin to a my these customers the team Let our me to and serve National by continued sharing times. entire

that the new we week brands, growth paid We the corporate quarter we consistent our in our quarter program. Overall, and released of to Due following of of release, continue and to by locations. year, QX XXXX. QX announced believe Best to our increased developments. ended basis fiscal our adjusted XXX% increased announced quarter of Subsequent for comparison. operating of strength World. sales adjusted stores quarter model. stores helpful are, pleased to Net X today's top-line being XXXX revenue to in durability XX% store is and ESG responsibility with period. nearly in as report a the and our XX as our with We're noted recovery significant XX.X% journey. results the same Eyeglass to income quarter third the Slide and to increased another led comparable continues opened performance. $X.XX. We following America's release, be debt first million reopening strength to compared of Adjusted $XX third reflect our XXXX XXX% X,XXX growth deliver EPS this million Turning over $XX we the end, results share we new press business the last as over and the progress results, our summary quarter a most in the significant repurchase third The down consistent Also, during of

in in you Finally, take results through will our our we minutes, few XXXX updated Patrick and earnings outlook. In today's a release, outlook QX detail. tightened more

Turning to Slide X.

fortunate with for prior sales As XX to over consistency performance strong our past store COVID reopening since business by the a of provider followed growth demonstrated be quarters track the year. shows, our comparable record comp medical We're of last low-cost chart to a necessity. positive has closing the decades two

by from things screen trends an from positive and of aging usage. such Our attractive consistency as an also migration as highlights population, strain increased the in operating shopping supported mall benefits eye such industry

Vision. National and grow our to continue retailers to with the XXXX. significant we like comp these remains continue performance fragmented, were are to to confident our quarter, pleased market highly expect market In a we industry We versus opportunity that larger, slightly positive value have The share. trends optical favor and third better-capitalized we

lap the closures, pent-up to As comparison the an from of last from year stimulus average benefit difficult ticket. the elevated we due store government and demand

chain to Having We We challenges that economy. the also that back-to-school supply to that, should faced quarter, outperform we're from this not across about had typical COVID-XX we variant the did in said and seasonal been given the the back-to-school few continue tepid continue. turned words impact cases this lift pre-pandemic the what the industry noted want the being say be a surge confident that out in believe from broader and environment a I experience current years. season. we to the

vendor Our over efforts teams market chain are strong from thus strength. inventories supply disruption a to position. our have long-term months. growth lead far. Consequently, done see chain last gains. tremendous Planning job sustainable the effective in solid share crucial, and benefiting supply We a merchandise order merchandising We've extended our currently X. a to to continued Slide and is mitigate Shifting and our financial times are relationships been have path and and few

Let me opportunities and on strengthen competitive further our advantages. now growth provide how our plan core and we to update an initiatives our maximize

focus sizable as a white New to we a primary continue space opportunity. see stores remain

in growth our World. on target are double our footprint We We about two plan fact even reopening track to last openings. in modest sites current currently play opened engines to XXXX. XX stores with and ongoing a we have nearly our a Year-to-date, Eyeglass Optometrists our key very attractive locations and to open to Best meet have in potential a success, for our specific evident more America's stores XX the pipeline Eyeglass solid World store which role company's of a since acceleration in year. year next for includes support

the want career. and strive for of would not without commitment practice optometrists. been be place their of performance where admirable of the work entire to and optometrists care to consistent possible network stay hard Our have patient choice our We to

heard always have we before, are optometrists. me you say seeking more As

such, with patients of in We the along optometrist-related marketing-intensive driving customers programs exam compete in As and attracting from and story. word given a be eyeglasses. for the purchase customers traffic capacity. happy to continue we Marketing, to a continues retention maintaining our to high positive rates in category expanding cycle invest toward factor key and infrequent mouth

our aggressively customers environment the Our and many beyond. QX. in our pandemic both safety-first channels believe we're more value the television are in maximize investment We advertising and during and pleased to and with is consistent and digital that current resonated market investing to opportunities new share in message grow acquired to have approach have strategy

insurance managed positive a the We go ongoing driver. to underdeveloped dollars in co-pays vision tend programs continues our to than here Our as category remain continue be to further an in and opportunity care participation and elsewhere. see revenue to relative stores

digital remain strategic focus Our investment. for omnichannel key a initiatives and

patients efforts capacity to see to well engagement to advance customer to opportunities continue expand improve We the as throughout as journey.

