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Vision Source

A solid year of growth at the individual practice level enabled Vision Source L.P. to retain its spot at No. 1 on the annual VM ranking of the top U.S. optical retailers. Vision Source, an alliance group and franchisor, moved ahead of Luxottica Retail for the top spot in the VM rankings a year ago for the first time.

For calendar 2017, Vision Source reported aggregated sales of $2.73 billion, an increase of 3.8 percent compared with the year-ago total. The location count dipped slightly to 3,330 from 2016 year end’s total of 3,344 locations.

Vision Source, North America’s largest network of independent optometrists, in 2017 worked to enhance many of its programs for members, including the Optical Dream initiative. The company also put more emphasis on building collaborative relationships with health care delivery systems. By developing stronger relationships with health care delivery systems, Vision Source is able to demonstrate that optometry is an integral component of the delivery of health services in the U.S., executives noted.

The network of private practice optometrists reported a weighted-average revenue growth rate of 5.7 percent during calendar 2017, according to a recent announcement. This organic growth was about 10 times the 2017 industry estimates of 0.5 percent revenue growth for the vision care market overall.

On the marketing side, Vision Source members benefit from an industry-exclusive geospatial analysis platform that identifies geographic areas of marketing opportunity for their practices along with consumer demographic profiles and their preferred marketing channels. Using this information, the Vision Source marketing team builds personalized marketing programs using both traditional and digital marketing assets from an online toolkit.

Vision Source executives provided details on two new initiatives that are underway: Vision Source Next, a program designed to facilitate the opening of new Vision Source locations, and a newly launched exclusive network to monitor ocular side effects among patients being treated for multiple sclerosis.

The latter program will come under the umbrella of My Treatment Monitor, a health care initiative addressing chronic conditions. The Vision Source Next program will facilitate the opening of 10 new Vision Source practices in the Dallas-Fort Worth market this year, executives said at The Exchange.

Essilor of America acquired Vision Source from a group of private equity companies in late 2015.



Luxottica Retail

Luxottica founder, Leonardo Del Vecchio, characterized 2017 as a year of “strategic renewal” for the group. In its report on fiscal 2017, Luxottica executives said during a conference call with analysts that “strong chain profitability” at LensCrafters will enable the company to remodel and refurbish “on a major scale” in more than 50 stores in 2018, while a revised agreement with Macy’s Inc. will result in “up to a total of 200 locations by early 2019.” Luxottica also is working on developing “the new LensCrafters.com platform.” Chief financial officer Stefano Grassi told analysts that LensCrafters is “going through a radical transformation,” but that it remains very profitable overall for Luxottica.

In its North American operations, Luxottica said overall group sales in fiscal 2017 declined less than 1 percent to €5,252 million at constant exchange rates. While wholesale division sales rose 3.7 percent to €1,056 million, in North America, retail sales fell 1.5 percent to €4,197 million. Execs cited the strength of Sunglass Hut (not included in the VM Top 50 sales estimate) and some of Luxottica’s e-commerce platforms. They noted that comp-store sales were strong at Target and Pearle, while still down at LensCrafters, “which is still focused on transforming its business model.”

LensCrafters just introduced a new consumer marketing campaign, “Lenscrafters is Why” which emphasizes a new value proposition and seeks to lay the groundwork for establishing LensCrafters as “an innovative leader when it comes to both quality eyewear and quality eyecare,” according to execs. “Lenscrafters is Why” is viewed as a concept and platform that covers a number of different media channels, including direct mail communications, email, the retailer’s website and social media programs.

Leading agencies in Europe, the U.S. and other parts of the world have given their go-ahead to the pending historic merger of Luxottica Group and Essilor, originally announced in January, 2017. At VM’s press time, both companies were awaiting word from China, the last major country to be heard from. Executives at both firms have said they anticipate the formal closure of the deal to come at the end of next month.



Walmart Stores

Walmart Inc. continues to hold the number 3 position on VM’s ranking for estimated optical retail sales in calendar year 2017. The mass retailer operates 2,900 of its own Walmart Vision Centers (which is 100 fewer than it operated in calendar year 2016) as well as 583 Sam’s Club optical centers (that’s 8 more locations than in 2016, but Sam’s closed about 45 optical centers in January 2018). An additional 227 Walmart Vision locations, operate by arrangement with National Vision Holdings. (These are tallied within NVI’s results but ranked as their own number of VM’s Leading Mass Merchants Chart on Page 42).

