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In Q2 Report, National Vision Says Sales Performance Rebounded in June as Consumer Demand Picked Up

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DULUTH, Ga.—Noting the impact of COVID-19, National Vision Holdings Inc. (NASDAQ: EYE) on Thursday reported that sales in its second quarter decreased 39.5 percent to $260.0 million from $429.5 million, with negative comparable-store sales growth of 44.7 percent (on an adjusted basis, comparable-store sales were negative 36.5 percent). However, in June, National Vision said a recovery began across its network as shown by the comparable-store sales growth of 14.3 percent (adjusted comparable-stores sales growth was 19.3 percent), the announcement noted.

Net income decreased 527 percent to a net loss of $43.8 million, which compared with net income of $10.3 million for the second quarter of 2019.

“The second quarter [which ended June 27] represented one of the most eventful periods in our company's history and our respective careers,” chief executive officer Reade Fahs said in the earnings announcement. “Following our March closings, we are pleased to have safely reopened our stores by early June. With our many new protocols in place, we believe we have an effective, safety-first approach to serve patients and customers in a COVID-19 environment. While we expect the macro environment will continue to evolve, we believe we are well positioned to continue operations throughout the remainder of the COVID-19 pandemic.”

Also in the second quarter, National Vision said it recorded adjusted EBITDA of negative $14.4 million. The company opened 12 new stores during the quarter and transitioned five Walmart Vision Centers to National Vision management. It ended the quarter with 1,185 stores.

On a conference call with securities analysts, Fahs said he would not be surprised if the overall optical retail market has fewer stores operating 12 months from now as a trend “toward larger, better-capitalized value retailers like National Vision” continues across the optical retail sector. Fahs also said the company expects to open between 50 and 55 stores this year.

Since reopening, National Vision stores have experienced “consistently strong demand” from patients and customers, and the June comparable results increased over 19 percent, Fahs said. This marked “the best reported comp increase in my 18 years at National Vision, with similar momentum continuing throughout July,” he added.

The company noted that the positive results were likely helped by pent-up demand during the lock-down and benefits from government stimulus payments. “But performance also reflects successful macro and micro navigation of this dynamic situation by our operations and product teams. As our stores provide essential healthcare services and products, and given the state of the economy, we believe ever more consumers are drawn to our affordably priced eye exams, eyeglasses, and contact lenses,” the announcement noted.

Fahs continued, “In May, we took the financial steps to strengthen our balance sheet and are confident in our financial flexibility and liquidity to navigate the remainder of the pandemic. In July, we were pleased to extend our 30-year partnership with Walmart for another three years into 2024. This contract extension comes on the heels of the successful transition of the five additional Vision Centers that Walmart granted in January. We have been encouraged by the initial results at these stores to date and see tremendous future potential for them as well.”

For the first half 0f 2020, National Vision said net revenue decreased 18.1 percent to $729.7 million from $890.7 million for the same period of 2019. Net revenue was negatively impacted by 1.7 percent due to the timing of unearned revenue.

On a comparable-store sales basis, there was a drop of 23.0 percent. The company opened 35 new stores, transitioned five Vision Centers in Walmart stores to its management, closed six stores, and ended the period with 1,185 stores.

National Vision said it continues to take actions to manage its business through the dynamic and challenging environment resulting from the COVID-19 pandemic. Following temporary store closures to the public in March 2020, the company completed the process of reopening stores with enhanced safety and cleaning protocols in early June 2020. In addition, the company said it continues to take actions to manage the business that the company believes are prudent in these circumstances.