Our detailed we results. are pilots with financial call this and At turn remote far discussion pilots. medicine in for the me point, thus are of over continuing, let the a more our Patrick pleased to

Patrick Moore

pleased pandemic. good on the during this with And build as Thanks, momentum the everyone. performance Reade. operating delivered our we consistent morning, We're quarter

execution. results driven store-level traffic Our were and continued by excellent positive trends

our the reinvest business share we debt. maximize grow continue opportunity our addition, to to while to to In reduce in continuing

the Thus, the As of closures was affected our XXXX we year. store with release, temporary last impact earnings results our by reported results consistent XXXX. second have versus of comparability a shared both reminder, quarter and

comparison. more which As helpful believe to comments made today earlier, XXXX, Reade noted is we our are a primarily being

XXXX to benefited let's Now revenue XX.X% turn timing Slide growth increased revenue revenue X.X%. by The over unearned X. XXXX. versus Net of

quarter, a Best increase the stores XX we store in one During X.X% count. closed store new opened America's and for

sales nearly over comparable Best the store up unit last growth both brands XXXX and growth moderated transactions. last average growth X.X% was increased XX.X% growth over and in expected were over For X% driven elevated sales Adjusted XX in as from and increase driven customer our average customer Growth over the as QX America's XXXX, comps ticket year. ticket XXXX. XXXX was by to transactions combined, an Eyeglass levels months. Compared by same-store

comp Before generally the in two-year margin a pause I additional want our with to continue perspective expect believe reflected provide performance on highlights, two-year to from was moving comp stronger the the to benefit quarterly second the did some in quarter. we in delivered the quarter We The trends. not we discussion QX which consistent this first of quarter. significant that to government comp stimulus

versus Turning or XXXX cost eyeglass driven and revenue optometrist-related growth decrease basis by of points higher points our to expectations. margin. about Slide net percentage XXX The X, as mix XXX increased cost, eyeglass ahead applicable basis decreased of was in revenue, a lower to

this environment, quarter experience retailers. we did Given costs like freight the other higher

to expenses, growth. margin overhead for pleased the the basis XX.X%. Adjusted growth. payroll XXX% adjusted by strong which compensation, we We was as advertising margin to another and as in increased structure. costs corporate our investment. by to reinvest mix and XX leverage to was comp were represented deliver immaterial XXXX. depreciation delighted percentage leverage The XXX% factors lower consistent decreased higher SG&A offset in of amortization. quarter operating to points to business this basis increased points higher XXX driven eyeglass behind this to and Adjusted as achieved an increase expense performance-based of while Adjusted leverage revenue with fixed the and lower of margin EPS operating eyeglass income well Overall, continuing The these adjusted of with the million, cost, and decrease diluted $XX.X operating overall impact $X.XX. quarter partially compared key a increased were However, net expense incentive

to year-to-date XX% to operating billion, $XXX $X.XX. EPS doubled Turning adjusted million. than $X.X XX. of versus more to diluted Adjusted revenue Slide results XXXX increased with income Net on

Slide Now turning to XX.

net and from At We $XXX from balance quarter the our X.Xx million million end $XXX the including or quarter, $XX quarter, sheet cash as was and for public a ended with balance of an of was over when company. point million. debt increase the Our third our available lowest debt-to-adjusted revolver. total $XXX Net remains was our last EBITDA total leverage capacity liquidity of liquidity million strong.

in inventory As million. Reade with our current end approximately X% growth. $XXX pleased revenue Year-over-year, or At of per position. the inventories with line noted, quarter, were were grew store the over inventory we

helped has challenging through strength supply chain the financial Our environment. manage current us

for teams merchandising store new for and distribution XXXX out technology their Let our are my focused excellent and to me thanks on investments. primarily expenditures call customer-facing Capital work. and add

XXXX of financial million. near million invest $XXX $XXX in end business a our range lower the of our to spend remain to our We the be commitment We that and believe expect to competitive advantage. strength

XX. Slide to Turning

credit our delighted and reduction million share week debt which Given company's the repurchase. and million balance $XXX term to position, toward loan we million. borrowings of our cash under this down prepaid share to $XXX the are Yesterday, flows agreement, $XX considerable strong we cash voluntarily brings loan term commitment

In Directors be the addition, intended shares are share of repurchase repurchased the and program XXXX, the Board $XX of million through may authorization. repurchases approved dilution. offset end equity management to program, Under a

our an updated to year-to-date on The outlook Today, given fiscal now XXXX XX performance, providing Turning and our are Slides we XX. outlook.

uncertain, continued While and macro gives the in business. operating remain our confidence us consistent our performance environments

impacts to the outlook Our currently COVID. related reflects expected

outlook vaccination, However, The assumes current operations volatility. from COVID COVID and a result to risk continues the business company's in and material or regulations, stemming create variance programs as mandates. uncertainty its government no deterioration actions and potential of significant and testing including currently

to outlook outlook we net or million in $X.XX a know reminder, what year store growth a backdrop XXXX, and $X.XX income XX-week million XX% Adjusted comparable billion, $XXX projects the and today, of of basis. an EPS nearly to adjusted net revenue of of assuming in our now period increase on the XX% midpoint revenue diluted weighted comparing between stacked average shares. a $X.XX, fiscal the Compared between $X.XX billion and EPS the increase XX% is operating to XX.X adjusted sales $XXX range diluted two-year diluted XX% XXXX. to last adjusted between over million, As to of XX%. to represents XXXX XX% XXXX our Against

