National Vision Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 7, 2025
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Operator

Good day, and thank you for standing by. Welcome to the Q1 twenty twenty five National Vision Holdings Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a Q and A session. To ask a question during the session, you will need to press 11 on your telephone.

Operator

You will then hear an automated message advising that your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Tamara Gonzalez. Please go ahead.

Tamara Gonzalez
Tamara Gonzalez
VP - Investor Relations at National Vision

Thank you, and good morning, everyone. Welcome to National Vision's first quarter twenty twenty five earnings call. Joining me on the call today are Reed Faz, CEO Alex Wilkes, President and Chris Layden, CFO. Our earnings release issued this morning and the presentation accompanying our call are both available in the Investors section of our website, nationalvision.com. A replay of the audio webcast will be archived in the Investors section after the call.

Tamara Gonzalez
Tamara Gonzalez
VP - Investor Relations at National Vision

Before we begin, let me remind you that our earnings materials and today's presentation include forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the release and our filings with the Securities and Exchange Commission. The release and today's presentation also includes certain non GAAP measures. Reconciliation of these measures is included in our release and the supplemental presentation.

Tamara Gonzalez
Tamara Gonzalez
VP - Investor Relations at National Vision

We would like to draw your attention to slide two in today's presentation for additional information about forward looking statements and non GAAP measures. Further, please note that all financial measures in today's commentary are based on a continuing operations basis unless otherwise noted. As a reminder, National Vision provides investor presentations and supplemental materials for investor reference in the Investors section of our website. I will now turn the call over to Reade. Reade?

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

Thank you, Tamara, and good morning, everyone. Thank you for joining us today. Last week, Alex and I met with over 1,200 store managers along with our field and optometric leadership to ensure that they were all fully enrolled, engaged and aligned with our transformation strategies and tactics. As so many of the company's leaders were uniquely all in one place. It was an ideal time to share the news of our CEO succession plans live and in person that as of August 1, Alex Wilkes will be succeeding me as CEO, and I will be transitioning to the role of executive chair the board Alex and I have done a lot of research and have a lot of mindful conversations about best practices associated with CEO transition that combined with Alex and my natural compatibility and chemistry has helped us to ensure a smooth and orderly transition as such on this my last earnings call after twenty three years and 30 earnings calls as CEO.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

I'm pleased to be able to share that the strength of our first quarter results are further evidence that national vision's transformation is working and should continue to be successful well into the future. Our entire team's disciplined approach to executing on our strategic initiatives was evident in the strong continued growth we saw this quarter in our three target customer cohorts, managed care, progressive and outside our customers, leading to a return to mid single digit comp performance and achieving solid bottom line performance. We are pleased with the ongoing momentum we've seen and are confident we are headed in the right direction. We believe that our value offering positions us well, particularly in this environment and the results in the quarter reinforce our confidence in the long term potential of our go forward strategy and initiative. Recall that the national vision transformation began following the many changes in the marketplace and the business that started in 2022.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

We address the emergent optometrist shortage through a variety of efforts, including enhanced flexibility, recruiting improvements and the implementation of remote exam capability. While there remain plenty of opportunities to further optimize the efficiency of the network, we believe we now have a strong foundation of optometric coverage in place. With this foundation, we kicked the transformation into a higher gear last year, which included the recruitment of new leaders with fresh perspectives to help develop and implement a multi year transformation agenda. That's when we recruited Alex Wilkes, an industry veteran from and CooperVision and Mark banner, who was new to our industry, but brought enlightened insights from his analogous consultative selling retail experiences with Sleep Number and Zales. A month ago, we also added Chris Layton to the team as CFO.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

Chris worked alongside Alex as Head of Finance during their transformation of Pearl vision for. Most recently, he was CFO of community veterinary partners, a business similar to optical given its reliance on medical professionals. Welcome Chris. Last fall, the new team performed a deep dive analysis on our customer and our business and developed a simple strategy that we shared with you last quarter. Our new strategy involves heightening our attention to segmentation, personalization and digitization in our messaging product, pricing architecture and customer experience with a special focus on our three target customer cohorts that represent about half of our customers, but a disproportionately large percentage of our sales.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

These segments, while already significant to us and growing faster than the rest of the business are also segments where we are significantly underdeveloped versus the category. Thus, focusing on them should help to expand our addressable market. Plus, they each in their own way help to insulate us more from the impact of difficult macroeconomic times. We began to see initial evidence of this during the first quarter where America's Best saw positive comp and sales from higher income groups, offsetting negative trends from lower income consumers. This was true with managed care customers, and those self paying in these income brackets.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

While these segments are receiving heightened attention, we remain mindful of maintaining focus on the value we provide to our more purely budget oriented customers, especially in an environment where all consumers, especially cash consumers are ever more value seeking. The initial programs springing from this new strategy helped us to deliver a strong quarter. After I take you through first quarter results, Alex will provide more details on our ongoing transformation programs and progress. With that, I'll turn to the highlights in the first quarter. Sales in the first quarter rose 5.7% to $510,000,000 Adjusted comparable store sales growth of 5.5 represented the ninth consecutive quarter of positive growth, solidly in the mid single digit range, thanks to positive traction on our initiatives with every brand delivering positive comp growth.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

America's Best comparable store sales were 5.9% on top of 1.2% in last year's first quarter, and Eyeglass World comp store sales of 3.1%, its best quarter since 2021. All three of our target customer segments delivered double digit comps. And while strong comp was due to average ticket, we were encouraged to see traffic turn positive for the quarter. Importantly, while we experienced average ticket gains, we continue to see exam to eyeglass purchase conversions hold steady and healthy Net Promoter Scores. This is a confirmation that our pricing actions were accepted by customers.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

Adjusted operating income increased 21.8% to $41,300,000 and adjusted diluted earnings per share increased to $0.34 As stated previously, exam capacity remains in good shape. Retention remains healthy, and our recruitment efforts are in line with expectations. Remote technology is enabled in approximately two thirds of the store base and is now embedded in our operations. We are encouraged that this strong momentum continued as we entered the second quarter, which gives us further confidence in our transformation program. And with that, let's turn to guidance.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

The strength of our first quarter results gives us the confidence to raise our guidance for the year. Chris will take you through our outlook in more detail. While we're confident in our strategy and seeing strong response to our initiatives, we believe in this environment it's hard to predict consumer demand. Thus, our focus on cost efficiency couldn't be timelier. Amidst all this, we feel good about the course we're on and are confident in our future.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

And with that, I'll turn the call over to Alex.

