- Actions to improve overall health of the core business
- Addressing underperforming stores expected to deliver ~$4
million in annualized Adjusted EBITDA1 improvement by end of fiscal
2026
- Moderates 2025 new store openings to invest in enhanced
customer experience
National Vision Holdings, Inc. (NASDAQ: EYE) (“National Vision”
or the “Company”) today announced the results of its comprehensive
store fleet review. In August 2024, the Company announced it had
identified an initial list of less than 5% of its total fleet that
were not meeting its profitability thresholds and said it was
considering potential actions for those underperforming stores. The
Company plans to take action on 43 stores, including closing 39
stores by the end of fiscal 2026 and converting four Eyeglass World
stores to America’s Best by the end of fiscal 2024.
The Company expects that closing these stores will improve the
overall health of the core business. Further, the Company announced
that in fiscal year 2025 it will temporarily moderate new store
openings to 30-35 new stores, after which time the Company expects
to return to its more recent store opening cadence as its
initiatives begin to take hold. The combination of these actions is
expected to provide the Company increased flexibility to invest in
existing operations and deploy capital to initiatives that will
drive increased revenue and improved profitability. The Company has
significant whitespace opportunity for continued growth. As
detailed earlier this year, the total whitespace opportunity is
believed to be at least 2,500 stores, more than double the existing
store count across its brands.
“Active, continuous management of our portfolio has always been
a priority and is necessary to maintain a healthy business. We have
taken a hard look at our current store fleet to assess our
operations and ensure that our real estate investments meet higher
standards in this environment,” said Reade Fahs, National Vision’s
CEO. “Following this review, we have identified areas across the
business that we can address to improve operational execution and
drive comparable store sales improvement. We believe the actions we
are taking will better position the company to optimize growth and
profitability for the long-term.
“We are working closely with impacted stores to ensure that this
is a seamless transition for our patients and customers who rely on
us. We intend to retain associates and affiliated optometrists in
affected stores wherever possible by facilitating transfers to new
roles or other stores.”
Actions Following Store Fleet
Review
As detailed in the table below, the Company plans to close 39
stores by the end of Fiscal 2026.
Number of Store Closures
Planned
Fiscal 2024
Number of Store Closures
Planned
Fiscal 2025
Number of Store Closures
Planned
Fiscal 2026
America’s Best
8
3
10
Eyeglass World
4
—
5
Fred Meyer
—
9
—
Total
12
12
15
Additionally, the Company will convert four Eyeglass World
stores to America’s Best stores during fiscal 2024. Going forward,
the Company will continue to closely monitor store performance and
store profitability as part of its ongoing real estate portfolio
strategy to maximize returns.
“We are committed to disciplined growth with a focus on
maximizing returns,” said Melissa Rasmussen, National Vision’s CFO.
“As such, we are temporarily moderating new store growth next year
and plan to open between 30-35 new stores. Importantly, this
moderation enables us to allocate capital in fiscal 2025 to
increase investments in enhancing the overall patient and customer
experience. Additionally, by opening fewer stores in fiscal 2025,
we intend to focus on the best locations for new stores that meet
our strategic objectives of improving profitability and enhancing
our overall competitive position.”
Financial Impact
The Company expects the store closures described above to
deliver approximately $4 million of annualized Adjusted EBITDA
improvement by the end of fiscal 2026, of which approximately $2 to
$3 million is expected by the end of fiscal 2025.
These closures are expected to negatively impact revenue by $11
to $13 million in fiscal 2025 and $2 to $3 million in fiscal
2026.
The Company recorded approximately $1 million of one-time,
non-recurring exit charges during the third quarter of 2024 related
to lease terminations, severance, and other charges associated with
the fiscal 2024 and fiscal 2025 closures.
In addition, the Company recorded noncash impairment charges of
approximately $14 million in the third quarter of 2024.
Approximately $11 million was related to the Fred Meyer intangible
asset and the remaining $3 million was for tangible long-lived
assets primarily related to the portfolio review.
