UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________
FORM 10-Q
_______________________________________________________________________
For the quarterly period ended June 28, 2025
OR
For the transition period from to
Commission file number 001-38257
_______________________________________________________________________
(Exact name of registrant as specified in its charter)
_______________________________________________________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Zip Code) | ||||||||
| (Address of principal executive offices) | ||||||||
(770 ) 822‑3600
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
_______________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at July 25, 2025 | |||||||
| Common stock, $0.01 par value | ||||||||
NATIONAL VISION HOLDINGS, INC. AND SUBSIDIARIES
Table of Contents
| Page | |||||||||||
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts included in this Form 10-Q, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends and other information, may be forward-looking statements.
Words such as “believes,” “expects,” “may,” “will,” “should,” “could,” “seeks,” “intends,” “plans,” “estimates,” “anticipates,” or variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts or guarantees of future performance and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.
There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Form 10-Q. Such risks, uncertainties and other important factors that could cause actual results to differ include, among others, the risks, uncertainties and factors set forth in Part I, Item 1A - “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024 (the “2024 Annual Report on Form 10-K”), as filed with the Securities and Exchange Commission (the “SEC”), as such risk factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov, and also include, but are not limited to, market volatility, an overall decline in the health of the economy, global macroeconomic conditions and other factors that may affect consumer spending or behavior; our ability to successfully implement our transformation initiatives, or anticipate the impact of important strategic initiatives; our ability to recruit and retain vision care professionals for in-store roles or to provide remote care offerings; our ability to compete in the highly competitive optical retail industry; the success of our marketing, advertising and promotional efforts; our ability to maintain, protect, and enhance the value of our owned brands; our ability to open and operate new stores (including as a result of store conversions) in a timely and cost-effective manner or to successfully enter new markets; our ability to increase sales in existing stores and to successfully reinvest in existing stores; our ability to successfully implement our pricing strategies; changes in the cost of inputs, and factors such as wage rate increases, inflation, cost increases, increases in the price of raw materials and energy prices significant capital requirements to fund our expanding business including updating our Enterprise Resource Planning (“ERP”) and Customer Relationship Management (“CRM”), and other technological, systems and capabilities; the potential for our growth strategy to strain our existing resources and cause the performance of our existing stores to suffer; risks associated with leasing substantial amounts of space, including future increases in occupancy costs; our ability to successfully manage the distinct risks faced by our e-commerce and omni-channel business; our ability to retain our existing senior management team or attract qualified new personnel; seasonal fluctuations in our operating results and inventory levels fluctuate; the potential impacts of catastrophic events, including changing climate and weather patterns leading to severe weather and natural disasters; the potential for certain technological advances, greater availability of, or increased consumer preferences for, vision correction alternatives to prescription eyeglasses or contact lenses, or future drug development for the correction of vision-related problems to reduce the demand for our products; our ability to successfully manage our inventory balances and inventory shrinkage; the potential for the loss of, or disruption in the operations of, one or more of our distribution centers or optical laboratories, which would impact our ability to process and fulfill customer orders and deliver our products in a timely manner, or at all, or result in quality issues; the performance of our Host brands and our ability to maintain or extend our operating relationships with our Host partners impacts resulting from the termination of our partnership with Walmart; our investments in technological innovators in the optical retail industry, including artificial intelligence; sustainability issues, including those related to climate change; our ability to develop, maintain and extend relationships with managed vision care companies, vision insurance providers and other third-party payors; risks associated with vendors from whom our products are sourced and our dependence on a limited number of suppliers; the impact of any significant failure, inadequacy, interruption or security breach affecting our information technology systems, or those of our vendors; our reliance on third-party coverage and reimbursement, including government programs, for an increasing portion of our revenues; our ability to comply with state, local and federal vision care and healthcare laws and regulations, as well as managed vision care laws and regulations; liability stemming from rapidly changing and increasingly stringent laws, regulations, contractual obligations, and industry standards relating to privacy, data security and data protection; product liability, product recall or personal injury issues; our ability to comply with laws, regulations and enforcement activities or changes in statutory, regulatory, accounting and other legal requirements; the outcome of legal proceedings relating to our business operations; the protection and validity
3
of our intellectual property; risks related to our indebtedness; changes in interest rates; restrictions in our credit agreement that limit our flexibility in operating our business; and risks related to owning our common stock.
We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this Form 10-Q apply only as of the date of this Form 10-Q or as of the date they were made and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
All references to “we,” “us,” “our,” or the “Company” in this Form 10-Q mean National Vision Holdings, Inc. and its subsidiaries, unless the context otherwise requires. References to “eye care practitioners” in this Form 10-Q mean optometrists and ophthalmologists and references to “vision care professionals” mean optometrists (including optometrists employed by us or by professional corporations owned by eye care practitioners with which we have arrangements) and opticians.