Alex Wilkes
Alex Wilkes
President at National Vision

Thank you, Reid, and thank you for the partnership over these past nine months and going forward. I'll start with saying just how honored I am to be given the opportunity to lead National Vision during this important time of transformation. I've shared that I've always been impressed by the remarkable growth of National Vision by our special culture and by the strength of our brands. This was especially evident at our store manager, doctor and field leadership meeting last week. I'm privileged to lead the company as we define our next chapter of growth.

Alex Wilkes
Alex Wilkes
President at National Vision

I also recognize that I am in a unique position to continue to benefit from Reed's involvement in the business as Executive Chairman. These past few months, Reed and I have worked closely to prepare for this next phase of our transformation. With this in mind, I'd like to take a moment to give you a sense for how I'm thinking about National Vision and what my priorities will be as CEO. National Vision is uniquely positioned to capitalize on the growing need for value that we see across income demographics, particularly in this environment. National Vision has truly differentiated characteristics.

Alex Wilkes
Alex Wilkes
President at National Vision

Our fantastic optometry network provides patients with an eye exam experience that we believe is unmatched, including using industry leading exam technology, both for in store and remote exams. We are unique in how we go to market with our optometrist network and in the phenomenal quality of the exams they provide. When you pair this up with our scale and market recognition as a leading value provider, you have a winning combination. With these characteristics and the strength of the team we have in place, I'm confident in our ability to drive sales and improve our profitability going forward. Over the past two quarters, we've outlined specific initiatives to achieve these goals.

Alex Wilkes
Alex Wilkes
President at National Vision

The strength of our first quarter results and continued momentum is a proof point of their success. My priority as CEO is to continue the transformation strategy that we've put in place and that has shown success. This involves heightened segmentation, personalization and digitization across our messaging, assortment and pricing architecture and our in store experience. Our strategic initiatives are focused on growing our business around this expanding customer view. We're defining value propositions, concentrated more on our highest value customers and creating an improved customer and store experience, all while being intently focused on disciplined expense management.

Alex Wilkes
Alex Wilkes
President at National Vision

This approach places National Vision in a position of strength as we pursue profitable growth. Importantly, the investments we're making are phased over the course of this year, and we believe they have a long runway of future benefits. As we look ahead to the balance of the year, we are on track with the initiatives we laid out for you last quarter. In store, this shift is taking place on a few fronts, most notably in our pricing actions, product offerings and selling approach that are giving us meaningful traction in growing average ticket. We started evolving our pricing structure to better match our customer profile with pricing actions in the fourth quarter.

Alex Wilkes
Alex Wilkes
President at National Vision

These have been well received by customers as they have grown average ticket with no degradation in conversion or NPS. Pricing is an especially important competency to strengthen in a world of heightened tariffs. Over the last two quarters, we've demonstrated runway on ticket with conversion flat to increasing, giving us confidence that we have room as needed to mitigate tariffs. Pricing will be an ongoing and robust capability as we've proven that the pricing we've taken to date is holding strong. Average ticket is, of course, a function of both price and mix.

Alex Wilkes
Alex Wilkes
President at National Vision

So along with pricing actions, we're currently in the process of evolving our product assortment. We are rapidly moving from a focus on a wide selection of lower price frames to a wider assortment that attracts a broader customer base. After the second quarter, the percent of our frame mix over $99 will be two times what it was at the end of twenty twenty four. We've already started this with a deliberate cadence of new on trend branded frames that we'll be rolling out throughout the year. At the end of the first quarter, we launched Lam and Ted Baker, two highly sought after brands at appealing price points for our target customers.

Alex Wilkes
Alex Wilkes
President at National Vision

Lamb is Gwen Stefani's line of eyewear that reflects a blend of luxury and attitude, styling, and fills a market void for edgy and inclusive styling. Ted Baker is a global lifestyle brand known for its modern fine tailoring, a great addition to our stores that brings luxury styling without the luxury price point. Additionally, as of the April, we began our Ray Ban Meta pilot in select stores in New York and Atlanta markets. In May, we will begin piloting Nuance Audio Glasses, an all in one vision and hearing solution. Key to making pricing actions and branded product launches work is store associate enrollment and training.

Alex Wilkes
Alex Wilkes
President at National Vision

At the core of this is heightened associate understanding of our consumer segments, heightened personalization and lifestyle selling, and heightened focus on overall value and not just price. We started this in the fourth quarter and went a lot deeper at our store manager meetings last week. This work will be ongoing, but clearly this is already contributing to our improved average ticket. As the shopping experience is enhanced for the higher value customer, the experience is enhanced for all customers. We will have more to offer where they have aspirational spend.

Alex Wilkes
Alex Wilkes
President at National Vision

The key takeaway is that customers are responding to what we're doing. We're seeing strong momentum in our initiatives. To deliver enhanced selling and increased personalization requires new digital tools to demonstrate the benefits of the products we carry. At the April, we began the rollout of an in store app that demonstrates the advantages of the latest lens technologies, as well as the benefits of advanced progressive lenses. This is an important milestone as we enhance the in store experience via digital selling tools, and we have other innovations on the horizon to delight our various customer segments with more personalized in store experiences.

Alex Wilkes
Alex Wilkes
President at National Vision

But the digitization of the consumer experience also involves how we attract them and maintain their loyalty. As we discussed on our last call, we're making rapid enhancements to transform our digital marketing and omnichannel capabilities by a partnership with Adobe involving our CRM system and ecommerce platform. We're looking forward to our next key milestone with the go live of our new CRM in the second half of this year. As a reminder, these will allow us to create new personalized journeys for all our customers and significantly enhance how our customers experience us online, particularly when combined with our new marketing approach. The work that VML, our new agency of record, is doing to redefine our communication and brand platforms is underway, and we're excited by the early progress to refresh, modernize, and create a more personalized experience for our customers.

Alex Wilkes
Alex Wilkes
President at National Vision

Before I turn the call over to Chris to take you through our outlook, an important reminder is that while we are focused on our initiatives, we are making significant changes to lower the cost of doing business. This started with $12,000,000 in corporate cost takeout at the beginning of this year. We are working with Accenture on other types of cost savings measures going forward, and we look forward to updating you on on future calls. And with that, I'll turn the call over to Chris. Chris?