Separately, today the Company is releasing its third quarter
2024 earnings results, which will be available on the Company’s
website.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”) and Section 21E of the Securities
Exchange Act of 1934. These statements include, but are not limited
to, statements related to our current beliefs and expectations
regarding the performance of our industry, the Company’s strategic
direction, market position, prospects including remote medicine and
optometrist recruiting and retention initiatives, and future
results. You can identify these forward-looking statements by the
use of words such as “outlook,” “guidance,” “believes,” “expects,”
“potential,” “continues,” “may,” “will,” “should,” “could,”
“seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,”
“anticipates” or the negative version of these words or other
comparable words. Caution should be taken not to place undue
reliance on any forward-looking statement as such statements speak
only as of the date when made. We undertake no obligation to
publicly update or review any forward-looking statement, whether as
a result of new information, future developments or otherwise,
except as required by law.
Forward-looking statements are not guarantees and are subject to
various risks and uncertainties, which may cause actual results to
differ materially from those implied in forward-looking statements.
Such factors include, but are not limited to, the termination of
our partnership with Walmart, including the transition period and
other wind down activities, will have an impact on our business,
revenues, profitability and cash flows, which impact could be
material; market volatility, an overall decline in the health of
the economy and other factors impacting consumer spending,
including inflation, uncertainty in financial markets, recessionary
conditions, escalated interest rates, the timing and issuance of
tax refunds, governmental instability, war and natural disasters,
may affect consumer purchases, which could reduce demand for our
products and materially harm our sales, profitability and financial
condition; failure to recruit and retain vision care professionals
for in-store roles or to provide remote care offerings could
adversely affect our business, financial condition and results of
operations; the optical retail industry is highly competitive, and
if we do not compete successfully, our business may be adversely
impacted; if we fail to open and operate new stores (including as a
result of store conversions) in a timely and cost-effective manner
or fail to successfully enter new markets, our financial
performance could be materially and adversely affected; if the
performance of our Host brands declines or we are unable to
maintain or extend our operating relationships with our Host
partners, our business, profitability and cash flows may be
adversely affected and we may be required to incur impairment
charges; we are a low-cost provider and our business model relies
on the low-cost of inputs and factors such as wage rate increases,
inflation, cost increases, increases in the price of raw materials
and energy prices could have a material adverse effect on our
business, financial condition and results of operations; we require
significant capital to fund our expanding business, including
updating our Enterprise Resource Planning (“ERP”) and Customer
Relationship Management (“CRM”), and other technological, systems
and capabilities; our ability to successfully implement
transformation initiatives (including store fleet optimization);
our growth strategy could strain our existing resources and cause
the performance of our existing stores to suffer; our success
depends upon our marketing, advertising and promotional efforts and
if we are unable to implement them successfully or efficiently, or
if our competitors are more effective than we are, we may
experience a material adverse effect on our business, financial
condition and results of operations; we are subject to risks
associated with leasing substantial amounts of space, including
future increases in occupancy costs; certain technological
advances, greater availability of, or increased consumer
preferences for, vision correction alternatives to prescription
eyeglasses or contact lenses, or future drug development for the
correction of vision-related problems may reduce the demand for our
products and adversely impact our business and profitability; if we
fail to retain our existing senior management team or attract
qualified new personnel such failure could have a material adverse
effect on our business, financial condition and results of
operations; our profitability and cash flows may be negatively
affected if we are not successful in managing our inventory
balances and inventory shrinkage; our operating results and
inventory levels fluctuate on a seasonal basis; our e-commerce and
omni-channel business faces distinct risks, and our failure to
successfully manage those risks could have a negative impact on our
profitability; we depend on our distribution centers and/or optical
laboratories; we may incur losses arising from our investments in
technological innovators in the optical retail industry, including
artificial intelligence, which would negatively affect our
financial results; environmental, social and governance (“ESG”)
issues, including those related to climate change, could have a
material adverse effect on our business, financial condition and
results of operations; changing climate and weather patterns
leading to severe weather and disasters may cause significant
business interruptions and expenditures; future operational success