Taken together, all of the 3,127 vision center locations within Walmart generated an estimated $1,679 million in sales in the calendar 2017 year.

Collectively, combining Walmart’s own corporately-run vision centers with the estimated revenue from Sam’s Club opticals and the sales for the National Vision leased vision departments within Walmart would put Walmart Stores’ overall total vision care revenues at an estimated $1,846 million in 2017.

Independent optometrists operate private offices next to Walmart Vision Centers and Sam’s Club optical centers to provide comprehensive eye exams and prescriptions by appointment and on a walk-in basis.



National Vision

It was a milestone year in 2017 for National Vision Holdings Inc. (NVI), which once again holds the No. 4 ranking on the Vison Monday Top 50 list.

In addition to completing a successful public stock offering late last year, NVI also opened its 1,000th optical center and finished the year with 1,013 optical centers, a net increase of 70 locations compared with 2016. NVI also reported that for fiscal 2017, revenue increased 15 percent to $1.38 billion, with adjusted same-store sales growth of 7.5 percent.

The company raised roughly $350 million via the public stock offering in October 2017. Owners who sold some shares in the IPO included affiliates of Kohlberg Kravis Roberts & Co. and private equity funds managed by Berkshire Partners LLC, which maintained a stake.

The retailer has recorded 64 consecutive quarters of same-store sales growth, as it completed the IPO, trading under the NASDAQ listing ‘EYE.’ Chief executive officer Reade Fahs told Vision Monday last year that the company overcame the impact of a series of hurricanes in both Texas and Florida in 2017 that led to some temporary store closings and had an impact on the operations of 203 stores overall.

National Vision opened 17 stores in the fourth quarter of 2017 “and continues to see a long runway for store growth,” Fahs said during a conference call with securities analysts. “We continue to believe that, as long as we provide great prices and great service to our patients and customers, we should be well-positioned in 2018 and beyond.” He noted that new-store openings in 2018 would be primarily in California and the Northeast region of the U.S., and that most of the new stores National Vision opens would be “skewed toward new markets.”

NVI’s retail brands include America’s Best Contacts & Eyeglasses (594 units), The Vision Center (Walmart 227 units), Eyeglass World (107 units), Vista Optical (Fred Meyer, 29 units) and Vista Optical on select military bases (56 units).



Costco Wholesale

It was a strong year, and a milestone 12-month period, for the optical centers within Costco Wholesale Corp., the largest U.S.-based membership warehouse club. Sales in the optical departments increased 10.8 percent to $1.065 billion in 2017, which placed Costco once again at No. 5 in the Top 10 U.S. Optical Retailers ranking. It marked the first time Costco had surpassed $1 billion in optical sales in a single year.

The double-digit sales increase in 2017 also doubled Costco’s 5 percent increase in optical sales in 2016, when the warehouse club retailer reported optical sales of $961 million. Costco opened a net six new optical departments in 2017 and finished the year with 497 optical centers. Costco operated only 475 optical locations at the end of 2015.

For its efforts in training staff and identifying growth opportunities, Costco was named as the 2017 U.S. Retailer of the Year by Transitions Optical. The retailer received the Transitions Innovation Award earlier this year at the annual Transitions Academy. Upon accepting the award, Vito Romano, director of U.S. Optical Operations at Costco, said the retailer and Transitions “work together to identify the best training, product choices and point-of-sale for our stores. Ultimately, we want to keep our members happy, and offering the Transitions brand allows us to achieve this every day.”

As of the end of 2017, Costco operated 746 warehouses worldwide, including 518 in the U.S. and Puerto Rico and 98 in Canada. A Costco membership is not required to receive an eye exam at Costco warehouse clubs, but it is required to purchase frames and/or lenses from the optical department. Costco optical centers offer frames, contact lenses, and a variety of prescription and special lens options for Costco members. Many Costco optical departments also have an independent optometrist (OD) in or near the optical department. The ODs often are contracted on an individual basis.

Costco also is taking a leading role in advocating for the online sale of contact lenses in the U.S. The retailer has joined with 1-800-Contacts and Lens.com to establish the advocacy group Coalition for Contact Lens Consumer Choice, which supports the efforts to deregulate sales of contact lenses in the U.S.