Chris Laden
Chris Laden
CFO at National Vision

Thank you, Alex, and good morning, everyone. I'm excited to be joining the team and talking with you today. I look forward to meeting many of you in the weeks to come. Over the past month, I've been immersed in the business and getting to know all of our team members. I've admired National Vision and its leadership position in the optical industry for some time, and I'm excited to be joining at such a pivotal time for the organization while also partnering once again with Alex.

Chris Laden
Chris Laden
CFO at National Vision

I am also grateful to be able to continue to work with Reed in his new capacity. Reid, I only have 29 earnings calls to go to catch up to your record with NVI, so let's jump right in. For reference, my comments today will focus on comparisons to the prior year period, unless otherwise noted. For the first quarter, net revenue increased 5.7% to $510,000,000 driven by adjusted comparable store sales growth of 5.5% and growth from new store sales, partially offset by a 150 basis point negative impact from the timing of unearned revenue. The spread between net revenue and adjusted comparable sales was impacted by the timing of store activity.

Chris Laden
Chris Laden
CFO at National Vision

During the quarter, we opened nine new America's Best stores, while also executing our fleet optimization plan by closing three America's Best stores and nine Fred Meyer stores to end the quarter with a total of twelve thirty seven stores, reflecting a 3% increase in store count year over year. Adjusted comparable store sales were driven by an increase in average ticket of 4.5%, supported by our transformation initiatives, including the pricing actions we've taken, modernization of our customer experience, and enhanced selling techniques. The positive response to these initiatives from both store teams and customers occurred faster than our original estimates, resulting in a larger impact to average ticket. As we've mentioned, exam to purchase conversion rates remain consistent. In addition, customer transactions increased 0.7%, recovering from the February declines we noted when we last reported.

Chris Laden
Chris Laden
CFO at National Vision

And as mentioned, we continue to see strength from our three target customer segments. As a percentage of net revenue, cost applicable to revenue decreased 30 basis points to 40.2%. The resulting increase in gross margin reflected a higher than anticipated growth in average ticket, driven largely by the strong reception to the aforementioned initiatives. This benefit to product margin more than offset the dilution in contact lenses product margin and increase in optometrist related costs. Adjusted SG and A expense as a percentage of net revenue decreased 50 basis points compared with the first quarter of twenty twenty four.

Chris Laden
Chris Laden
CFO at National Vision

This decrease was primarily driven by lower advertising investments and partially offset by higher compensation expense. Depreciation and amortization expense of $23,000,000 was relatively flat compared to $23,200,000 in the prior year period. Adjusted operating income increased 21.8% to $41,300,000 compared to $33,900,000 in the first quarter last year. Adjusted operating margin increased 110 basis points to 8.1%, due primarily to the factors mentioned above. The net change in margin on unearned revenue negatively impacted net income from continuing operations by $4,100,000 and adjusted operating income by 5,500,000.0 Net interest expense increased to $4,600,000 compared to $4,300,000 in the prior year period.

Chris Laden
Chris Laden
CFO at National Vision

Adjusted EPS increased to $0.34 per share in the first quarter of twenty twenty five from $0.29 per share a year ago. Please refer to today's press release for reconciliations of non GAAP financial measures to their most comparable GAAP financial measures. Turning next to our balance sheet. We ended the quarter with a cash balance of approximately $80,000,000 and total liquidity of $374,000,000 including available capacity from our revolving credit facility. As of March 29, our total debt outstanding, net of unamortized discounts, was $346,000,000 and for the trailing twelve months, our net debt to adjusted EBITDA was 1.6 times.

Chris Laden
Chris Laden
CFO at National Vision

During the quarter, we generated operating cash flow of $32,200,000 and invested $20,200,000 in capital expenditures, primarily driven by investments in remote exam technology and new and existing stores. Additionally, the investments we've made in our new ERP are bearing fruit, as we successfully went live with the first phase of our ERP in April. We continue to maintain a strong balance sheet and healthy cash flow to support our growth and capital allocation priorities. We have $84,800,000 remaining on our convertible notes, which mature on May fifteenth of this year. We intend to settle those notes with cash on hand and borrowings from our revolving credit facility.

Chris Laden
Chris Laden
CFO at National Vision

Moving now to the discussion of 2025 outlook, which includes the fifty third week. We estimate that the fifty third week will add approximately $35,000,000 of net revenue and approximately $3,000,000 of adjusted operating income. As a reminder, adjusted comparable store sales growth is calculated on a fifty two week comparable basis to the prior year. With respect to tariffs, we have evaluated a variety of scenarios since the April 2 policy announcements. The situation is of course highly fluid, and there's a potential impact to NBI and our customers.

Chris Laden
Chris Laden
CFO at National Vision

As a result, we have modeled a variety of outcomes, and based on what we know today, believe that we can mitigate central higher tariff costs with pricing actions and cost reduction efforts to neutralize the tariff impact on AOI. To keep our outlook consistent, we have not included the impact of these tariffs, nor our planned mitigation responses in our guidance. That said, we estimate that the tariffs communicated as of May 1 would result in approximately $10,000,000 to $15,000,000 in incremental product costs for the balance of the year. For our 2025 fiscal year, while we continue to take a cautious view given the uncertainty with the potential impact policies and tariffs may have on consumer spending, we are raising the low end of our adjusted comparable store sales guidance range to reflect the strength in first quarter results and ongoing momentum through the start of the second quarter. In addition, we are raising our AOI expectations in line with our first quarter results and the performance of our initiatives positively impacting average ticket.

Chris Laden
Chris Laden
CFO at National Vision

Our guidance now assumes that approximately two thirds of our adjusted comparable store sales growth will come through increases in average ticket, which more closely reflects the composition we saw in the first quarter. For the year, we currently expect net revenue between $1,919,000,000 and $1,955,000,000 supported by adjusted comparable store sales growth of 1.5% to 3.5%, and new store sales based on our expectation to open approximately 30 to 35 new stores this year. We expect our new store opening cadence to be relatively equally split across the first and second half of the year, with about one third of the openings currently slated for Q4. We expect to close seven America's Best stores this year, five in the second quarter and two in the fourth quarter, as part of our continuous management of our real estate portfolio. Given the stronger than anticipated reception to our initiatives through the start of the year, particularly with respect to the resulting increase in average ticket, we now expect adjusted operating income between $81,000,000 and $92,000,000 which includes a range for depreciation and amortization of $93,000,000 to $96,000,000 We expect adjusted diluted EPS to be between $0.59 and $0.67 per share, which assumes approximately 79,000,000 weighted average diluted shares outstanding.