depends on our ability to develop, maintain and extend
relationships with managed vision care companies, vision insurance
providers and other third-party payors; we face risks associated
with vendors from whom our products are sourced and are dependent
on a limited number of suppliers; we rely heavily on our
information technology systems, as well as those of our vendors,
for our business to effectively operate and to safeguard
confidential information; any significant failure, inadequacy,
interruption or security breach could adversely affect our
business, financial condition and operations; we rely on
third-party coverage and reimbursement, including government
programs, for an increasing portion of our revenues, the future
reduction of which could adversely affect our results of
operations; we are subject to extensive state, local and federal
vision care and healthcare laws and regulations and failure to
adhere to such laws and regulations would adversely affect our
business; we are subject to managed vision care laws and
regulations; we are subject to rapidly changing and increasingly
stringent laws, regulations, contractual obligations, and industry
standards relating to privacy, data security and data protection
which could subject us to liabilities that adversely affect our
business, operations and financial performance; we could be
adversely affected by product liability, product recall or personal
injury issues; failure to comply with laws, regulations and
enforcement activities or changes in statutory, regulatory,
accounting and other legal requirements could potentially impact
our operating and financial results; adverse judgments or
settlements resulting from legal proceedings relating to our
business operations could materially adversely affect our business,
financial condition and results of operations; we may not be able
to adequately protect our intellectual property, which could harm
the value of our brand and adversely affect our business; we have a
significant amount of indebtedness which could adversely affect our
business and financial position, including limiting our business
flexibility and preventing us from meeting our debt obligations; a
change in interest rates may adversely affect our business; our
credit agreement contains restrictions that limit our flexibility
in operating our business; conversion of the 2025 Notes could
dilute the ownership interest of existing stockholders or may
otherwise depress the price of our common stock; and risks related
to owning our common stock, including our ability to comply with
requirements to design and implement and maintain effective
internal controls. Additional information about these and other
factors that could cause National Vision’s results to differ
materially from those described in the forward-looking statements
can be found in filings by National Vision with the Securities and
Exchange Commission (“SEC”), including our latest Annual Report on
Form 10-K and subsequent Quarterly Reports on Form 10-Q, which are
accessible on the SEC’s website at www.sec.gov. These factors
should not be construed as exhaustive and should be read in
conjunction with the other cautionary statements that are included
in this release and in our filings with the SEC.
Non-GAAP Financial Measures
National Vision uses certain non-GAAP financial measures,
including Adjusted EBITDA, which are designed to supplement, and
not substitute, financial information presented in accordance with
generally accepted accounting principles in the United States of
America (“GAAP”) because management believes such measures are
useful to investors. Additional information about these measures
and a reconciliation to the nearest GAAP financial measures is
detailed in National Vision’s press release regarding financial
results for the third quarter of 2024, which is available at
www.nationalvision.com/investors.
About National Vision Holdings, Inc.
National Vision Holdings, Inc. (NASDAQ: EYE) is one of the
largest optical retail companies in the United States with over
1,200 stores in 38 states and Puerto Rico. With a mission of
helping people by making quality eye care and eyewear more
affordable and accessible, the company operates four retail brands:
America’s Best, Eyeglass World, and Vista Opticals inside select
Fred Meyer stores and on select military bases, and an e-commerce
website DiscountContacts.com, offering a variety of products and
services for customers’ eye care needs. For more information,
please visit www.nationalvision.com.
___________________________ 1 Adjusted EBITDA is a non-GAAP
financial measure, and the Company is not able to reconcile this
measure to net income, the corresponding measure under generally
accepted accounting principles (“GAAP”), without unreasonable
efforts because it is not possible to predict with a reasonable
degree of certainty the actual impact of certain items and
unanticipated events, including taxes and non-recurring items,
which would be included in GAAP results. The impact of such items
and unanticipated events could be potentially significant. See
“Non-GAAP Financial Measures” below and the Company’s press release
regarding financial results for the third quarter of 2024 for
further information about the Company’s use of Adjusted EBITDA.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241106528641/en/
Investors: investor.relations@nationalvision.com
National Vision Holdings, Inc. Tamara Gonzalez
ICR, Inc. Caitlin Churchill
Media: media@nationalvision.com National Vision Holdings,
Inc. Racheal Peters
National Vision (NASDAQ:EYE)
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National Vision (NASDAQ:EYE)
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