Website Disclosure
We use our website www.nationalvision.com as a channel of distribution of Company information. Financial and other important information regarding the Company is routinely accessible through and posted on our website. Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about National Vision Holdings, Inc. when you enroll your e-mail address by visiting the “Email Alerts” page of the Investor Resources section of our website at www.nationalvision.com/investors. The contents of our website are not, however, a part of this Form 10-Q.
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
National Vision Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
In thousands, except par value | As of June 28, 2025 | As of December 28, 2024 | |||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Inventories, net | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Noncurrent assets: | |||||||||||
| Property and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Trademarks and trade names | |||||||||||
| Other intangible assets, net | |||||||||||
| Right of use assets | |||||||||||
| Other assets | |||||||||||
| Total noncurrent assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Other payables and accrued expenses | |||||||||||
| Unearned revenue | |||||||||||
| Deferred revenue | |||||||||||
| Current maturities of long-term debt and finance lease obligations | |||||||||||
| Current operating lease obligations | |||||||||||
| Total current liabilities | |||||||||||
| Noncurrent liabilities: | |||||||||||
| Long-term debt and finance lease obligations, less current portion and debt discount | |||||||||||
| Noncurrent operating lease obligations | |||||||||||
| Deferred revenue | |||||||||||
| Other liabilities | |||||||||||
| Deferred income taxes, net | |||||||||||
| Total noncurrent liabilities | |||||||||||
| Commitments and contingencies (See Note 8) | |||||||||||
| Stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
Treasury stock, at cost; | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
National Vision Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
In thousands, except per share amounts | June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Net product sales | $ | $ | $ | $ | |||||||||||||||||||
| Net sales of services and plans | |||||||||||||||||||||||
| Total net revenue | |||||||||||||||||||||||
| Costs applicable to revenue (exclusive of depreciation and amortization): | |||||||||||||||||||||||
| Products | |||||||||||||||||||||||
| Services and plans | |||||||||||||||||||||||
| Total costs applicable to revenue | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Asset impairment | |||||||||||||||||||||||
| Other expense (income), net | ( | ( | ( | ( | |||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
Income from operations | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
Earnings (loss) from continuing operations before income taxes | ( | ||||||||||||||||||||||
Income tax provision (benefit) | ( | ||||||||||||||||||||||
Income (loss) from continuing operations | ( | ||||||||||||||||||||||
| Loss from discontinued operations, net of tax (See Note 2) | ( | ( | |||||||||||||||||||||
Net income (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
Basic earnings (loss) per share: | |||||||||||||||||||||||
| Continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
| Discontinued operations | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Total | $ | $ | ( | $ | $ | ||||||||||||||||||
Diluted earnings (loss) per share: | |||||||||||||||||||||||
| Continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
| Discontinued operations | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Total | $ | $ | ( | $ | $ | ||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||
Net income (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
| Unrealized gain on hedge instruments | |||||||||||||||||||||||
| Tax provision of unrealized gain on hedge instruments | |||||||||||||||||||||||
Comprehensive income (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
National Vision Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
Three and Six Months Ended June 28, 2025 | |||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||
| In thousands | Shares | Amount | |||||||||||||||||||||
Balances at December 28, 2024 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||
Issuance of common stock (1) | — | — | — | ||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | ||||||||||||||||||
| Purchase of treasury stock | ( | — | — | — | — | ( | ( | ||||||||||||||||
| Unrealized gain on hedge instruments, net of tax | — | — | — | — | — | — | |||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||
Balances at March 29, 2025 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||
Issuance of common stock (1) | — | — | — | ||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | ||||||||||||||||||
| Purchase of treasury stock | ( | — | — | — | — | ( | ( | ||||||||||||||||
| Unrealized gain on hedge instruments, net of tax | — | — | — | — | — | — | |||||||||||||||||
| Net income (loss) | — | — | — | — | — | ||||||||||||||||||
Balances at June 28, 2025 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||
(1) Consists primarily of the vesting of shares issued under the Company’s stock incentive plans and Associate Share Purchase Plan. | |||||||||||||||||||||||
Three and Six Months Ended June 29, 2024 | |||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||
| In thousands | Shares | Amount | |||||||||||||||||||||
Balances at December 30, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||
Issuance of common stock (1) | — | — | — | ||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | ||||||||||||||||||
| Purchase of treasury stock | ( | — | — | — | — | ( | ( | ||||||||||||||||