Chris Laden
Chris Laden
CFO at National Vision

This outlook range assumes fiscal twenty twenty five adjusted operating margin to increase approximately 60 to 110 basis points relative to fiscal twenty twenty four, entirely driven by SG and A leverage. This reflects the disciplined actions we have taken, including the $12,000,000 in SG and A savings discussed last quarter, the majority of which is expected to benefit the back half of the year. As a reminder, the additional cost savings we are working on with Accenture are not yet quantified, and as such, factored into our outlook. For the year, we expect gross margin to be similar to fiscal twenty twenty four. We expect improvement in the first half, driven by eyeglass margins, to be offset in the second half of the year, primarily due to headwinds expected in the fourth quarter, as we lapped the benefit we saw last year due to a one time doctor incentive true up.

Chris Laden
Chris Laden
CFO at National Vision

We have not changed our expectation with respect to depreciation and amortization, interest expense, tax rate, and capital expenditures. To summarize, we are operating in a dynamic environment. As Reade and Alex discussed, we are confident in our ability to drive continued success with our transformation initiatives, while remaining diligent to respond to changes in external factors. I will now turn the call back over to Reid before we open our call for your questions. Reid?

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

Thank you, Alex and Chris. In summary, I hope you took away that we feel our Q1 results are further confirmation that the strategy the new team has developed and is in the early stages of implementing involving targeting our most valuable segments has put us back on the right course. Of course, we believe is both durable and sustainable. I hope you took away that although tariffs may end up being disruptive to the macro that we have plans at the ready to mitigate their impact and we believe we are among the best positioned in our category to handle them. I hope you took away that through methodical study of best practices, coupled with mutual respect and natural chemistry between Alex and I that we're implementing a successful transition of leadership.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

I'm just so pleased that I'm transitioning the leadership to a person and a team who've proven they can get National Vision back on the sort of long term growth trajectory that we enjoyed for so long. It feels great to be transitioning during such an upswing. As mentioned previously, this will be my last call as CEO. I would like to sincerely thank our analysts and the entire investment community. When we went public, I was told that you all with your probing questions would make us better and you did just that.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

And for that, I'm appreciative. But mostly I want to end the call by saying that's been an honor to serve in this role with national vision for the past twenty three years. I leave proud of the millions of patients whose lives and vision have been saved and improved by the thousands of optometrist practicing alongside our stores. Optometry is such an admirable profession, and I'm pleased with the work we do to help enable them to provide the patient care. They do.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

I leave proud of the tens of millions of customers who we have helped save money while improving their lives and self images with great eyeglasses and contacts. I leave proud of the tens of thousands of associates who have found life giving fulfillment working here and advanced up our career ladder. That's helping them to have happier, more successful lives. And I leave proud of the millions of ultra low income people in American abroad who we have helped to see again, philanthropically. I've witnessed the multiple ways this has improved their lives, their family's life and their communities.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

Over the years, I have delighted in saying that National Vision is a people business. We just happen to be selling eye exams, eyeglasses and contact lenses. Our people make the business successful and the people we serve and care for are what makes it life giving for all of us. I move on in my new role, pleased and confident in the knowledge that all this and more will continue in national vision future chapters. And with that, I'll turn it over for questions.

Operator

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star, one, one on your telephone and wait for your name to be announced. Our first question comes from Simeon Gutman with Morgan Stanley. Your line is now open.

Simeon Gutman
Simeon Gutman
Managing Director at Morgan Stanley

Hey, good morning everyone. Reed and Alex, congratulations. My first question is if you assume I'm sorry for the noise. If you assume no conversion degradation, like you said, like you're getting the ticket, is the run rate for what ticket can become in the next couple of quarters, is it are we seeing it or it should accelerate given the mix changes that are still occurring? Thanks.

Alex Wilkes
Alex Wilkes
President at National Vision

Yes, Simeon, good morning, and thanks for the question and thanks for the congratulations. Certainly a big day for all of us at National Vision. Yes, look, we're super happy with the ticket acceleration that we've seen in both the fourth quarter and the first quarter. Logically, you look at the things that we're going to do go forward, we said that pricing is an ongoing muscle and we have not yet kind of achieved the point on the elasticity curve where we're seeing degradation in conversion. So we think there's runway.

Alex Wilkes
Alex Wilkes
President at National Vision

Ticket expansion has been fairly proliferated across the category over the last several years. We have not necessarily kept up with the market. Now I think we're leveraging our strength and we're seeing positive response. Again, super proud of the fact that we're seeing ticket grow without degradation, not only in conversion, but also in the NPS rate. So our customers are saying, guys, we appreciate what you're doing.

Alex Wilkes
Alex Wilkes
President at National Vision

We like this stuff that you're introducing, and we're seeing a high take rate on it. So yeah, we absolutely think we have runway left.

Simeon Gutman
Simeon Gutman
Managing Director at Morgan Stanley

And then as a follow-up, if you decompose the revenue growth between managed care and customer pay, are you now optimizing some of the managed Care budgets that you just weren't fully optimizing before? Or is it Customer Pay side that's driving it as customer has more choice and potentially higher price points to choose from?

Alex Wilkes
Alex Wilkes
President at National Vision

Yes, I think it's actually a bit of both. So, certainly by introducing some more premium product, it's product that the managed care customer is hungry for. Introducing those products and those capabilities is actually raising the experience for the totality of our customer base. So we know that the managed care customer has a higher degree of spending power, and that's giving us the right to introduce some products that really benefits our customer base in totality. The progressive customer, the outside RX customer, those three segments that we know have a higher resiliency in the market.

Alex Wilkes
Alex Wilkes
President at National Vision

Frankly, again, we're seeing great response there.

Simeon Gutman
Simeon Gutman
Managing Director at Morgan Stanley

Okay, good quarter. Good luck.