to relates outlook. Let me it our some additional provide context as

of lower strong results last margin quarter. will for expectation the continue guidance the challenges fourth performance. face the from the reflects third record to we year's Our slightly significant In quarter, and fourth a flow-through grow-over quarter

seasonality $XX quarter Last considerations addition, fourth are a quarter several in there and revenues fiscal which comparison. affect week, is industry, EPS. revenues. will fourth approximately Due the In added included $X.XX optical historically quarterly the the key also in lowest in XXth year, million the for period our to that the

cost leverage make difficult We the structure. more to of expect year a more seasonality more fixed to components return normal our this which to would it

revenue in recognition negative, can the at versus to comparisons. be a unearned sales revenue driven by of end Lastly, QX year-over-year timing in QX affect now We the materially expect change year. quarter-to-quarter our last unearned

on of presentations, past included clearly the With that the this revenue we investors to we we'll unearned in today's the seven always net quarter so the underlying growth As communicate can accounting explanatory business. presentation, this expect cash earnings would XXXX, XX-day slide to in the have an and appendix represent timing section down in revenue fourth compared understand to to in mid-teens. Compared be year. in momentum of mind, the impact low to last

rate the with XXXX comps, consistent growth expect year’s continued comps by growth from versus ticket positive quarter. transaction This year, driven the flattish growth is fourth by in last in elevated of continue represent third quarter to terms delivered generally versus reduction In that we level. a a offset would the last

a quarter market XXXX. year expect grow as the lapped exceptional profitability continues the in outlook Compared we to investments implemented to Our continued as the to fourth due further profitability project investments well expansion to impact lower in XXXX, QX decline advertising earlier as this of we wage margin share. in

basis percentage year applicable cost revenue, XXX expect of full we points as revenue decrease XXX to XXXX, For year. to versus a last net to

As quarter that shifts product and from some fourth pressures quarter record reminder, of cost as benefited our in expected well. XXXX mix an the ticket will this elevated again moderate with a performance

slightly to above increase costs versus XXX XXXX QX, to the year just expected revenue last level. For or applicable XXX points to basis are about

of of investments. expenses, net basis reflects other the primarily of adjusted to SG&A investments revenue of as to XXX we and and XXX XXXX marketing expect performance terms compensation, we increase revenue points and more The incentive levels net as SG&A normalized a In return would percentage between higher year-over-year. percentage a increase wage higher

XXXX. are the To of To operating approximately and model. As good consistency performance tax our we are X% the feel and highlights underlying points for additional amortization, strong points a above confident assumptions strategies We share further Reade. the while strategically the our result, and gains resiliency well-positioned to summarize, assist performance XXX of on provided the investing basis effectively XXX margin market midpoint for interest to growth. At the with an to pursuing XXXX sustainable of of approximately adjusted drive basis right navigate business and approximately We modeling, guidance our consistent quarter also this we’ve and long-term. depreciation our about above this or we continued third evolving financial our estimate goal I’ll the at strength environment business and range rates. the and point, turn that to remain level focus call deliver back

Reade Fahs

Thank you, Patrick.

Mission. XX Turning of to Slide our and Moment

mission, are both We to scale. out a continuing our and close home live to at global

across which comprehensive our is social responsibility report efforts environmental, to lays corporate activities. stakeholders. groundwork Vision’s also the to shared continued and approach proud our in presents for disclosure of responsibility report, has time our transparency and to enhancements company are a We overall have released governance corporate and framework The the our overview first National first and

we our XXXX access the list in unsolicited other our report, the You efforts along Vision corporate despite about a can Corporate best Separately, continued culture. third included during this what we’re Best challenging Women. our yet remains Diversity veterans consistency page named we website. results Forbes and with received that of for second this another for our of performance and row In to with in Best and Employers earlier For a was responsibility the America’s volatile summary, Forbes honor. recently pleased the information National quarter the National employers environment. List of accolade Responsibility Vision on Employers our of to receive pandemic, year Recall year, were for

Our takeaway patient today’s to and could every call and to and store, serve their associates commitment The customer customers and of one customer in team. network a entire I the from patient National patients not more of with day key continue at is appreciative optometrists Vision one be safety, time. and every service proud this. and care

Our performance business strength highlights pandemic during of and durability the model. the our

opportunities market share trends start we’re of of the portion the of the to pandemic optical continue efforts see the growing market With retail from recovering that operator and stronger the company emerging from and hastening keeping tremendous in ahead and us to favor and National our We’re call. benefiting while ESG the call more Vision, are that, a to core DNA. I’d to our like to the question-and-answer back turn profitable

Operator

with our Instructions] And question Yih comes Barclays. from first Thank you. [Operator Adrienne

is open. line Your

Adrienne Yih

of question year-to-date, October? in want And I on comment that has sure you part elongated back made sales progress come some this of growth. to seeing first marketing mid-teens, on children fourth Good Patrick, back-to-school. come that sales back-to-school? Growth low seeing And lower Are make of nice in kind you’re kind years. And the to just it and XXXX morning, over success. more to due in continued just XXXX want as detail you to more my in you a wage I’m I and but quarter. over right. a fruition I got that not Are everybody. then profitability September, post Reade, is past expecting to seeing the

perhaps given So first thoughts the the should year early just of you much. lower got on that profitability Thank very And kind marry stimulus. if of model we with higher how those half sales correct? any I next