| Unrealized gain on hedge instruments, net of tax | — | — | — | — | — | ||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||
Balances at March 30, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||
Issuance of common stock (1) | — | — | — | ||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | ||||||||||||||||||
| Purchase of treasury stock | ( | — | — | — | — | ( | ( | ||||||||||||||||
| Unrealized gain on hedge instruments, net of tax | — | — | — | — | — | ||||||||||||||||||
Net income (loss) | — | — | — | — | ( | — | ( | ||||||||||||||||
Balances at June 29, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||
(1) Consists primarily of the vesting of shares issued under the Company’s stock incentive plans and Associate Share Purchase Plan. | |||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
National Vision Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Six Months Ended | |||||||||||
| In thousands | June 28, 2025 | June 29, 2024 | |||||||||
| Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization of debt discount and deferred financing costs | |||||||||||
| Amortization of cloud computing implementation costs | |||||||||||
| Asset impairment | |||||||||||
| Deferred income tax expense (benefit) | ( | ( | |||||||||
| Stock-based compensation expense | |||||||||||
(Gains) on change in fair value of derivatives | ( | ||||||||||
| Inventory adjustments | |||||||||||
| Other | ( | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | |||||||||||
| Inventories | |||||||||||
| Operating lease right of use assets and lease liabilities | ( | ( | |||||||||
| Other assets | ( | ||||||||||
| Accounts payable | ( | ||||||||||
| Deferred and unearned revenue | ( | ||||||||||
| Other liabilities | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of property and equipment | ( | ( | |||||||||
| Other | ( | ||||||||||
| Net cash used for investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repayments on long-term debt | ( | ( | |||||||||
| Borrowings on long-term debt | |||||||||||
| Proceeds from issuance of common stock | |||||||||||
| Purchase of treasury stock | ( | ( | |||||||||
| Payments on finance lease obligations | ( | ( | |||||||||
| Net cash used for financing activities | ( | ( | |||||||||
| Net change in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | |||||||||||
Cash, cash equivalents and restricted cash, end of period (See Note 4) | $ | $ | |||||||||
| Supplemental cash flow disclosure information: | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
Cash paid for taxes | $ | $ | |||||||||
| Capital expenditures accrued at the end of the period | $ | $ | |||||||||
| Operating cash outflows - operating leases | $ | $ | |||||||||
| Right of use assets acquired under operating leases | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
National Vision Holdings, Inc. and Subsidiaries
Index to Notes to Condensed Consolidated Financial Statements
| Page | |||||
9
National Vision Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Description of Business and Basis of Presentation
Nature of Operations
National Vision Holdings, Inc. (“NVHI,” the “Company,” “we,” “our,” or “us”) is a holding company whose operating subsidiaries include its indirect wholly-owned subsidiary, National Vision, Inc. (“NVI”) and NVI’s wholly-owned subsidiaries. We are a leading value retailer of eyeglasses and contact lenses in the United States (the “U.S.”). We operated 1,240 and 1,240 retail optical locations in the U.S. and its territories as of June 28, 2025 and December 28, 2024, respectively, through our four store brands, including America’s Best Contacts and Eyeglasses (“America’s Best”), Eyeglass World, Vista Optical locations on select U.S. Army/Air Force military bases (“Military”) and within select Fred Meyer stores.
Basis of Presentation and Principles of Consolidation
We prepare our unaudited interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and, therefore, do not include all information and disclosures required by U.S. GAAP for complete consolidated financial statements. The Condensed Consolidated Balance Sheet as of December 28, 2024 has been derived from the audited consolidated balance sheet for the fiscal year then ended. These condensed consolidated financial statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary to present fairly the Company’s consolidated results of the interim period.
Certain information and disclosures normally included in our annual consolidated financial statements have been condensed or omitted; however, we believe that the disclosures included herein are sufficient for a fair presentation of the information presented. These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the fiscal year ended December 28, 2024 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2025 (the “2024 Annual Report on Form 10-K.”) The Company’s significant accounting policies are set forth in Note 1. within those consolidated financial statements. We use the same accounting policies in preparing interim condensed consolidated financial information and annual consolidated financial statements. There were no changes to our significant accounting policies during the six months ended June 28, 2025.
The condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Refer to Part II. Item 8. Note 2. “Discontinued Operations” of the 2024 Annual Report on Form 10-K for more information on discontinued operations.
Fiscal Year
Our fiscal year consists of 52 or 53 weeks ending on the Saturday closest to December 31. Fiscal year 2025 contains 53 weeks and will end on January 3, 2026. All three and six month periods presented herein contain 13 and 26 weeks, respectively. All references to years and quarters relate to fiscal periods rather than calendar periods.