Alex Wilkes
Alex Wilkes
President at National Vision

Thank you.

Operator

Thank you. Our next question comes from Zachary Fadem with Wells Fargo. Your line is now open.

Zachary Fadem
Zachary Fadem
MD, Senior Equity Analyst - Broadlines & Restaurants at Wells Fargo

Hey, good morning. Reed, first of all, it's been a pleasure wishing you all the best. Alex and Chris, congrats to you. So first of all, as you think through all the drivers of your Q1 comp, particularly the nearly 6% at America's Best, first of all, could you walk us through the cadence in the quarter? And then perhaps any color on income demographics and whether the gap between your cash pay customers and managed care customers widened or narrowed in the quarter?

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

Yes. So thank you for that Zach. So first of all, the quarter was a strong January and then we had that two weeks in February that were particularly peculiar, which happened to be right before our call. And so on that, we said that that made us cautious on last call and then March came back strong. So we had a weird anomaly of two weeks in February that just happened to coincide with our last earnings call.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

And as we've suggested, healthy trends have continued into April. In terms of the demographic side, we did see a trade into us of higher income customers. So, of more higher income customers and some of the lower income customers dropping out, which happens in tough economic times. We've seen that before, but it was very much offsetting. And the key thing is, we are providing great value to all.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

They that's the is the moment when people are seeking value and that's who we are. And that's what our brand has always been known for.

Zachary Fadem
Zachary Fadem
MD, Senior Equity Analyst - Broadlines & Restaurants at Wells Fargo

Yes, on that note, we had always talked about, Reed, how the value segment of the industry was an outperformer in terms of growth relative to the rest of the industry. And as you think about all the opportunities across the business today, how would you compare industry growth rates across some of the new buckets like managed care, progressive, etcetera, relative to your core value offering?

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

So, the key thing about our three segments, the managed care, the progressives and the outside Rx is we are underdeveloped to the category in all of those. We do think that sort of when we hit 40% last year, it was sort of a tipping point and thus having sort of designing things a bit more for that managed care customer made a lot of sense and a lot of things Alex and the team are doing to bring in new products to make sure that people are getting their full benefits worth is helping us and we see that continuing to help us going forward. So overall, one, yes, should continue to be an ever more important trend as the macro gets more uncertain. And two, we have picked the right segments where we're underdeveloped and are showing great growth with them and great success.

Zachary Fadem
Zachary Fadem
MD, Senior Equity Analyst - Broadlines & Restaurants at Wells Fargo

Appreciate the time. Thanks so much.

Operator

Thank you. Our next question comes from Paul Lejuez with Citi. Your line is now open.

Brandon Cheatham
Brandon Cheatham
VP Equity Research at Citigroup

Hey, everyone. This is Brandon Cheatham on for Paul. Reid, I'll add my congratulations. It's been great working with you. And Alex, also congratulations on your new role.

Brandon Cheatham
Brandon Cheatham
VP Equity Research at Citigroup

I was I was wondering, you know, if you could share where your private label product is made and how much of your third party product might be exposed to China tariffs? Depending on what happens, do you have the ability to switch away from third party frames that might be made in China and carry something else? Then the product cost increases you mentioned the 10,000,000 to $15,000,000 How much of that is private label versus third party frames?

Alex Wilkes
Alex Wilkes
President at National Vision

Yes. So, we said that less than 10% of our cost of goods is exposed to China. And we've done a really nice job over the last several years to reduce our reliance on China and move our supply chain around some of the rest of Asia to mitigate some of the risk that we're now seeing. I think great job by the team having the foresight to work on this over a number of years. In terms the mix, it's something we really don't go into a huge degree of detail publicly, but we do have as we've shown historically, we have flexibility to move, especially as it pertains to private label.

Alex Wilkes
Alex Wilkes
President at National Vision

That is where we have made the majority of our sourcing shifts over the last several years.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

As I said, we're pleased with several countries, which gives a bit of diversity.

Brandon Cheatham
Brandon Cheatham
VP Equity Research at Citigroup

Okay. Got it. And then, yeah, I know this might be hard to parse out, but the ticket performance during the quarter, how much of that is driven by some of the pricing action you've taken, better frames kind of going up that value ladder versus like the selling practices that you implemented and being able to kind of cater more so that managed care customer. If you could kind of expand on where you think you are in kind of getting your sales force up that curve of approaching that managed care customer with better selling practices.

Alex Wilkes
Alex Wilkes
President at National Vision

Yeah, Brian, actually we're quite pleased that all the actions that we put in place are contributing to the expansion of ticket. Approximately two thirds of the ticket increase is attributable to the no regrets pricing decisions that we introduced in Q4 and Q1 that I talked about a bit more in detail last quarter, and the remaining third is coming from assortment changes and through the selling behaviors and the selling techniques that we're introducing at the store level. So again, we're super pleased that really it's all of those things pulling in the right direction and delivering frankly as expected.

Brandon Cheatham
Brandon Cheatham
VP Equity Research at Citigroup

Appreciate it. Good luck.

Operator

Thank you. Our next question comes from Kate McShane with Goldman Sachs. Your line is now open.

Kate McShane
Kate McShane
Managing Director at Goldman Sachs

Hi, good morning. Thanks for taking our question. I just wanted to clarify one thing on the tariff commentary. I think you had mentioned 10,000,000 to $15,000,000 in incremental product costs for the year as of today, your May 1 tariffs. And I also think you said this is not in guidance.

Kate McShane
Kate McShane
Managing Director at Goldman Sachs

But is it right to think that this would be fully mitigated based on what your earlier comments were before?

Chris Laden
Chris Laden
CFO at National Vision

Hey, Kate. This is Chris Blayton. Yeah. Confirming that your commentary is accurate, the tariff guidance is based off of the May 1 tariff policies that are in place and the impact for the balance of the year largely in the second half. And and we do believe that we can offset the incremental cost there either with additional actions to increase average ticket as well as other cost mitigation efforts.

Chris Laden
Chris Laden
CFO at National Vision

And none of those are in guidance.

Kate McShane
Kate McShane
Managing Director at Goldman Sachs

Okay. Thank you. And then unrelated, we wanted to ask about remote exams. We wondered if there was a way to quantify how remote exams did during the quarter or how they comped relative to the company comp. It sounds like profitability there too is still lower.

