DULUTH, Ga.—National Vision Holdings, Inc. (NASDAQ: EYE), one of the largest optical retail companies in the U.S., has reported its financial results for the second quarter ended June 29, 2024. Net revenue increased 4.6 percent to $451.7 million compared with the second quarter of 2023, the company said, and for 2024 year-to-date, net revenue increased 4.2 percent to $934.5 million compared with the prior-year period. In both cases, the net revenue increase was primarily attributed to growth from new store sales and adjusted comparable store sales growth, partially offset by the effect of converted and closed stores, the company said.

The company also reported a net loss of $3.1 million in the second quarter and revised its fiscal 2024 net revenue outlook from a range of $1.825 billion to $1.865 billion to a range of $1.820 billion to $1.840 billion, and adjusted operating income to a range of $57 million to $62 million. The company attributed the change in its second half outlook to factors including year-to-date performance, macroeconomic concerns and recruiting and retention trends that were lower than expected. 
 
“Comparable store sales growth in the second quarter improved sequentially from the first quarter largely due to increased traffic,” said Reade Fahs, National Vision’s CEO. “We delivered an overall 2.4 percent increase in adjusted comparable store sales, and a 2.9 percent increase at America’s Best, reflecting ongoing strength in managed care and a notable improvement in comparable store sales from cash pay customers. Although this progress is positive, we needed a greater inflection in sales to deliver on the results we originally expected and are revising our guidance accordingly.

“We have been transforming our business over the past two years to adapt to new market realities and made valuable changes to the way we operate, however we need to do more to accelerate both the pace and rigor of our transformation," Fahs added. "As such, we are taking new actions to drive profitable growth, including recently announced additions to our leadership team that will bring new talent and fresh perspectives to our business as we seek to expand exam capacity, implement new sales drivers and improve efficiencies to strengthen our foundation."

Fahs noted that the company will be engaging in a comprehensive review of National Vision stores to optimize its fleet and drive growth and profitability, adding that they will be approaching the review with heightened scrutiny. In response to questions, Melissa Rasmussen, National Vision chief financial officer, noted that the rationalization of stores could be attributed to a number of factors, and that while many stores' four-wall margins have been healthy, some are not meeting profitability objectives.   

"Following our review, we will act on stores that are not meeting our profitability objectives by either closing, converting or implementing improvement plans, among other measures," Fahs noted. "The initial screen of stores is less than 5 percent of our total fleet. Our comprehensive review will consider many factors beyond financial impact, including market and long-term strategy, to ensure all actions taken will be accretive to both short- and long-term profitability and strategic goals."

During the first six months of fiscal 2024, the company reported that it ceased its Walmart and AC Lens operations, in alignment with plans the company announced in July of 2023. This included supplying and operating Vision Centers in select Walmart stores, providing contact lens distribution and related services to Walmart and its affiliate, and arranging for the provision of optometric services at certain Walmart locations in California. Accordingly, the condensed consolidated financial statements reflect the results of the Legacy segment and the substantial majority of AC Lens operations as discontinued operations for all periods presented, the company noted.

The company said it opened 17 new stores in the second quarter, and opened 31 new stores year to date. The company converted 20 Eyeglass World stores to America's Best stores, and ended the period with 1,216 stores. Overall, store count grew 5.6 percent from July 1, 2023 to June 29, 2024.
 
Costs applicable to revenue increased 7.4 percent to $193.6 million compared with the second quarter of 2023. As a percentage of net revenue, costs applicable to revenue increased 110 basis points to 42.9 percent compared with the second quarter of 2023 and were primarily driven by lower eyeglass mix, and an increase in optometrist-related costs as well as other mix and margin effects. As a percentage of net revenue, these increased costs were partially offset by higher exam revenue, the company noted.

Net loss from continuing operations decreased to $(1.0) million, compared with $3.6 million in the second quarter of 2023. Income (loss) from continuing operations, net of tax, margin decreased to (0.2) percent compared with 0.8 percent in the second quarter of 2023.

Income from continuing operations, net of tax, decreased to $10.7 million compared with $18.7 million in the same period in 2023. National Vision reported a cash balance of $179.5 million as of June 29, 2024. Total debt was $456.8 million as of June 29, 2024. Cash flows from operating activities for the first six months of 2024 were $75.4 million compared with $112.2 million for the same period in 2023.