Seasonality
The consolidated results of operations for the three and six months ended June 28, 2025 and June 29, 2024, are not necessarily indicative of the results to be expected for the full fiscal year due to seasonality and uncertainty of general economic conditions that may impact our key markets. Historically, our business has realized a higher portion of net revenue, income from operations, and cash flows from operations in the first half of the year, and a lower portion of net revenue, income from operations, and cash flows from operations in the fourth fiscal quarter. The first half seasonality is attributable primarily to the timing of our customers’ personal income tax refunds and annual health insurance program start/reset periods. Seasonality related to fourth quarter holiday spending by retail customers generally does not impact our business. Our quarterly consolidated results generally may also be affected by the timing of new store openings, store closings, and certain holidays.
CARES Act
Accounts receivable, net on the Condensed Consolidated Balance Sheets as of June 28, 2025 and December 28, 2024 includes $9.0
10
Accounts Receivable
Allowance for credit loss was $(0.2 ) million and $(0.2 ) million as of June 28, 2025 and December 28, 2024, respectively.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Lease income
Rental income primarily from sub-leasing store space to independent optometrists, which is presented in selling, general and administrative “SG&A” expenses in the Company’s Condensed Consolidated Statements of Operations, was $0.3 million and $0.7 million for the three and six months ended June 28, 2025 compared to $0.3 million and $0.7 million for the three and six months ended and June 29, 2024.
Stock-Based Compensation
During the six months ended June 28, 2025, we granted performance stock units to certain employees. The number of shares issued at the end of the three-year performance period will be determined by the level of achievement of predefined performance goals, including adjusted operating income, return on invested capital and relative total shareholder return versus a peer group. We recognize compensation expense on performance stock units ratably over the requisite performance period of the award to the extent management views the performance goals as probable of attainment. We recognize compensation expense for the fair value of the relative total shareholder return versus the peer group component over the requisite service period of such awards using a Monte Carlo simulation.
Asset Impairment
Impairments of tangible long-lived store assets and ROU assets were primarily driven by lower than projected customer sales volume and profitability in certain stores and other entity-specific assumptions. We considered multiple factors including, but not limited to: forecasted scenarios related to store performance and the likelihood that these scenarios would be ultimately realized; and the remaining useful lives of the assets.
Income Taxes
For the first and second quarters of 2025, the Company’s quarterly provision (benefit) for income taxes was calculated using the annualized effective tax rate (“AETR”) method, which applies an estimated annual effective tax rate to pre-tax income or loss. For the three and six months ended June 29, 2024, the Company calculated the provision (benefit) for income taxes using a discrete effective tax rate (“ETR”) method. The Company determined that due to the fact that small changes in the Company’s estimated pretax income or loss would result in significant changes in the estimated AETR, the AETR method would not provide a reliable estimate for the three and six months ended June 29, 2024.
Our effective tax rate for the three months ended June 28, 2025 was 28.7 %, reflecting our statutory federal and state rate of 25.2 % and other effects of other permanent items. Our effective tax rate for the six months ended June 28, 2025 was 32.2 %, reflecting our statutory federal and state rate of 25.2 %, discrete effects of permanent adjustments related to equity compensation and other effects of permanent items.
Our effective tax rate for the three months ended June 29, 2024 was 60.0 %, reflecting our statutory federal and state rate of 25.2 %, tax impacts of consolidated VIEs and effects of other permanent items. Our effective tax rate for the six months ended June 29, 2024 was 35.4 %, reflecting our statutory federal and state rate of 25.2 %, non-deductible compensation expense, tax impacts of consolidated VIEs and other permanent items.
Subsequent to the date of the financial statements, the One Big Beautiful Bill Act (“OBBBA”) was enacted on July 4, 2025. The Company continues to evaluate the impact of this legislation on its financial position. The OBBBA is not currently expected to materially impact the Company’s effective tax rate in the current fiscal year.
11
Investments
In the second quarter of fiscal year 2023, we completed an investment in the equity of an entity specializing in applying artificial intelligence-powered screening and diagnostic tools to retinal imaging. As of June 28, 2025, we have invested a total of $3.3 million in the equity of the entity. The investment is valued at cost. In addition, we completed an investment in a convertible promissory note issued by this entity. Refer to Note 5. “Fair Value Measurement” for more information on the promissory note. These investments are recognized in Other assets in the Condensed Consolidated Balance Sheets and in Other in the investing section of the Condensed Consolidated Statements of Cash Flows.
Discontinued Operations
In accordance with ASC 205-20 “Presentation of Financial Statements: Discontinued Operations,” a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. In the period in which the component meets held-for-sale or discontinued operations criteria, the major current assets, non-current assets, current liabilities, and non-current liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations.