Kate McShane
Kate McShane
Managing Director at Goldman Sachs

So how much of a headwind is that from a mix standpoint? And does that improve at all as you grow that business?

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

Remote is now thank you, Kate, by the way. Remote is now sort of an ongoing part of how we do business. And in terms of percentage of exams, it was roughly the same as it was in Q4. And it is just part of how we do things now. We do think so what we're trying to communicate is we think we've got our coverage under control and you're not going to be hearing us talk about being hurt by exam coverage.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

We have less than five stores are totally dark right now. So it's really a small number. We use remote as needed throughout the system. But what we're saying is we do think over time there is going to be an opportunity for greater efficiency in the entire exam ecosystem. So that's just going to be improvement overall, but we think we've got the base coverage we need and we think we can just make it more cost efficient over time as we leverage the various tools we have live remote, hybrid remote and a few other things we're trying here and there.

Kate McShane
Kate McShane
Managing Director at Goldman Sachs

Thank you.

Operator

Thank you. Our next question comes from Robert Ohmes with Bank of America. Your line is now open.

Robert Ohmes
Robert Ohmes
Analyst at Bank of America

Hey, thanks for taking my question. Reade, congrats on just an unbelievable career in the industry in twenty three years at National Vision. I hope you have a great happy birthday next week. And we have the same birthday. That's why I always remember your birthday.

Robert Ohmes
Robert Ohmes
Analyst at Bank of America

And Chris and Alex, welcome. A couple of questions. Just the first question is just on the low income consumer weakness. I mean, obviously, it's the position they're in, but are they going somewhere else? Or are they just deferring?

Robert Ohmes
Robert Ohmes
Analyst at Bank of America

And in general, are you seeing any change in replacement or exam cycles across different demographics?

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

So a few things. One, Robbie, I will have a happy birthday because we're paying off our convertible loans on that day. So that will be a real nice milestone. I don't know what you're doing to celebrate. We're paying off $85,000,000,000 in debt.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

That's great. And Robbie, thank you. You've been with us since the beginning in 2017, our very first road show in Salt Lake City, which is a really great and exciting time for us. So thank

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

you

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

for that. So the low income consumer tighter and more strapped in this environment than ever more. We do believe that there are increasing trends in terms of the number of people who are insured in terms of total insured lives out there. So, it's a shift into managed care costs part of a broader trend that actually is just another proof point as to why insurance insured customers are a great target for us. And the managed care purchase cycle remains quite normal along the way.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

But again, even managed care customers are seeking value and we provide great value for them, which is why we've had a steady ongoing increase there.

Robert Ohmes
Robert Ohmes
Analyst at Bank of America

That's helpful. And then and maybe for Alex, the can you just talk a little bit more about the recruitment and retention things you're doing and maybe weave into that how the optometrist cost outlook looks from here?

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

I've been sort of focused a bit on that. Retention is really healthy now. We do oftentimes find in times of economic uncertainty retention is healthy and we also think we are doing a number of things just to make it an ever better place to practice optometry. Our recruitment is also quite healthy and we're pleased with that especially the student arena that's going very well. So both those are good along the way and costs are in line, nothing and we aren't seeing increases there.

Robert Ohmes
Robert Ohmes
Analyst at Bank of America

Terrific. Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from Adrian Yee from Barclays. Your line is now open.

Angus Kelleher-Ferguson
Equity Research Associate at Barclays Corporate & Investment Bank

Hi, this is Angus Kelleher on for Adrian Yee. Congrats, Reed and Alex and Chris. Congrats on your first joint call. My question is, given the testing of smaller format America's Best stores and learnings from the fleet review, what early insights can you share about optimal store economics and potential changes to store growth trajectory and the penetration of remote enabled capabilities at these smaller locations?

Alex Wilkes
Alex Wilkes
President at National Vision

Yeah, so we shared last call that we have a couple new prototype stores we're testing smaller square foot design. We look to understand the results of that better as the year plays out. One of the things that we are currently evaluating is our store design and our store kind of build in totality. So we have signed an agreement with a world class design firm to help us review our store design, store footprint of the future. Again, that's a more forward looking statement than something impacting '25.

Alex Wilkes
Alex Wilkes
President at National Vision

But certainly our working hypothesis is that there is opportunity for a smaller store footprint than what we have historically built.

Angus Kelleher-Ferguson
Equity Research Associate at Barclays Corporate & Investment Bank

Got it. Great. Thanks. And then I think you touched on this in the prepared remarks, but what's been the feedback from doctors regarding the shift to target managed care customers? And how do you see this playing out over time and at scale?

Alex Wilkes
Alex Wilkes
President at National Vision

Yeah, I think our doctors are super excited about the direction that we're going in general. And The ability to see more managed care patients that also have an insurance benefit that allows them to visit us more frequently, the managed care consumer purchase cycle is generally shorter than the cash pay consumer. Tend to be more compliant patients, which is something doctors love. Mean, doctors love the idea of patients that believe in an annual eye exam, and the managed care plans are architected around that. So there's really great alignment between what the managed care providers are allowing in terms of benefit and the beliefs that doctors have, just how important annual eye exam is.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

Got it. Thank you.

Operator

Thank you. Our next question comes from Simeon Siegel with BMO. Your line is now open.

Jonathan Elias
Jonathan Elias
Consumer Equity Research Sr. Associate at BMO Capital Markets

Hi, this is John Elias on for Simeon. Also adding our congratulations to Reade, Alex and Chris. Can you elaborate on the improved product margins from eyeglass frames and lenses? How much of the benefit was mix shift versus like for like improvements? And how do you think about product margins going forward?

Chris Laden
Chris Laden
CFO at National Vision

Yes, it was really a combination of both. Ticket impact that we saw in the first quarter, as Alex said, about two thirds overall is driven by price increases about a third mix. As we've introduced new products into the assortment and mix has shifted there a bit driving ticket, all those mix shifts have been at a minimal margin percentage neutral, if not accretive. So we feel good about the directory there. What we are going be comping in the back half of this year is a onetime nonrecurring event in Q4, which is why our outlook for the total year is flat.

Chris Laden
Chris Laden
CFO at National Vision

But we are seeing the benefit we expected through the first quarter and expect to see through the first half.