Reade Fahs

has it of the high it back-to-school last it you the it, starting in the and just were call, very never Thank about much, The to season, we begin see Adrienne. Good. hit that our past. we have time

of parents kids lot it’s also it because a it season. a of back-to-school very same does back at come yes, Back-to-school but was a a misnomer just bit the season, muted time. little So involve

really we think So time federal way it’s just about better of tax Generally, of February, sort around in March seasonality. have back. our second the it, the to coming seasonality first our returns

Our address with And not little our back-to-school years. bit necessities. more customers August, then adults then of did and that that September, season both past just the money trends follow it second a kids in the And get it – at time. pocket their is and normal

was or was – the So seasonality going have is school. school year. to kids year, this from from to pre-COVID would things was the we’ve for much just not second us highs we that this back weren’t heard It it there kids from Last last year or expected like year. not the in going back industry just the

Patrick Moore

Yes, for Adrienn. well I the level view important because Good morning. to question. for Thanks dive and a everybody, just XXXX, before kind backdrop. want And into think it’s let me I of as a take that of I unpack tariff QX,

So P&L resiliency consistency year demonstrated based provide the guidance of our all on elements. year this decided we and full across business, to

think as take were the companies in of that tough I environment the were said going conservatism one beginning, we few remains a we And lean did slight to we towards the that. predict. to

raised guided in we the and pleased really shifting stand and doctors how associates to delivered I’m environment continue pleased this with now, how we and I’m As twice. one. very operate and of We’ve narrowed this. we’ve we all actually proud that performed.

most of learn the a on in somewhat push reflect right. year, we this I advertising mode. had As test a and few the of year did during times full We got

high all It saw rates we’ve flow-through, where do that surgical in great earlier. retention think very investments associates peak and our conducive environment we experienced. testing. a was around and delta ticket, hiring immediate demand, I even the in to stores, so, We returns good high made variant that about associates wage lab we midyear talked amid to

totaled annualized gains the doctor We also which for investments, These an yield on to compensation. in in basis, mid-single-digit continued us. made millions investments

Finally, of but we back-to-school the the mentioned, kind lightened season, beginnings a it see back-to-school normal of season. we Reade saw didn’t as then and fall

as of I those and year of quarters, assessment are fixed costs good if out. it doing good execution of leveraging and we the effective navigation So pretty All how darn some things relates for very to and call forecasting supply inventory that were do, in I a all, and chain. an most

apply a That’s the offset average Now comp items customer fourth and ticket, let’s transactions these flattish levels. continuing. mentioned QX. Several take a that Positive comp for by in resulting of moderating very to elevated generally flattish off for it quarter. a coming are down QX, I

And business But point, across okay us. changes exceptionally coming into lean them model. of just elements off moderating XXrd lower a of if certainly our elevated year. kind we through over bit customers deelevating quarter. that’s of margins the It are to felt what third less tickets, but long advertising, they period items last all incentive to $X.XX millions and meeting continue keeping advertising, now, are it’s fourth categories. And mid-single-digit degree changes seeing less that million the degree. in comp customers and of I of to to we the few haven’t make that. EPS. to make it’s this then little three that purchase. a they also high margin, but that it’s were you to in core through, also investments with we those Now less week, want $XX certain flow quarter our across it’s ticket some manage did those I because this flow impacts a growing If best over inflationary seeing in we’re Remember, was performance-based levels are they’re want that the to was We we’re structural a Yes, them are time, mentioned those there doing affect wage

less returning seven that’s than we timing unpack will effect which that to QX little think We’ll had strong to saw we versus be fourth demand peak days. ten unearned quarter XXXX we a lot always year, pent-up we than little negative third expect because materially a demand quarter. a do are for a got means in that’s – with of back-to-school QX normal fourth lighter explicitly to in Second, of hoped. be this just was to quarter. the revenue We seasonality, how And where

thinking remind quarter dollars We’re did folks is XXXX, now. to of a have is around compensation In fourth gross other XXXX I that And the and thing quarter adjustments. vendor rebates of SG&A few to return and to would some margins forgotten accrual long going as seasonality. good we guys the XXXX, we compare probably of million in

So do perfectly it’s not normal comparisons the to back to.

I I a that in to lot, quarter this for know unpack but So really was on own everybody. call fourth

that I a so give of kind of third sense you from you we’re and And how hope to helps moving through year the fourth.

Adrienne Yih

Incredibly helpful. Thank much. you very

Operator

you. Thank

Our next Morgan Simeon comes Gutman with from Stanley. question

Your line is open.