Future Adoption of Accounting Pronouncements
Income taxes. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and for interim periods within fiscal years beginning after December 15, 2025. The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.
Expense Disaggregation Disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income (Topic 220-40): Expense Disaggregation Disclosures (“ASU 2024-03”). This update requires, among other things, more detailed disclosure about types of expenses in commonly presented expense captions such as cost of sales and SG&A, and is intended to improve the disclosures about an entity’s expenses including purchases of inventory, employee compensation, depreciation and amortization. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.
Induced Conversions of Convertible Debt Instruments. In November 2024, FASB issued ASU 2024-04, Debt-Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion or extinguishment of convertible debt. This guidance is effective for fiscal years beginning after December 15, 2025, and interim periods within those annual reporting periods, with early and retrospective adoption permitted. The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.
Credit Losses for Accounts Receivable and Contract Assets. In July 2025, FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update provides a practical expedient which allows an entity to assume that, for purposes of estimating expected credit losses related to an asset, current conditions as of a balance sheet date do not change for the remaining life of the asset. This guidance is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.
The FASB issued other accounting guidance during the period that is not currently applicable or expected to have a material impact on the Company’s financial statements, and therefore, is not described above.
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2. Discontinued Operations
We recorded a net expense of $2.9 million and $5.7 million during the three and six months ended June 29, 2024, respectively, associated with our discontinued operations, which consisted of severance benefits, early termination fees, and other exit-related costs. These charges were recorded in both Selling, general, and administrative expenses and Costs applicable to revenue for discontinued operations. The plan has been substantially completed and we do not anticipate additional material costs related to this plan.
The following table presents loss from discontinued operations, net of tax:
Three Months Ended | Six Months Ended | |||||||||||||
| In thousands | June 29, 2024 | June 29, 2024 | ||||||||||||
| Revenue: | ||||||||||||||
| Net product sales | $ | $ | ||||||||||||
| Net sales of services and plans | ||||||||||||||
| Total net revenue | ||||||||||||||
| Costs applicable to revenue (exclusive of depreciation and amortization): | ||||||||||||||
| Products | ||||||||||||||
| Services and plans | ||||||||||||||
| Total costs applicable to revenue | ||||||||||||||
| Operating expenses: | ||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Other expense (income), net | ( | ( | ||||||||||||
| Total operating expenses | ||||||||||||||
Loss from discontinued operations before income taxes | ( | ( | ||||||||||||
Income tax (benefit) from discontinued operations | ( | ( | ||||||||||||
| Loss from discontinued operations, net of tax | $ | ( | $ | ( | ||||||||||
The following table presents significant non-cash items and cash flows from investing activities related to discontinued operations:
| Six Months Ended | |||||
In thousands | June 29, 2024 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||
| Depreciation and amortization | |||||
| Stock-based compensation expense | |||||
| Inventory adjustments | |||||
Other | ( | ||||
| Cash flows from investing activities: | |||||
| Other | |||||
3. Severance Benefits
During the six months ended June 28, 2025, we recognized $2.1 million related to severance benefits for certain associates in the Corporate and other category within Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income. These charges were recognized in accordance with FASB guidance on employers’ accounting for postemployment benefits and guidance on accounting for costs associated with exit or disposal activities, as appropriate.
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4. Details of Certain Balance Sheet Accounts
The following table provides a reconciliation of cash and cash equivalents reported within the Condensed Consolidated Balance sheets to the total of Cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statement of Cash Flows:
| Six Months Ended | |||||||||||
| In thousands | June 28, 2025 | June 29, 2024 | |||||||||
| Cash, cash equivalents and restricted cash: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Restricted cash included in other assets (1) | |||||||||||
| $ | $ | ||||||||||
(1) Restricted cash relates to regulatory requirements associated with our FirstSight operations. | |||||||||||
The following tables provide additional details of Inventories, net as of the dates shown below:
| In thousands | As of June 28, 2025 | As of December 28, 2024 | |||||||||
| Inventories, net: | |||||||||||
Raw materials and work in process (1) | $ | $ | |||||||||
| Finished goods | |||||||||||
| $ | $ | ||||||||||
(1)Due to the immaterial amount of estimated work in process and the short lead times for the conversion of raw materials to finished goods, the Company does not separately present raw materials and work in process. | |||||||||||
5. Fair Value Measurement
Recurring fair value measurements
Convertible Promissory Note
On December 17, 2024, the Company purchased $1.3 million principal amount of a convertible promissory note issued by a private company. During the three months ended June 29, 2024, the Company purchased an additional $0.8 million in the same instrument. As of June 28, 2025, given the lack of material underlying changes we estimated the fair value of the convertible promissory note to be $2.1 million. Refer to Note 1. for information on other investments in this entity.