Jonathan Elias
Jonathan Elias
Consumer Equity Research Sr. Associate at BMO Capital Markets

Great. And then for my follow-up, how are

Jonathan Elias
Jonathan Elias
Consumer Equity Research Sr. Associate at BMO Capital Markets

you thinking about advertising expense for the rest of the year?

Alex Wilkes
Alex Wilkes
President at National Vision

Yeah. So, as previously shared, we're super excited about having a new agency of record to bring a fresh perspective on our creative platform. We generally aren't making any plans to reduce or accelerate our advertising investment. That being said, we are in the process of creating new creative, creating new campaigns, and we are certainly looking at ways to have our marketing investment be more efficient. We are strongly going to consider ways to evolve our media mix to become more efficient purchasers of media and point our marketing investment to the channels that are yielding the highest return.

Alex Wilkes
Alex Wilkes
President at National Vision

Historically, we haven't talked much about this, but we are also taking a harder look at our media mix model and really making decisions on how we're going to invest across linear, how we're going to invest across digital and search and continuously optimizing. Also, from a channel mix perspective, you know, we do know that once we have our CRM platform go live second half of the year, that's really going to make all of our marketing investment just work so much harder for us. So again, we feel great about what we're doing from a marketing strategy perspective, and as we evolve our media mix go forward, given that we're going to have stronger capabilities to help us drive consumer acquisition and loyalty.

Jonathan Elias
Jonathan Elias
Consumer Equity Research Sr. Associate at BMO Capital Markets

Thanks for the color and all the best.

Operator

Thank you. Our next question comes from Anthony Chukumba with Loop Capital. Your line is now open.

Anthony Chukumba
Managing Director & Senior Research Analyst at Loop Capital Markets LLC

Good morning. Thanks for taking my questions. Congrats on the strong start to the year. And Alex and Chris, welcome to the party. And obviously, Reed, thank you for everything that you've over the last twenty three years for the company.

Anthony Chukumba
Managing Director & Senior Research Analyst at Loop Capital Markets LLC

So my first question, as I looked at your comps, obviously the average ticket, very encouraging. But I was pleasantly surprised by the increase in traffic, The point 7% increase in traffic. What do you attribute that to? Was the driver there?

Alex Wilkes
Alex Wilkes
President at National Vision

Yeah, so I think it's a combination of things. I think it is really leaning into these customer segments that we spoke of. We're doing a better job being a place of consumption for the managed care customer, for the outside Rx customer, and for the progressive customer. Seeing the growth in those segments is frankly contributing to that overall traffic or that overall customer count number. So really, first step was around how do we become more relevant to that consumer that, as we've talked about, we've been attracting that consumer anyway, but now that we're distorting some effort against them, we think we have a right to win, and I think that is exactly showing up in that point 7% increase in traffic, during which a time which we all know it's an uncertain time with a lot of macro headwinds.

Alex Wilkes
Alex Wilkes
President at National Vision

Anthony, I really do appreciate you calling out on that. We're incredibly proud of that point 7% customer increase, especially given the uncertainty that we live in today. Also, last point here, our value offering and our value messaging resonates across customer types. And again, we think that that is something that in this particular moment matters a lot.

Anthony Chukumba
Managing Director & Senior Research Analyst at Loop Capital Markets LLC

Got it, that's very helpful perspective. And then just one follow-up, I know in the past you sort of at least directionally talked about the difference between your managed vision care comp versus your cash pay comp. I was just wondering if you had any commentary in terms of first quarter.

Alex Wilkes
Alex Wilkes
President at National Vision

Like I said before, the cash pay has not quite shown the resiliency of the other customer segments. Managed care continues to grow at or above the high single digit range that we've talked about in the past, and the cash pay consumer is certainly more strapped. But again, that is a bit of a dynamic too of the managed care ecosystem has grown year over year by good margin as well. There is some degree of the cash pay consumer pool shrinking the managed care pool increasing. But we still have seen even on the ticket side, the cash pay consumer has also traded up, and we're seeing some of the ticket benefit with our cash pay consumers as well.

Anthony Chukumba
Managing Director & Senior Research Analyst at Loop Capital Markets LLC

That's helpful. Thank you.

Operator

Thank you. Our next question comes from Michael Lasser with UBS. Your line is now open.

Michael Lasser
Michael Lasser
Equity Research Analyst - Hardlines, Broadlines & Food Retail at UBS Group

Good morning. Thank you so

Michael Lasser
Michael Lasser
Equity Research Analyst - Hardlines, Broadlines & Food Retail at UBS Group

much for taking my question, and best of luck to everybody. You raised the midpoint of your top line guidance by $9,000,000 You raised your operating income outlook by $6,000,000 Is it reasonable and realistic for us to expect that type of flow through moving forward? And at what point does National Vision need to make further investments, especially as it attracts this new customer base that arguably is going to have higher expectations that will need to be met?

Michael Lasser
Michael Lasser
Equity Research Analyst - Hardlines, Broadlines & Food Retail at UBS Group

Thank you

Michael Lasser
Michael Lasser
Equity Research Analyst - Hardlines, Broadlines & Food Retail at UBS Group

very much.

Chris Laden
Chris Laden
CFO at National Vision

Hey, thanks for that question and good morning. We did raise our guidance on AOI for the balance of the year. That was largely attributed to the performance we saw in the first quarter. The initiatives that were put in place in Q4, super happy to report that they actually were adopted both by our store teams and our consumers at a faster pace than we had initially projected. So a lot of what you're seeing in the AOI guidance increase is driven by that accelerated performance.

Chris Laden
Chris Laden
CFO at National Vision

I think you're absolutely right, as we think through the balance of the year from a capital investment perspective, we're going to continue to contemplate what initiatives we have on the table that are going drive the highest ROI and are certainly open as we introduce our new CRM activity in the second half to invest more if we're seeing the results drive out of it. On the flip side, right, we're operating in an uncertain environment, so we want make sure that we're balancing the positive momentum we've seen with the uncertainty in the second half of the year.

Michael Lasser
Michael Lasser
Equity Research Analyst - Hardlines, Broadlines & Food Retail at UBS Group

My follow-up question is the pattern you described on how the quarter played out is not dissimilar to what many other retailers have experienced over the last few months. So the question is, is there any evidence that you're seeing that the consumer is trying to go in and get a pair of eyeglasses ahead of what could be a more inflationary environment as the tariffs take hold? And so when you expect to see that play out if indeed there is some pull forward?

