BUSINESS: Retailers In Its Q3 Report, National Vision Raises Adjusted Earnings, Net Revenue and Adjusted Comp Store Sales Growth Guidance for Full Year 2023 By Staff Friday, November 10, 2023 12:30 AM DULUTH, Ga.—National Vision Holdings, Inc. (NASDAQ: EYE) raised its adjusted earnings, net revenue and adjusted comparable store sales growth guidance for the full-year 2023, when it reported financial results for the third quarter and nine months ended Sept. 30, 2023. For fiscal 2023, the company now projects net revenue between $2.115 billion and $2.125 billion, with adjusted comparable store sales growth of about 2 percent. Previously, the company had anticipated fiscal 2023 net revenue between $2.075 billion and $2.135 billion, with adjusted comparable store sales growth of 0 percent to 3 percent.Reade Fahs, National Vision's CEO, said, “Our third quarter results reflect ongoing strength in our managed care business as well as continued progress on our strategic initiatives focused on expanding exam capacity, particularly within America’s Best. We delivered a solid back to school selling season, supported by our focus on delivering incredible value while offering exceptional customer service.”For the quarter, NVI's net revenue increased 6.6 percent to $532.4 million compared with the third quarter of 2022 primarily due to an increase in adjusted comparable store sales growth, growth from new store sales, and higher revenue from the company's AC Lens business, partially offset by the effect of unearned revenue in the third quarter of 2023 compared with the prior-year quarter. Net revenue includes a (0.3 percent) impact from the timing of unearned revenue in the current-year quarter compared with the prior-year quarter.Comparable store sales growth was 3.8 percent and adjusted comparable store sales growth was 4.3 percent, both reflecting an increase in customer transactions and higher average ticket. Comparable store sales growth was negatively impacted by the effects of unearned and deferred revenue in the current-year quarter compared with the prior-year quarter.The company opened 21 new stores and ended the quarter with 1,402 stores. Overall, store count grew 5.3 percent from Oct.1, 2022 to Sept. 30, 2023.Net income (loss) decreased to $(73.8) million, inclusive of non-cash impairment charges related to the termination of the Walmart partnership of $79.4 million, compared to $11.5 million in the third quarter of 2022. Net income (loss) margin decreased to (13.9) percent compared to 2.3 percent in the third quarter of 2022.As previously announced on July 26, 2023 and reported by VMAIL, the company’s partnership with Walmart Inc. will be ending in 2024. This includes supplying and operating Vision Centers in 229 Walmart stores, providing contact lens distribution and related services to Walmart and its affiliate, Sam's Club, and arranging for the provision of optometric services at certain Walmart locations in California.For fiscal 2023, the company expects its Walmart store operations and the wholesale distribution and related services to Walmart and its affiliate, Sam's Club, included in its AC Lens operations recorded in the Corporate/Other segment to generate approximately $355 million in revenue.The remaining portion of the AC Lens operations, which is immaterial from an earnings perspective, will be wound down in conjunction with the wholesale distribution and e-commerce contact lens services, and is expected to generate approximately $45 million in sales for fiscal 2023. Combined, the Walmart store operations and the AC Lens operations are expected to generate approximately $400 million in revenue and earnings before income tax of approximately $15 million.The annualized direct and indirect costs associated with these operations for fiscal 2023 are expected to be approximately $385 million. The company expects these costs to be wound down in conjunction with the contract termination dates, and includes the plan to consolidate NVI currently expects approximately 7 percent of its total associate headcount to be impacted by the termination of the Walmart partnership and the wind down of the AC Lens operations.Fahs stated, “I am proud of how our teams have continued to operate with discipline and focus on customer care as we continue to navigate a dynamic macro environment. With the upcoming termination of our Walmart partnership, we have taken actions to mitigate disruption of the business until the transition is completed while identifying opportunities within our cost structure to better align our expense profile with our go-forward operating model."As we look to the balance of this year, we are focused on continuing to execute on our initiatives and remain committed to our mission of making quality eyecare and eyewear more affordable and accessible,” Fahs said.The company has announced that beginning in 2024, it will be implementing an incremental expense reduction program targeting annualized savings in the range of $10 million to $12 million. The program will focus on streamlining corporate overhead including optimizing non-customer facing labor costs, as well as reducing travel expenses and third-party spend.This program, together with the expected benefits from non-headline pricing actions the company is planning to take, is expected to more than offset the profitability gap created by the termination of the Walmart partnership, its announcement said.In its presentation to analysts, following the release of the Q3 numbers, National Vision stated it would be continuing to pursue several strategic initiatives. These include a plan to expand exam capacity through continued improvement in retention and record recruiting and the expansion and deployment of remote capabilities in more than half of its America's Best locations, as of Sept. 2023.They also include further digitization to improve efficiency, leveraging omni-channel capabilities and capitalizing on "white space" opportunities for new store growth.