National Vision(US:EYE)2022-05-10 17:00Financial Data and Key Metrics Changes - For Q1 2022, net revenue decreased by 1.2% compared to the record Q1 sales last year, with adjusted comparable store sales declining by 6.8% compared to a strong 35.8% increase in Q1 2021 [9][25] - Adjusted operating income decreased by 33% to $45 million, and adjusted diluted EPS decreased by 32% to $0.33 [30] - Compared to 2019, net revenue increased by 14.4% [25] Business Line Data and Key Metrics Changes - The company opened 15 new America's Best stores and two Eyeglass World stores, resulting in a 5% increase in store count [26] - Average ticket declined slightly year-over-year but increased sequentially from Q4 [27] - Adjusted SG&A expense as a percentage of net revenue increased by 110 basis points due to deleveraging of advertising, store payroll, and occupancy expenses [29] Market Data and Key Metrics Changes - The company experienced solid growth in sales tied to vision insurance, as insured consumers were less deterred from shopping in a tight economy [22] - Comparable store sales related to managed care grew in the positive low single digits [23] Company Strategy and Development Direction - The company is focused on overcoming current headwinds by improving exam capacity through recruitment and retention actions, including the acceleration of remote medicine initiatives [10][18] - The company plans to open at least 80 stores in 2022, with a solid pipeline for future locations [20] - The pricing strategy was adjusted for America's Best and Eyeglass World to remain competitive in the current inflationary environment [12][62] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the current challenges are temporary and expressed confidence in the long-term health of the business model [10][24] - The updated fiscal 2022 outlook reflects expected impacts from macroeconomic factors, projecting net revenue between $2.01 billion and $2.07 billion [36][38] - Management noted that the operating environment is uncertain, and they have taken a conservative posture in their outlook [37] Other Important Information - The company reported a strong cash position of approximately $315 million and total liquidity exceeding $600 million [31] - The company is committed to investing in key growth initiatives despite current challenges [40] Q&A Session All Questions and Answers Question: Can you quantify how much of the challenge is associated with macro pressure on the lower-income consumer versus capacity constraints? - Management indicated that the challenges were somewhat balanced between economic factors and optometrist capacity factors, with a notable slowdown in consumer demand, especially among lower-income uninsured consumers [54][55] Question: To what degree does the pressure on the availability of optometrists persist, and how will you manage through that? - Management stated that they have managed through optometrist wage pressure in the past and will continue to offset these pressures across other areas of the P&L [56][58] Question: Can you talk about the added gross margin pressure versus initial expectations? - Management noted that there was some deleveraging of fixed costs within gross margin, which contributed to the added pressure [61] Question: Why is now the right time to change the America's Best Signature offer? - Management explained that the decision to raise prices had been under review for a while, and they believe the market gap will widen further in an inflationary environment [62] Question: Can you discuss the exam constraints and how many optometrists are currently at capacity? - Management clarified that the exam capacity issue is due to a lack of available optometrists to meet consumer demand, and they expect capacity to improve with record hiring and the rollout of remote medicine [71][72] Question: What are the trends in the legacy segment? - Management indicated that the legacy group performed better than America's Best and Eyeglass World, with positive comps noted in certain segments [88]