Simeon Gutman

Hey, side. on everyone. to focus I want demand

So two questions.

you talk the the we then First, how the expect or second to is think business? is, should on out to market next an of the question robust market evolve stimulus the can stacks you impact about dollars Do optical And to the see on that? growth you some continue the had way growth? way that two years? seeing or grow – retail there any and How any there moderate, we maybe we’re about think is now to parse the

Reade Fahs

in to delta and first that out we’re Simeon, business. I came and/or out hoping feel COVID COVID going comp more that and been that store And believing know the we do – don’t we hadn’t going all sort get times, I’m time. the on stage the chart. still an the normalcy era gray looked category is think many predictable COVID of of variance that we still I’m how at this to COVID that era unprecedented our era long we’re unpredictable. normal in to in something this last. is – normalcy expecting. said era be to I is I nation have we’re And so thing we when to your September, that a the of was So now. more like question, terms we back, of mean and we is of such But a our health gray trends unpredictable

it their It some in them question get money products. always terms also last And in us pocket, stimulus impact, customer when buying sale. In us our in in they us. always year, coming of helps average your terms on and helped helps it certainly, of our

Our thumb, programs their time. the sale moderate a us and benefits I it stimulus from future over can’t more money often what’s as tax when of pocket surprised money And But causes plan going to government. happen average returns, as – our to stimulus happens seasonality. for in is and customer with gets rule our with predict

Simeon Gutman

any date Have terms you’re see better, wane? to changes there of been in starting good, best, that where to

Reade Fahs

to hear I didn’t see Starting that. last word. you

Simeon Gutman

to meaning we’re and made we’re fewer trends starting or better, see add-ons. Wane, the or to buying instead some of the decision being slow to starting better put is where good ticket of starting best we’re

Reade Fahs

when our seeing What hits are wouldn’t is if surprised was it I of place, still we a a gradual pre-COVID. ticket. normalizing average be stable whether that’s above it where

this or Light beyond quite in post-pandemic pandemic and well selling Blue period. this like lenses things finding are We’re

is we – long and fundamental again, repeat that at surprised wouldn’t what where time. I normalization now last seeing that’s level. decline And of we’re be fall they when buy low-cost a we’re necessity. consumer places. money it let year. versus But ongoing other the and an stabilizes, that of the elevated We So what our of the levels like to it by is footfall, build and is going it want to what customer and don’t up for seeing success our making said market been word let through our business we for gain the may. our transactions of stabilizes always fact is Patrick save average elevated is sales a you’re in to to And source the positive the versus provider business count, our mouth, we’d we’ve not because what our share That like success of a customers that we’re medical key success increased it which how and said,

So we are expecting continued.

and So of levels declines the we unusual count. customer last year average sale, it heightened and versus making in the are for via up

Operator

Thank Michael with Lasser you. UBS. comes question our next And from

open. Your is line

Michael Lasser

of players some share compare the for indications question. appears slowed other a publicly Good in optical If the third traded lot Vision’s National it my morning. we Thanks market, the to gains results that National Vision’s in taking from the quarter period.

about recognizing investment, the where be much gains you’re down are comparisons Now others. difficult talking would than more they What been? increasing to versus have probably your marketing slow your causing share

Reade Fahs

pace including continuing We glimpse we category the and indication grow Yes. you market we the we so believe are insurance to there. players similar frame And seeing the share. can from But entire it We category, are we’re at – companies. to share. market suppliers continuing get, the Every are past. who happening believe not and lens the the that’s way it to grow a seeing

Michael Lasser

my marketing is question the $X wage give Patrick, what fourth planned fourth demand well investment. our fourth we year, a were referring and And that that wage forecast. quarter? investments XXXX, incremental you’re going want be the the to that that pretty our Understood. If This investments. going And the us recognizing said you you. on referenced continue think that to you’re incorporate uncertain. for mid-single to into big can how are these the will quarter? you if not, to important you incur what quarter marketing because a in investment in will the sense wage messaging that into we’re environment be to next trying persist in calibrate Is the Thank is would obviously to going is? But similarly, expenses models I you follow-up million of

Patrick Moore

Yes.

I I three an say wage, give that in annualized wage Michael, terms of adjustments, impact that’s to millions guidance mid-single-digit says and would figure. So, trying was the of

and second on So, kind quarters. the the you of can much of that – third how do math fourth the affected

return been ahead, advertising In general, levels ratio say advertising a of while, quite I terms still to saying thinking similar about sales. uncertainty expect lot a the we would to as in to a of advertising, that environment. of for we’ve there’s looking in

normal as more We’re specific will a XXXX do see that not offer providing think, this in help. at things said, I few seasonality time, I metrics but to XXXX. going we’re I may

a surgical those relative challenging do of that And revenue. much I half. in kind have investments the levels normal we’ll again, think to half made wage year. at midyear in advertising and growers will second think spend we easier in is of I comes then in back of to those the how first can lap you worth. that figure much next the kind wanted terms you I give of to And arrive summer the way that to and

headwinds. yes, was faced headwinds Hey, in like example. the tariffs this management team has there’s past, a few So this great a

a expect we we We consistent currently can of and are a help tariffs. our You seems find just please intent just is and us that, us continue them, and to resilient multiple ways level looking that performance work everybody kind will to initiatives did keep like at through to doing that of like delivering do with to that. to

in I So more when a that again hope lot Mike? helps we’ll insight talk we into QX. little that provide a bit,

Michael Lasser

Thank you. does. It

Operator

you. Thank

with Jefferies. comes question from Wissink Steph next Our

Your is line open.

