National Vision Holdings Reports Strong Third Quarter with Comp-Store Gains of 7 Percent

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DULUTH, Ga.—In its first quarterly report as a public company, National Vision Holdings Inc. (NASDAQ: EYE) announced Thursday that adjusted comparable-store sales rose 7 percent and helped drive an overall net revenue increase of 14.9 percent in its third quarter ended Sept. 30.

It marked the 63rd consecutive quarter of comparable-store sales growth for National Vision, which completed a successful initial public offering and NASDAQ listing in late October. The company reported a 16.6 percent increase in adjusted EBITDA (which totaled $36.2 million in the quarter) and net revenue of $346.1 million (versus $301.2 million in the year-ago period). Net income totaled $1.5 million in the quarter, compared with $3 million in the year-ago period. Higher interest expense was cited as the primary factor in the decline.

“It was a good quarter,” chief executive officer Reade Fahs told VMail following the company’s financial report, noting that the quarter included the impact of a series of hurricanes in both Texas and Florida that led to some temporary store closings. (The company estimated the adverse impact of the storms—which affected 203 stores—at between $3.5 million and $4.1 million on net revenue.)

“We are quite proud of the consistency of this track record (of comp-store growth),” Fahs said. “The adjusted comparable-store sales growth in Q3 was 7 percent, and importantly our comps were driven by increases in customer transactions.” Emphasizing the value positioning of the group’s stores, Fahs added, “We strive to insure that our customers are telling their friends about how little they spent with us and what great products we carry and the great experience they had,” he told securities analysts on a conference call Thursday morning.

The company’s America’s Best division, which operated 577 stores as of Sept. 30, produced a comp-store sales gain of 10.2 percent in the quarter, while same-store sales at Eyeglass World rose 2.4 percent. The “legacy” segment achieved same-store sales growth of 1.3 percent.

National Vision opened 19 stores in the quarter, bringing its store-opening total to 59 for the first nine months of 2017, which included the company’s first stores in California. The company has opened over 500 new stores over the past 10 years, Fahs told analysts. “We continue to see sizable white space given the still fragmented nature of our industry.” He said the company projects that it can add, in the aggregate, more than 1,000 stores under the America’s Best and Eyeglass World banners.

For the nine-month period, sales rose 14.6 percent to $1.1 billion, with comp-store sales growth of 6.7 percent in the period. Net income totaled $17.1 million.

In a call with VMail, Fahs noted that he believes National Vision is building momentum with managed care vision plans. “We are underdeveloped [in managed vision care] relative to most of American optical retail,” he said, noting that the America’s Best group of stores didn’t accept managed care insurance when it was acquired by National Vision in 2005.

“It’s a gradual process of getting more and more of the managed care players to be open to allowing you on their panel and to participate fully in the panel,” he added. “We find that this happens gradually over time… But we still think there is more opportunity for that, especially as brands like America’s Best become better known and they become more of a desirable [choice] to have on the panel.”

National Vision ended the quarter with 996 stores, and it reported that overall store count grew 6.9 percent between Oct. 1, 2016, and Sept. 30. Fahs also noted that National Vision signed a three-year extension to its existing contract to operate optical departments in Walmart stores, carrying the deal into 2020.

The company also noted that since the end of the third quarter it has opened its 1,000th store and enhanced its partnership with the Boys and Girls Club of America. “All in all, it was another healthy quarter—emblematic of the health and consistent progress we have had over the past several years,” Fahs said in the company announcement.