Visionworks

With new management and new financial backing, Visionworks, holding firm at its number six spot on the VM Top 50 in 2017, is embarking on a new and refocused path toward the future.

Centerbridge Partners L.P. announced that it had acquired a minority equity stake in Visionworks, Highmark Inc.’s HVHC optical retail subsidiary, last August. In a deal that closed at the end of the year, Highmark retained a controlling ownership interest in Visionworks. (At the same time, Centerbridge and HVHC also reached an agreement for Centerbridge to purchase HVHC’s Davis Vision managed care subsidiary, in which Highmark would acquire a minority ownership in the combined Davis Vision-Superior Vision company).

Optical industry veteran executive Peter Bridgman became CEO of Visionworks at that time. A long-time Luxottica Retail executive, who was a VP of strategy at EyeMed and led Pearle and LensCrafters, Bridgman is building a new Visionworks senior leadership team. In 2018, the team’s attention will be in three broad areas—building a seamless patient experience, a simplified frame and lens product approach and a streamlined consumer/patient marketing message.



MyEyeDr./Capital Vision

Launched 17 years ago, with one doctor and one location, MyEyeDr. and its Capital Vision Services management company has expanded and escalated its growth, as the company subsequently received investments in 2015 from Altas Partners of Toronto and CDPQ, a Canadian pension fund.

During calendar year 2017, the group continued its active pace, with the acquisition of many individual offices and smaller practices as well as such high-profile groups as Schaeffer Eye Centers, announced in November 2017 (which is still ranked separately by VM in this year’s report).

The group, said Sue Downes, CEO and founder, is targeting 500 locations by the end of this year. MyEyeDr. embraces a “Total Vision Care Concept, where the group provides for all aspects of vision care: eye exams, contact lenses, eyeglasses, sunglasses and medical eyecare services,” the company said.

The company has anticipated its infrastructure to onboard newcomers quickly, and to analyze and further build out systems to oversee both managed care, inventory and operations. It has continued to invest in its leadership team on both the retail management and professional fronts as well.

MyEyeDr. prides itself on being strong in practice management and understanding how to make the eyecare experience easier for doctors and patients, and easier for the office’s associates to facilitate. “We also pride ourselves in really understanding the complexity of managed care and making it more simplistic to manage for our offices and our staff,” Downes said.



EyeCare Partners

EyeCare Partners LLC (ECP) with locations in Missouri, Illinois, Ohio, Kentucky, North Carolina, Alabama, Kansas, Florida and Georgia, is continuing its expansion in both the optometric and ophthalmology sectors. CEO Kelly McCrann has stated that the group projects reaching 275 locations by the end of 2018, building presence in both existing markets and in new geographic territories, such as moves announced this year into Alabama and Kentucky.

EyeCare Partners, backed by private equity firm FFL Partners, successfully acquired and integrated more than 240 optometry and ophthalmology practices over the past three years, the company pointed out.

McCrann told Vision Monday, “We’re continuing to experience exceptionally strong interest from leading, medically-focused practices due to our collaborative approach working with doctors to expand their patient base through exceptional patient care and world-class business support. In addition, our acquisition model offers independent practitioners excellent liquidity as well as the ability to focus their attention on providing exceptional clinical care, while we provide world-class business support and scale advantages.”

ECP’s chief professional officer, James Wachter, OD, added, “We continue to focus on full scope medical model practices that can take advantage of our software and platform of support services. We take the burdens and administrative challenges away from the doctors, which allows them to do what they do best: take care of patients.” Noted Joe Gira, MD, ECP’s chief of ophthalmology, “Partnering with leading ophthalmology practices across the country allows us to provide a vertically integrated model for our doctors and patients.”

One example of a recent initiative to support its network members includes a proactive outreach program contacting 90,000 patients a week to ensure they are staying up-to-date with their eyecare, generating more than 7,000 appointments each month. Another is ECP’s newly-launched Lifestyle program that uses advanced technology and demographic data to connect patients with new products that match their interests and activities, the company said.

Efforts like these have led to exceptional patient satisfaction ratings, consistently generating high Net Promoter Scores of 90+ that put ECP on par with leading consumer brands, an announcement said.