Steph Wissink

everyone. you. We a wanted time little the Thank Good packing on cohort. morning new to spend customer

related us incremental to some think you the share some you’ve CRM And of from some I initiatives new implemented marketing. of with you the had insights could If your customers gained.

whether helpful. could success of with some you appointment talk would bit Thank to be you prompts reminders customers? Anything those you. very can try us about your lapsed cohorts share initiatives digital around of or if to a So, and that reactivate customer little new it’s

Reade Fahs

Good. our Well, existing encouraging brands, Eyeglass new there. quarter with was is in which World, customers the across slightly what higher gains in both we and growth saw both and

marketing As intensive is and we Patrick marketing mentioned, reflect effective. think our those this results a the is fact category, that

a We programs sauce, of in more our much efforts marketing sophisticated don’t ever but and effective. to getting more it our our part of are in marketing ever is sophisticated because secret detail are ever that ways. more We and too digital publicly variety CRM like

Steph Wissink

for then on Eyeglass follow-up And World. one us great. just That’s

Thank model? should strong years? brand the that of into I brand started should unit that going to about forward, on think that start some the unit we returns anticipate forward be was to see out that are thinking really you you. in How that growth a growth the you to could thinking about at that start level. accelerate investment the How in the we business

Reade Fahs

our World’s on we resonance think period, the reopened it’s versus marketing World model Eyeglass We Eyeglass performance the happy very And and and after combination was COVID it’s of up very, fantastic. ever a execution XXXX XX%. improved in of part Yes, the just with since QX, again, closure there. been

closer we’ve that to is much AB. return think shared The ROIC I we profile. find now the

we’re in said have growth we a accelerate so modestly in or growth to going unit EDW And – XXXX.

World share to Eyeglass we available we concepts, in growth both And We two and that ever so Best double more think America both engines really of Eyeglass World, these sort making the count is, it’s opened nice we in coming I’ll our – have what’s nice love store brands we were on we plan in October, years. America’s growth have to to can and combined think the and Americans. of them two

Operator

comes question our with Guggenheim. Thank Bob you. Drbul And from next

line Your is open.

Bob Drbul

morning. guys. Good Hey,

for the I is the and me. are some openings, love guess business guess Any that couple other in insights questions and just various Thanks. in how on any some whether with relationship I terms there's the following about the a I Walmart? stores if in that then the update of of of your of opening of Walmart, sort into you new like would markets the just that? And more markets. question existing new store on Just to generally opened quick stores Walmart it's hear

Reade Fahs

Good.

ahead, Patrick Go Okay.

Patrick Moore

little store, given For a Coast strong, approach more with really any San markets the we in market large that and and into whereas ourselves Bob, new two balanced West stores. New with much the L.A. Francisco a that so Since on brand-new of Coast Vicinity weighted York East last Connecticut. more went was year we've taken not time, and recently, the lots the

ratio, pick entering since we really little portion markets give large existing happy. off smaller a in of those take already tend I we're existing and last year, tend two each are to that approach. or brand have to They our now but it's metros to But two states in openings tend or a you but majority exact the one off new So it's markets. store can't awareness. faster And a we like Stores really markets. balanced

performing only multiyear metrics wow, in they X.X of they've gate, when The Our well. But hit new out They've great. closed was store we the quicker. perform looked didn't since during time their the of last came lot they them COVID. well is a years

So we're happy batting really our opening with store ever. new

Reade Fahs

Again, take with we're in I'll Walmart last our year centers founded the ago. Good. for three Good. of economics. do part that XXst company year inside our vision partnering years Walmart to same with We the question. extended with of Walmart years contract XX

added our years several time to and since that's we're there. it the stores with They We're great. contracts and five store encouraging with ramp-up in was stores, is the we're XXXX the and year, us gave in the do got last pleased first results. and they've to So the more real can stores, those with five think positive results ship of see things those Wallmart still all we we still continuing whereby

Bob Drbul

both. Thanks,

Operator

you. Thank

question with Citi. comes Paul next from Leju Our

open. is line Your

Paul Leju

are high as of grow good down a Hey, was line thank of then store historical you, easier how curious you the can other? you from Or more guys. break how versus at there harder kind lease? perspective. think concept? XXXX catch-up to normal pipeline just comps XXXX? by XXXX. concept at of it locked And at loaded sort which does away just your any Curious a top locations look kind or a are And thinking about XXXX second, new you're XXXX and signed it many take rate? a that one in finding from And any find the Thanks forward base Would for for relative pull you would that to XXXX XXXX? about guys. Do How sales level with from was from of you

Patrick Moore

second want one. the then do you come to back I'll Reade, one, the and Yes. to take first

Reade Fahs

Yes. Yes.

