National Vision Reports Double-Digit Increases in Sales and Adjusted EBITDA for Q4 and Fiscal 2018

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DULUTH, Ga.—National Vision Holdings (NASDAQ: EYE) said it achieved a double-digit increase in net revenue as well as adjusted EBITDA in fiscal 2018. The optical retailer, which operates the America’s Best optical stores, among others, delivered its 68th consecutive quarter of positive same-store sales growth in last year’s fourth quarter, according to Wednesday morning’s financial announcement. National Vision delivered double-digit revenue and adjusted EBITDA results in the fourth quarter, also, with sales increasing 10.6 percent to $355.9 million and adjusted EBITDA rising 16.3 percent to $28.7 million. Comparable-store sales increased 4.3 percent in the quarter, while the adjusted comparable-store sales growth was 2.9 percent, the announcement noted.

The company noted that same-store sales in Q4 were driven by increases in “average ticket,” while customer transactions increased but were negatively impacted by one less selling day in the final week of the year and five stores that were closed for most of the quarter due to severe weather. National Vision opened 16 new stores in the fourth quarter, closed one store and ended 2018 with 1,082 stores.

“We are pleased with our fourth quarter and full year results, which demonstrate the consistency of our differentiated business model and a strong value message that continues to resonate with customers,” National Vision chief executive officer Reade Fahs said in the announcement. “We opened 16 stores this quarter and continue to gain share in the attractive optical retail market. Last month, our new state-of-the-art lens manufacturing lab opened in Texas and adds essential capacity to support our growth,” he added, noting that the company believes it finished 2018 as the third-largest optical retailer in the nation and “the fastest growing.”

During a conference call with securities analysts, Fahs noted that the company in January undertook a “management realignment” that included Jeff McAllister moving from his role as chief operating officer to a new position as special advisor to the board of directors. His previous responsibilities are being apportioned among the existing senior management team, Fahs said, noting that he will assume some of the COO responsibilities. McAllister will serve in his new role until the end of the year.

In fiscal 2018, net revenue increased 11.7 percent to $1.5 billion from $1.4 billion in 2017, and comparable-store sales rose 6.7 percent, “driven by an increase in customer transactions and, to a lesser extent, average ticket,” the announcement noted. Overall, store count grew 6.8 percent from Dec. 31, 2017 to Dec. 29, 2018.

Fahs also said on the call that the company’s “net promoter” scores have risen to record levels, and that a fourth optical lab opened in Plano, Texas, which the company expects will help drive gains in operating performance going forward. “In 2018, we expanded our footprint [and] increased market share in a highly fragmented market,” Fahs told analysts. “We see a large opportunity in front of us,” he added, noting that the company has strengthened its partnerships with Essilor (signing a new multiyear agreement with the lens company) and Walmart (which includes expanding a contact lens distribution agreement).

Asked about the impact of the tariffs on imports from China, Fahs said he believes the company’s exposure to tariffs (which are limited to eyeglass cases at this time) is not expected to have a material impact on results. National Vision also has now rolled out the Oakley brand to America’s Best stores, and continues to benefit from the success of its “Owl” and “Mr. World” advertising campaigns, Fahs said. Continued investment in television advertising is planned for 2019.

Looking ahead, National Vision said it expects to open approximately 75 new stores in 2019 (with the majority under the American’s Best banner), and deliver adjusted same-store sales growth in the range of 3 percent to 5 percent, net revenue in the range of $1.675 billion to $1.705 billion, and adjusted EBITDA in the range of $186 million to $191 million.