National Vision Reports Double-Digit Sales Gains for Q4 and Significantly Raises ‘Whitespace’ Growth Opportunity to Boost Number of New-Store Openings

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DULUTH, Ga.—National Vision Holdings Inc. (NASDAQ: EYE) reported Wednesday that net sales in the fourth quarter increased 23.6 percent to $496.7 million, driven by comparable-store sales growth of 14.3 percent (the adjusted comparable-store sales growth was 10.6 percent). It marked the second consecutive quarter of double-digit comparable-store sales increases after the coronavirus slowed much of the U.S. retail business in the early part of 2020. The comparable-store increases in the third and fourth quarters of 2020 “made for the best half year of comps in my 18 years with National Vision,” chief executive officer Reade Fahs said on a conference call with securities analysts following the earnings announcement.

National Vision also noted that it sees significant growth opportunities ahead, and increased its estimate for how many new stores the company can open under its America's Best and Eyeglass World banners—what National Vision calls its “whitespace”—to at least 2,150 stores. This number previously was set at 1,850 stores. National Vision operates 892 stores today, with 773 America’s Best units and 119 Eyeglass World locations.

Fahs said the new projection follows a review based on independent research, which resulted in the company’s “long-term projected whitespace opportunity” increasing by 300 stores. This will allow National Vision to “further increase penetration in both existing and new markets,” Fahs said. “As a result, we believe America’s Best can grow to at least 1,300 locations—up from our previous estimate of 1,000—and continue to believe that Eyeglass World can grow to at least 850 stores.” (There was no time frame provided for the new higher end of the store-count estimate.)

This upward projection is based, in part, on the “hastening of industry trends that seem to favor our value-oriented freestanding models,” Fahs said. “We believe that the optical category in a post-COVID environment remains ripe for our expansion.”

He added on the conference call, “What we’re seeing is that this category is shifting to the value segment. It’s been shifting for years and post-COVID has hastened that. I think there’s a growing understanding that you don’t have to pay what you used to, for eyeglasses especially, and I believe that it’s not going to go back.”

In the earnings announcement, Fahs said, “As I reflect on 2020 in general and the fourth quarter in particular, I could not be more pleased with how the National Vision team rallied to serve our patients and customer’s needs while maintaining a core focus on ‘safety first.’ In the fourth quarter, we once again posted double-digit comps. Our low cost eyecare and eyewear offerings seem to be even more in demand during this pandemic economy.”

He also highlighted a strong performance last year across the Eyeglass World stores, adding “Eyeglass World has really found its moment in the post-COVID period.”

For its fiscal year 2020, National Vision said sales fell 0.7 percent to $1.71 billion from $1.72 billion for 2019. Net revenue growth was negatively impacted by 0.2 percent due to the timing of unearned revenue. Comparable-store sales growth was negative 5.6 percent, and negative 6.1 percent on an adjusted basis.

The company opened 57 stores in 2020, transitioned five Vision Centers in Walmart stores to its management, closed eight stores and ended the period with 1,205 stores. Overall, store count grew 4.7 percent from Dec. 29, 2019 to Jan. 2, 2021.

In terms of financial results, National Vision said that in the quarter ended Jan. 2, net income increased 795 percent to $35.1 million and adjusted EBITDA increased 118 percent to $83.5 million.

For the year 2020, National Vision reported that net income increased 10.6 percent to $36.3 million from $32.8 million for fiscal year 2019.

Fahs also said in the announcement, “Entering 2021, we are off to a solid start despite severe weather disruptions in February. I want to thank the 2,000-plus affiliated optometrists and over 12,000 associates for their tireless hard work and continued commitment to serve our patients and customers. While significant uncertainty remains, I am confident that we have what it takes to navigate the rest of this pandemic and beyond.”