Patrick Moore

pipeline? Store

Reade Fahs

looking are trouble There's locked Good. we there. I not year good very in we've out to be change are locations the that. years. start many able rough, in things locations. but flow don't We're with think done Yes, in rough timing next XX good. No and Yes. that build having area, finding announced of we're loaded, is and good. I'll plenty we how Yes. the confident going stores ever to are store same that of pipeline great all at sort past

Patrick Moore

back cycle normal normal one that thought at and on into your we in next comp grow-over I pull seasonality, that and at to here. forward. It's expectations. And we year, forward. quarter. not sales But look question pull that, we're really for we've first think that obviously, beyond contemplated retention I second kind were a I going suffer look a growth And seems as from to of love difficult lot Paul, – more of we The I about think indicate didn't data

one landscape a to win see we to a that more half-year little planning. got get I and I maybe we've But So have we think more that where beyond got got through. challenge over grow very for that, normal much

Reade Fahs

variants, to COVID exclusive really a But And as mandates to no mine with good as there agree impact to big caveat, assuming is as to excluding what all future. the with guess basis, might – your that's base predict. everything. I'm on I any mean And and going of new that said stuff, hard one the assuming no Patrick thing and associated was dramas

Patrick Moore

Yes.

out I lot the more that a that think plans overall we're the XX, start guidance last look now, as think they been at aggregate over we'll next I working we versus months. on we've to where lay look normalized and XX the year

Paul Leju

just missed if Got of follow-up. unearned impact millions it. terms in you Patrick, dollars, one Did Thank specifically the revenue sorry in quantify you, guys. And XQ, of that? I

Patrick Moore

that. We material, did quantify, would we said quantify not be it but Paul. We didn't

Operator

Thank you.

Our Robby next question Bank with of comes Ohmes America. from

open. is line Your

Robby Ohmes

Good Hey. morning, guys.

quick Just a follow-ups. couple of

lower remind the understand was question purchasing they change all, happens eye And price just environments high Reade getting sort it then or off. I patterns Patrick, other exams – what in that. is the like delay at really can especially their First, of the you and gas Do customers? stimulus income with on ones? your rolling us things maybe Does

expecting in I the were also you guys bigger next to having that that in of that think past half a more open you the the And been you that a in competition an you happening? than competition Thanks. is guys more of the do up back impact first you on open having see guys half Has lot year? this year. at mentioned and impact were of And had all? that

Reade Fahs

Good. Yes.

So thank you that. for Robby,

to do of temporary on any why a stimulus, from any impact budget. but immune we not economic Our tight external we're live benefit customers That's event.

are could goes the So out watch you it's long things have times flip when able like time, We direct look a if that. There's gas good are gas And up, at do almost also. economic positively to think in bad. and I been trends, correlation. you our but way the we But prices long-term no happened. side see

in hand, for customer customer sort better just little tight a little more feeling but one and the their the the a open. your is is then tight second budget off looking value. also budget, their our of feeling On normal in On question, more

fall And May September we still of June took and opened were our them XXXX. fully competitors of in to while of gradually a period throughout opening open XXXX sort it X of of many XXXX. of So of the reopen, stores some as

the been the believe doors through along category financial or we way from independent benefiting were reasons. of So much fact last year exception – QX year, we the about X% all the shut last retirement fully that with the of pretty that, since has open of

retailers So couple down while a shut XX the stores lot stores there. and there. optical chain And But were there last less few doors of whole is closed I last year, of other. year, we are also – sort – of there there down, them there top mean, the of there data are growing stores, out a series on were XXX most a the and

that category, the – last reopening last QX But of in occurred So of to all terms year. stores saw have the year the by closing of yet decline that reopen.

Operator

comes with Chukumba Loop Anthony Markets. Our Capital next from question

open. is line Your

Anthony Chukumba

the is that you particularly XX%. look guess I to as thanks underwhelming and do taking second I the with results people the I into like quarter, think wondering, for pull in question, sales my from XX% stimulus terms to check. if XXXX, Good there My was being your second with first morning maybe quarter demand And slowed of forward relative the growth at maybe questions. somewhat having back-to-school a in

Does purchase, the that make quarter, sense they maybe all? they in back-to-school So stimulus with would at that have third the second quarter in the made made check.

Reade Fahs

as pull It's of, seeing on It's category. first forward see, in sort our found And well But the generally generally, about not that acting moment is not it's especially hard assess something we consumer segment. our the to well. with we it. not I'm It's of I'm normally – from days. hey, as to trigger seeing XX

You've doesn't hope goes and it it. got all and away, but and act it to then go through have the denial that phase, you on to

These pull it's it our amongst that. assess of are lot don't general, a of very we really big. but is in think So we as to regular forward customer times, base aren't hard thinking

Anthony Chukumba

Got it.