Non-recurring fair value measurements
Long-lived Store and ROU Store Assets
We recognized impairments of $0.5 million during the six months ended June 28, 2025, and $3.5 million and $4.0 million during the three and six months ended June 29, 2024, respectively, primarily related to our long-lived tangible store assets and ROU assets. A decrease in the estimated cash flows would lead to a lower fair value measurement, as would an increase in the discount rate. These non-recurring fair value measurements are classified as Level 3 measurements in the fair value hierarchy.
The cash flows used in estimating fair value were discounted using a market rate of 10.5 % and 11.5 % during the six months ended June 28, 2025 and June 29, 2024, respectively. The estimated remaining fair value of the store assets impaired during the six months ended June 28, 2025 and June 29, 2024 was $0.5 million and $0.5 million, respectively. Substantially all of the remaining fair value of the impaired store assets represents the fair value of ROU assets.
Additional fair value information
Term Loan A and Revolving Loans
Since the borrowings under first lien term loan (“Term Loan A”) and revolving credit loans (the “Revolving Loans”) utilize variable interest rate setting mechanisms such as Term SOFR, the fair values of these borrowings are deemed to approximate the carrying values. We also considered the effect of our own credit risk on the fair values of Term Loan A and Revolving Loans. Refer to Note 6. “Debt” for more information on these borrowings.
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6. Debt
Our debt consists of the following:
| In thousands | As of June 28, 2025 | As of December 28, 2024 | |||||||||
| 2025 Notes, due May 15, 2025 | $ | $ | |||||||||
| Term Loan A, due June 13, 2028 | |||||||||||
Revolving Loans, due June 13, 2028 (aggregate principal amount $ | |||||||||||
| Debt before unamortized discount and issuance costs | |||||||||||
| Unamortized discount and issuance costs - 2025 Notes | ( | ||||||||||
| Unamortized discount and issuance costs - Term Loan A | ( | ( | |||||||||
| Debt less debt discount and issuance costs | |||||||||||
| Less current maturities | ( | ( | |||||||||
| Long-term debt - noncurrent portion | |||||||||||
| Finance lease obligations | |||||||||||
| Less current maturities | ( | ( | |||||||||
| Long-term debt and finance lease obligations, less current portion, discount, and issuance costs | $ | $ | |||||||||
Scheduled annual maturities of debt are as follows:
| Fiscal Period | In thousands | |||||||
| 2025 - remainder of fiscal year | $ | |||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| Thereafter | ||||||||
| $ | ||||||||
We were in compliance with all covenants related to our debt as of June 28, 2025.
2025 Notes
During the three months ended June 28, 2025, the Company fully repaid the 2.50 % convertible senior notes due on May 15, 2025 (“2025 Notes”), of which there was $84.8 million outstanding, at maturity for $85.8 million, inclusive of $1.0 million of accrued interest.
We recognized the following in Interest expense, net related to the 2025 Notes:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| In thousands | June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||
| Contractual interest expense | $ | $ | $ | $ | |||||||||||||||||||
| Amortization of issuance costs | $ | $ | $ | $ | |||||||||||||||||||
7. Revenue from Contracts with Customers
The majority of our revenues are recognized either at the point of sale or upon delivery and customer acceptance. We obtain consideration from our customers at the time of sale in cash, credit card, or on account with managed care payors having terms generally between 14 and 120 days, with most paying within 90 days. For sales of in-store non-prescription eyewear and related accessories, and paid eye exams, we recognize revenue at the point of sale. Our point in time revenues include 1) retail sales of prescription and non-prescription eyewear, contact lenses and related accessories to retail customers (including those covered by managed care) and 2) eye exams. Revenues recognized over time primarily include product protection plans (i.e. warranties) and eye care club memberships.
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The following disaggregation of revenues depicts our revenue based on the timing of revenue recognition:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| In thousands | June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||
| Revenues recognized at a point in time | $ | $ | $ | $ | |||||||||||||||||||
| Revenues recognized over time | |||||||||||||||||||||||
| Total net revenue | $ | $ | $ | $ | |||||||||||||||||||
Refer to Note 9. “Segment Reporting” for the Company’s disaggregation of net revenue. As our operating segments are aligned by similar economic factors, trends and customers, the reportable segment view best depicts how the nature, amount and uncertainty of revenue and cash flows are affected by economic factors.
