National Vision Holdings, Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. Thank you, and good morning, everyone.

Welcome to National Vision's second quarter 2026 earnings call. Joining me on the call today are Alex Wilkes, CEO, and Chris Laden, CFO. Our earnings release issued this morning and the presentation accompanying our call are both available in the Investors section of our website, ir.nationalvision.com. A replay of the audio webcast will be archived in the Investors section after the call. 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 in today's presentation also includes certain non-GAAP measures. Reconciliation of these measures is included in our release and the supplemental presentation. We would like to draw your attention to slide 2 in today's presentation for additional information about forward-looking statements and non-GAAP measures. 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 Alex.

Alex? Thanks, Tamara, and good morning, everyone.

Thank you for joining us today for our second quarter earnings call. The second quarter marked an important step forward for National Vision. We completed a significant technology milestone following the implementation of our e-commerce replatform, and most importantly, we delivered underlying results in line with our strategic framework, driving growth through underdeveloped customers, under-penetrated products, and an enhanced customer experience, all while delivering meaningful improvement and profitability. This is the flywheel we are building: a stronger customer mix, better product attachment, and a more connected experience at a store base that supports sustainable growth, margin expansion, and increased profitability.

For the quarter, net revenue grew 2.5% to $499 million, and adjusted comp store sales increased 2.2% in line with our expectations discussed on our last quarter call, with accelerated ticket growth helping to offset the temporary replatform impact and broader pressure on lower value transactions. Our trend analysis suggests the replatform impacted total adjusted comp store sales by approximately 150 basis points. Excluding this impact, we estimate America's Best would have delivered slightly over 4% adjusted comp store sales growth. A result we are really proud of, especially in light of the current environment, and represents another proof point that our strategy to build a more profitable and durable business is taking hold. We sustain momentum with higher value customers, a key segment that we have deliberately focused our customer acquisition efforts against.

This is reflected in our positive comp growth with managed care, driven by strength in both ticket and traffic. In product categories that we have prioritized, anti-reflective coatings, transitions lenses, polycarbonate lenses, and premium progressive lenses each grew meaningfully this quarter. Importantly, our average ticket of expansion is coming from the quality of sale and consumers raising their hands to opt into premium offerings versus simply passing price through to drive growth. The bottom line benefits of our strategy are evident in our profitability. Adjusted operating margin expanded 140 basis points to 6.3% in the quarter, and adjusted EPS increased to $0.25 per share from $0.18 in the prior year quarter. Perhaps the clearest evidence that our strategy to become a more profitable company is working is reflected in our updated outlook.

Our strategic initiatives continue to perform as expected, and we are seeing the benefits in customer mix, premium product attachment, and consequently in profitability. Given this, we are meaningfully increasing our adjusted operating income outlook. As the replatform disruption faded and we gained greater insight into underlying demand patterns, it became clear that the lower value customer continues to somewhat defer their purchases, leading us to take a more measured view of the top end of our comparable store sales range. This was particularly evident at the introductory bundled offer price point. While we are never satisfied with losing transactions, those transactions are among the least profitable in our portfolio. We remain fully committed to serving these customers through our compelling entry-level offer and are confident they will continue to find great value offerings at our banners when the environment improves.

At the same time, we are seeing our strategic initiatives perform as expected as we continue to strengthen higher value customer transactions, premium attachment, and ticket growth. We believe this growth in higher value customers insulates us from the macro challenges so many other retailers are experiencing with their most budget-focused customers. This combination gives us increasing confidence in the quality of our growth and the earnings power of the business. Just as importantly, we are increasing our investment in marketing in the back half of the year to drive awareness at America's Best and Eyeglass World and support customer acquisition. For example, this fall, America's Best will have a national presence through Fox College Football Saturdays as a sponsor of Fox weather segments across Big Ten Tailgate pre-game broadcasts, all complemented by on-site activations and live broadcast integrations designed to increase awareness and engagement with the brand.

This sort of high-profile media initiative is a first ever for National Vision. As I reflect on our performance, I think it is important to take a moment to explain why the e-commerce re-platform was such a milestone achievement in the quarter. While it certainly created some short-term headwinds, it sets the organization up for growth, and it capitalized on our long-term aspirations. We now have moved from a legacy digital experience to a modern commerce platform that gives us capabilities we have never had before. The new website platform significantly enhances the customer experience, with faster, more intuitive shopping, a meaningful step up in functionality from our previous platform. This is not simply a technology upgrade, it is a foundational growth platform that we believe will drive higher conversion, deeper engagement, stronger retention, and more personalized customer relationships for years to come.

This modernization is also foundational to a world where we expect AI to play a greater role in consumer buying habits. More modern approaches to our website and unified commerce is one of the most significant opportunities in front of National Vision, and one that can reshape how customers engage with us across the full optical journey. Each year, tens of millions of users interact with our brands online, primarily starting their journey by booking an eye exam. What an opportunity we have in front of us as we can marry this level of interaction with a best-in-class commercial experience and access to incredible eye care. That is what we are creating, a unified commerce platform supported by our employed doctor model that will connect the exam, prescription, product selection, and purchase experience in a way that is more seamless, more personalized, and more relevant to each consumer.

Unified commerce gives us the opportunity to turn millions of annual consumer interactions into more connected, higher value relationships. We believe we are the first optical retailer able to combine online purchasing with in-store eye care at this scale, and we see that combination as a winning one and a key differentiator for our model going forward. Now let me turn to more near-term plans as we look to the second half of the year. First, we continue to see growth driven by durable ticket expansion, as we have seen throughout this year. We are attracting premium frame brands that now view National Vision as a strong fit, reflecting the evolution of our customer base toward higher income cohorts and the momentum we are seeing in higher value categories.

Premium product attachment continued to improve in the second quarter, supported by stronger branded frame performance, growing adoption of premium branded lenses, and superior materials, all key categories where we continue to close the gap against the overall market. Earlier this year, we outlined a path to grow premium materials and anti-reflective attachment, and we are already demonstrating meaningful progress against those ambitions. Our expanded assortment of premium and performance frame brands include Versace, Burberry, Persol, and Costa, and it is helping us attract a higher value customer to support continued premiumization. Ray-Ban continued to be a strong contributor, supported by dedicated branded presentations and new frame launches. We are also advancing product innovation through initiatives such as the launch of Nikon Eyes, Stellest lenses, and continued store segmentation. Nikon Eyes, our newest branded premium lens, is exceeding expectations with strong customer adoption, validating demand for higher value lens solutions.