Patrick Moore

worked I'll the the through just quarter. that affected we a also XXrd add, calendar as week second factor year, in week shift a XXrd was

And temporarily quarter stack, as numbers. quarter, fairly structural well elevated as frankly, in quarter, similar the look in COVID stimulus. you the That's see and was variant. until see factor going you're an number. I third you're second going over and just And think at comp to second first Delta a to our as two-year

two-year on think have stack, a third I like those normal looks you're a implications in So Anthony. at quarter, looking as first and them, don't what

Anthony Chukumba

then helpful. $XX clarification That's in it. repurchase. share million the And Got just one terms of

exercises. just that's offset So to option stock

expect really shares in shouldn't words, weighted change average in other any significant we So your the in – outstanding.

Patrick Moore

impact to of deciding us start management stock just This is action. Yes. any offsetting

Our goal to and neutral. balanced that is keep very

thus tell it's a buyback. It's that that three we now. not company. mean I doing million. And just years. lasts to you a And far think because we're starting been beginning not can two as the $XX public have big of We stock

start satisfy we'll are a to a allows general, eye in the loan about we cash A But notes I again, equity. just we're thinking on probably It for and product. out do on at will term loan. there. big moves We're probably convertible I up loan, accruing probably notes with to deployment take plug The number We'll offset probably sit more tight XXX debt you off thing that. some cash about those strategy, I that. I the the brought our for them years horizon, it's and cash think happy a multiple probably us and really notes term that's from the to while. quite we're on future. thinking go But next on the done at XX hybrid have to going we're the so dilution. and XX, And the reduction, all another going exactly ahead debt voluntary do since the in prepayments And many think term or we're is making not that

Anthony Chukumba

That’s helpful.

Operator

comes question Fargo. Wells Zack with from Our next Fadem

Your line is open.

Zack Fadem

you and what seeing to And a inflation Can environment. current extent category? cost response in morning. prices bit you're good supply about the talk Hey peers to chain the the just raise to your direction And you And given versus ticket an the opportunity there, average this view think out about should take the do of dynamic industry? more share? as spread how we in

Reade Fahs

and pricing America's the Yes, a on we And to any – so evaluate We lead we there goes we the because and over in we hasn't alternative share. peripheral do potential of price our market in fairly take money most infrequent that terms attitude our But category group for out did in well that's traditional competitors one find decade. at is is options. our customers basis of pricing committed being. but reason we're it are we XXXX, of raised do towards entry for our the better consistently versus over that time, pricing, higher terms peripheral saving that often, that the best us, benefits many offer pricing, take of in our trend our that's long-term a on that brand our

Patrick Moore

in And the then I'll talk just in a little category bit inflation about general.

major saw and with to to still certainly element and have We customers sell We have our help. everything been freight so to then the quarter, just have structure. of it we doesn't to it's pressure some of inventories, finally, as And a And contracts we patients. position us. make pre-buying. make of reminder, cost in vendors. immaterial for an as perfectly that It's it need stores in we we relates place open want a sure in does us but immune small just That all to inflation, our but long-term

small we'll pressures any so a that potential the offset we on be heavy will little And feel end year year. inventory, later also next might that probably but will that inflationary in purposely,

Zack Fadem

margin rate points parts basis expect more three a appropriate talked back in gross term I current margin QX QX longer which gross run fair to the closer about expect But we of XXXX is at there, return above know levels? about points the line, And than you higher Patrick, And the it was XXXX is your it. to XXX for to should down XXXX in helpful. business? rate two levels. about and that came Got Or the moving leg to

Patrick Moore

through costs you good remind I gross labor. with mean our – February margin can typically it's can normal that in I'll again, fixed a be in margin back-to-school. fluctuate year season, Well, gross are as some really and with and in to seasonality. April-ish in labs There related peak

little will be a higher a it where year lower. a of I periods into locked little get or have do fourth we So wouldn't quarters.

next expect probably to to that see big going are gains Reade gross small. For talked a with through lab of offset year. the I We're where margin, – raised ticket continue to to wage going have kind productivity normalize. wages we return And bit another about; there do lab me to levels. we're going to get think for we little does fairly to That's that that. then pressure pre-pandemic not of factor now we is

all will see that there's into as shot of gross think on what comes we I the over And still gross so play that story to I improvements continue time. think a about some margin can margins be.

Zack Fadem

it. Got the Appreciate time.

Reade Fahs

you. Thank

end of hour we're the think I at our there.

very joining you and Catherine, today, us you to you to support. our call. you to thanks speaking We're continued our much. fourth we for And all thank thank for Thank again all forward the quarter when results. much, very for moderating stockholders So report looking

Operator

This Thank participating. concludes call. today's for you conference

You may now disconnect.

National Vision (EYE) 10 Nov 212021 Q3 Earnings call transcript