We record reductions in revenue for estimated price concessions granted to managed care providers. The Company considers its revenue from managed care customers to include variable consideration and estimates such amounts associated with managed care customer revenues using the history of concessions provided and cash receipts from managed care providers. We reduced our net revenue for variable consideration of $4.5 million and $3.1 million during the three months ended June 28, 2025 and June 29, 2024, respectively, and $7.7 million and $7.0 million during the six months ended June 28, 2025 and June 29, 2024, respectively.
Unsatisfied Performance Obligations (Contract Liabilities)
During the three months ended June 28, 2025 and June 29, 2024, we recognized $22.9 million and $23.1 million, respectively, of deferred revenues outstanding at the beginning of each respective period. During the six months ended June 28, 2025 and June 29, 2024, we recognized $40.7 million and $41.2 million, respectively, of deferred revenues outstanding at the beginning of each respective period.
Our deferred revenue balance as of June 28, 2025 and December 28, 2024 was $87.5 million and $84.6 million, respectively. We expect future revenue recognition of the June 28, 2025 balance of $42.1 million, $32.9 million, $11.1 million and $1.4 million in fiscal years 2025, 2026, 2027 and 2028, respectively.
8. Commitments and Contingencies
Legal Proceedings
From time to time, the Company is involved in various legal proceedings incidental to its business. Because of the nature and inherent uncertainties of litigation, we cannot predict with certainty the ultimate resolution of these actions and, should the outcome of these actions be unfavorable, the Company’s business, financial position, results of operations or cash flows could be materially and adversely affected.
The Company reviews the status of its legal proceedings and records a provision for a liability when it is considered probable that a liability has been incurred and the amount of the loss can be reasonably estimated. This review is updated periodically as additional information becomes available. If either or both of the criteria are not met, we reassess whether there is at least a reasonable possibility that a loss, or additional losses, may be incurred. If there is a reasonable possibility that a loss may be incurred, we disclose the estimate of the amount of the loss or range of losses, or that an estimate of loss cannot be made. The Company expenses its legal fees as incurred.
We are currently and may in the future become subject to various claims and pending or threatened lawsuits in the ordinary course of our business.
On September 23, 2022, we were served with notice of a lawsuit filed by a former employee in California state court alleging, on behalf of a proposed class of employees, several violations of California wage and hour laws. On December 9, 2022, the case was removed to the federal District Court for the Northern District of California. On January 18, 2023, we were served with a related representative action filed in California state court pursuant to California’s Private Attorneys General Act. We filed an answer to this action on February 17, 2023. On September 29, 2023, the state court set the PAGA action for trial on October 7, 2024. The parties attended mediation on March 11, 2024, but a resolution of the matter was not reached at that time. Following mediation, the parties agreed to a settlement of all claims alleged by the named plaintiff on behalf of himself and all putative class members and other aggrieved employees. The Company will pay $4.5 million for the gross settlement fund in connection with the settlement. The settlement is subject to approval by the court following a fairness hearing. The parties agreed to move the federal and state court actions to state court for review of the settlement terms agreed to by the parties. The Sacramento County state court entered preliminary approval of the settlement on March 21, 2025, and scheduled a hearing for final approval. On July 25, 2025, the court issued final approval of the settlement and, absent any appeals of the court’s final approval or other legal challenges, the settlement agreement is effective and the Company will issue payment by October 7, 2025.
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On June 6, 2023, the Company was served with notice of a former employee’s intention to file a representative action against the Company pursuant to California’s Private Attorneys General Act based on alleged violations of California’s wage and hour laws. On June 22, 2023, the Company was served with a related lawsuit filed by the former employee in California state court alleging, on behalf of a proposed class of employees, violations of California wage and hour laws. On July 24, 2023, the Company filed its answer and a notice of removal of the case to the federal District Court for the Southern District of California. On July 28, 2023, the Company filed a Notice of Related Cases, seeking for both the case currently pending in the Northern District of California and described in the paragraph above and this case to be assigned to the same Judge/Magistrate Judge in an effort to save judicial effort and avoid duplication of labor. On August 15, 2023, the parties filed a stipulation to stay the case in the Southern District of California pending the resolution of the lawsuit pending in the Northern District of California. On August 21, 2023, the court entered an Order to Show Cause why the action should not be either dismissed or transferred to the federal court for the Northern District of California. Following the parties’ submission of their respective responses, the court dismissed the action without prejudice on September 11, 2023. The plaintiff retains his ability to pursue a PAGA action in state court pursuant to the June 6, 2023, notice. On January 22, 2024, the plaintiff filed a demand for arbitration of the claims set forth in the Complaint previously filed in state court in June 2023. The Company filed its response to the arbitration demand, the arbitrator conducted a scheduling conference on April 4, 2025, and the parties commenced the formal discovery process. On April 17, 2025, the Company served a Section 998 offer of compromise in the amount of $60,000 , which was accepted by the plaintiff, and the arbitrator closed its file on June 4, 2025.