Chris Laden
Chris Laden
CFO at National Vision

It's a great question and we look at it internally as well. The short answer is no. We haven't seen a change in the customer purchase cycle, and we don't believe that our first quarter traffic change was driven by any pull forward of purchase cycle.

Michael Lasser
Michael Lasser
Equity Research Analyst - Hardlines, Broadlines & Food Retail at UBS Group

Got you. Thank you very much and good luck.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

Thank you.

Operator

Thank you. Our next question is from Dylan Carden with William Blair. Your line is now open.

Dylan Carden
Research Analyst at William Blair

Thanks. Kind of I guess a related question. The 5.5% comp in the first quarter relative to the full year guide albeit raised, can you sort of speak to the conservatism that seems to be embedded over the next three quarters? Is that just the environment we're in or is there something else that's sort of nuance there?

Chris Laden
Chris Laden
CFO at National Vision

No, that's exactly it. It's really largely attributable to just the uncertainty in the environment. Consumer confidence has been reported down month over month, and we just want to make sure that we are being prudent about our expectations for the second half, given a lot of uncertainty from a macro perspective.

Dylan Carden
Research Analyst at William Blair

Fair. And the new store openings this year, are you closer to understanding maybe what the cadence would be go forward?

Chris Laden
Chris Laden
CFO at National Vision

Yes, look, we've said that we believe that half of the stores will be open in the first half of the year, half of the new stores will be in the second half. We typically see Q4 a little bit heavier in the second half, but we're still guiding to 30 to 35 new stores opening in the year.

Dylan Carden
Research Analyst at William Blair

Sorry, was unclear. I meant sort of go forward in the sort of coming years what you might open per year.

Chris Laden
Chris Laden
CFO at National Vision

Oh, I apologize for misunderstanding your question. No, we don't have guidance yet in terms of 26 forward in terms of new store openings.

Dylan Carden
Research Analyst at William Blair

Great. All right. Thank you.

Operator

Thank you. Our final question comes from Brian Tanquilut with Jefferies. Your line is now open.

Meghan Holtz
Meghan Holtz
VP, Healthcare Services Equity Research at Jefferies

Good morning. This is Megan Holtz on for Brian. I'd like to reiterate our congratulations to Reid and Alex as well. Just for our first question, as the tariff situation likely put some pressure on some of your peers, do you think there's opportunity for you guys to capture some additional market share?

Alex Wilkes
Alex Wilkes
President at National Vision

Yeah, so we've said that we believe that we are very well positioned in terms of the market from tariff perspective. And again, I think that goes to the decisions that we've taken over a multi year time horizon to ship our our country of origin and country of sourcing and not be so heavily reliant on one market. So we are we're very, very thankful for that approach that we took. Yeah. So, I mean, we absolutely think the work that we've done best positions us to potentially take advantage of the coming tariffs.

Meghan Holtz
Meghan Holtz
VP, Healthcare Services Equity Research at Jefferies

And then just as a follow-up on the labor commentary, some jobs data has pointed to a little bit of elevated wages in the mid single digit range for optometry. Is that similar to the labor wage rate that you guys are seeing internally?

Alex Wilkes
Alex Wilkes
President at National Vision

Yeah, I'll just quick comment here. I don't think we have any excessive concerns about any wage rate compression on optometrists. And again, I'll reiterate something we shared earlier. We share this. We're super happy with the fact that we've driven our dark stores down to really just a handful of stores.

Alex Wilkes
Alex Wilkes
President at National Vision

So we're always managing doctor pay and incentives. Of course, it's a balance to make sure that we're attracting the best doctors to join our company. And we think that strategy is working and again, as evidenced by seeing the dark stores be reduced a handful. Again, I think it speaks to the offering that we have to doctors that they can practice in a hybrid world, they can practice in a remote world, they can practice in store, and we provide them great opportunities for career advancement. One thing, and I'll just share this and sorry, I'll share this on Reid's behalf.

Alex Wilkes
Alex Wilkes
President at National Vision

Last week when we were at meeting with all of our Eyeglass World and Vista and Military and America's Best Associates, Reed was able to share the team how great is it that in this organization, we have a doctor who is now the general manager of one of our brands. So talk about a great place for optometrists to build their career. We allow them to practice in the mode that they want to practice, and we provide opportunities for them to sit at the executive table and to lead one of our biggest brands in the company. I think it's just a testament to how we feel about doctors within our organization.

Meghan Holtz
Meghan Holtz
VP, Healthcare Services Equity Research at Jefferies

Thank you, and congrats on a good quarter.

Operator

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Reid Foss for closing remarks.

Reade Fahs
Reade Fahs
Chief Executive Officer at National Vision

Thank you, Hope, and thank you all for your ongoing support over the years. Alex, Chris, and Tamara will be back with you to you in August. Thank you all. Bye bye.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Executives
    • Tamara Gonzalez
      Tamara Gonzalez
      VP - Investor Relations
    • Reade Fahs
      Reade Fahs
      Chief Executive Officer
    • Alex Wilkes
      Alex Wilkes
      President
    • Chris Laden
      Chris Laden
      CFO
Analysts
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Key Takeaways

  • As of August 1, Alex Wilkes will succeed Reed Fisch as CEO with Reed moving to Executive Chair, reflecting a planned, chemistry-driven leadership transition.
  • In Q1 FY25, net sales rose 5.7% to $510 million and adjusted comps gained 5.5%, marking the ninth straight quarter of positive growth and a 0.7% increase in transactions.
  • Execution of the transformation strategy—centered on segmentation, personalization, and digitization—drove higher average ticket through premium frame assortments (frames over $99 doubled) and new digital selling tools.
  • Profitability improved with adjusted operating income up 21.8% to $41.3 million and EPS up to $0.34, supported by ticket growth, a 30 bps gross margin benefit, and 50 bps SG&A leverage.
  • FY25 guidance was lifted to $1.919–1.955 billion in revenue, 1.5–3.5% comp growth, $81–92 million in adjusted operating income and $0.59–0.67 EPS, while preparing to mitigate $10–15 million of potential tariff costs.
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Earnings Conference Call
National Vision Q1 2025
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