Refac Optical Group

Refac Optical—parent company of U.S. Vision and Nationwide Vision—dropped one spot in the rankings to No. 9 following a slight decrease in total vision centers operated by the company. The overall location count at the end of calendar 2017 stood at 767 units, compared with 780 optical centers at the end of 2016.

Overall group sales were relatively flat in 2017 at $278.2 million (compared with $280 million in 2016). Among the major moves made by Refac in 2017 was the opening of two Saks Optical Boutique departments within the luxury department store Saks Fifth Avenue, with the first opening in Boca Raton, Fla., in April and a second in Phoenix in August.

In addition, the company points out that in 2017 it expanded its freestanding Nationwide Vision business outside the state of Arizona, entering the Tampa, Fla. and Las Vegas, Nev. markets with 12 new stores.

Further, in its Top 50 submission info, Refac said on a comparable store basis, the company had positive sales growth in each of the last five consecutive quarters.

The U.S. Vision segment of the company reported an overall store count of 674, which included 673 leased and 1 company-owned location. Retailers in which U.S. Vision operates optical departments are: J.C. Penney, BJ’s (204 units), Meijer, Boscov’s, Saks Fifth Avenue and Sears. U.S. Vision also operates Optical Center (AAFES Exchange military locations) and 20/20 Vision Center. The Nationwide Vision Centers unit has 93 locations, including 80 company-owned and 13 leased optical departments (operating in J.C. Penney in Florida).

Al Bernstein is president of the Nationwide Vision group, which Refac acquired in 2013. Adam Levy is president and chief executive of Refac, a position he has held since September 2015, and Susan Ludwick is executive vice president of retail, U.S. Vision. The company’s state-of-the-art, 80,000-square-foot optical lab is located in Blackwood, N.J., just outside of Philadelphia. It has capacity to produce more than 2 million complete pairs of eyeglasses annually, and serves optical practices across the U.S. and Canada. Refac pointed out that recent upgrades give it additional capacity which is being offered on an outsourced basis to individual ECPs.

In addition, U.S. Vision also operates optical locations within Canada’s Hudson’s Bay department stores, but those results are not included in this report. Since 2011, Refac has been owned by ACON Investments, a Washington, D.C.-based private equity investment firm.



Eyemart Express

Eyemart Express holds on to the No. 10 spot in this year’s ranking, with estimated annual sales of $245 million. The company’s store count remained flat at 182 locations under various banners, including Eyemart Express (161 units), Vision 4 Less (16 units), Eyewear Express (4 units) and Visionmart Express (1 unit).

The most significant news at Eyemart Express, however, is the arrival of a new president and chief executive officer, Michael Bender, as of Jan. 1, 2018. Bender, a former Walmart executive, succeeds Doug Barnes Jr. as chief executive of the optical retailer. Barnes is now serving as chairman. Bender formerly was chief operating officer of Walmart’s Global eCommerce business.

Under the leadership and guidance of Barnes, Eyemart Express recruited a new executive team over the past year as it continued its transition from private family ownership. Eyemart Express became part of the portfolio of a private equity firm, FFL Partners, in Nov. 2014. The company is a leader in the value segment of the market.

Barnes said the company was pleased to add Bender to its executive team, and that his “long record of retail experience and leadership style made him an ideal fit for Eyemart Express.” Bender has a comprehensive manufacturing, retail and health care background with more than 30 years of experience developing high-caliber work teams, optimizing supply chain operations and leading strategic growth in stores and online, the company said at the time he was appointed.

Additionally, in 2017 Eyemart Express aligned new hardware and software technology in a program to create incentives for in-store employees. Eyemart Express also dramatically shortened delivery times for glasses. In the past, about 17 percent of eyeglasses were produced in under one hour. With the updates, Eyemart Express cut delivery times to under one hour for 65 percent of its customers, and 40 percent of orders are fulfilled in under 30 minutes, Barnes said during a presentation in 2017.

One of the first moves Eyemart Express took under Bender’s leadership was an expansion into the Wichita, Kan., market, where the retailer opened its first store earlier this year. Eyemart Express operated 178 stores as of Feb 1.

—Marge Axelrad, Senior VP, Editorial Director with contributions from Mark Tosh, Senior Editor