On January 27, 2023, a purported class action complaint was filed in federal court in the Northern District of Georgia against the Company and two of the Company’s officers (the “Securities Class Action”). The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 thereunder, for materially false and misleading statements made between May 2021 and May 2022. The complaint seeks unspecified damages as well as equitable relief. On March 28, 2023, the original plaintiff, City of Southfield General Employees Retirement System, and a new plaintiff, International Union of Operating Engineers, Local No. 793, Members Pension Benefit Trust of Ontario, filed a lead plaintiff motion, seeking to be appointed co-lead plaintiffs. On April 3, 2023, the Company along with its named officers filed a motion to dismiss the complaint. On May 19, 2023, the court granted the lead plaintiff motion. On June 30, 2023, the plaintiffs filed an amended complaint, which added a claim under Section 20A of the Exchange Act and extended the alleged class period to February 28, 2023. On August 21, 2023, the Company filed a motion to dismiss the amended complaint. The plaintiffs filed their response in opposition to this motion on October 5, 2023. On March 30, 2024, the court granted the Company’s motion and dismissed the amended complaint with prejudice. On April 29, 2024, the plaintiffs filed a motion for reconsideration of the order granting the motion to dismiss. The Company and named officers filed a response in opposition to the plaintiffs’ motion for reconsideration on May 13, 2024, and the plaintiffs then filed a reply in support of their motion on May 28, 2024. The court entered an order denying the motion for reconsideration on March 24, 2025, and no appeal was filed by the plaintiff.
9. Segment Reporting
The Company’s operating segments were determined on the same basis as used by the Chief Operating Decision Maker (“CODM”) to evaluate performance internally. Our CODM is our chief executive officer. Our operations consist primarily of one reportable segment:
•Owned & Host store brands - Our owned brands consist of our America’s Best and Eyeglass World operating segments. In America’s Best stores, vision care services are provided by optometrists employed either by us or by independent professional corporations. Eyeglass World locations offer eye exams, primarily provided by independent optometrists, and have on-site laboratories. Our Host operating segments consist of Military and Fred Meyer. These brands provide eye exams principally by independent optometrists in nearly all locations. We have aggregated our America’s Best, Eyeglass World, Military and Fred Meyer operating segments into a single reportable segment due to similar economic characteristics and similarity of the nature of products and services, production processes, class of customers, regulatory environment and distribution methods of those brands.
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In addition to the single reportable segment identified above, we have two other operating segments: our dedicated e-commerce website and FirstSight. Our dedicated e-commerce website was previously managed by AC Lens and was transitioned to NVI in fiscal year 2024; the continuing operations for all periods presented reflect the results of this website. FirstSight sells single-service health plans in connection with the operations of America’s Best operations in California. The results of these two segments are presented separately from our reportable segment and do not meet the quantitative thresholds to be reportable segments.
The “corporate and other” category represents corporate overhead support expenses as well certain non-cash charges, including asset impairment, stock-based compensation expense, and the impact of certain events, gains, or losses excluded from the assessment of segment performance.
Other adjustments to reportable segment results represent adjustments necessary for the presentation of consolidated financial results in accordance with U.S. GAAP, specifically effects of the change in unearned and deferred revenue during the period.
Our former Legacy reportable segment and the majority of our former AC Lens operations as well as related effects of unearned and deferred revenue are classified as discontinued operations. Refer to Part II. Item 8. Note 2. “Discontinued Operations” of the 2024 Annual Report on Form 10-K for information related to our discontinued operations.
The operating segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly provided to, and reviewed by, our CODM to allocate resources and assess performance. The Company considers each of our brands to be an operating segment and has further concluded that presenting the results of our reportable segment provides meaningful information consistent with the objectives of ASC 280, Segment Reporting.
The CODM uses segment EBITDA, calculated as net revenue, less costs applicable to revenue, less SG&A expenses, to evaluate the performance, and make decisions about the allocation of resources to segments predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances on a monthly and quarterly basis when making decisions about the allocation of resources to each segment. Consistent with what the CODM reviews, depreciation and amortization and interest expense (income), net are excluded from segment EBITDA.
There are no differences between the measurement of our reportable segment’s assets and consolidated assets. There have been no changes from prior periods in the measurement methods used to determine reportable segment profit or loss, and there have been no asymmetrical allocations to segments.
Reportable segment information is presented on the same basis as our consolidated financial statements, except for net revenue and associated costs applicable to revenue, which are presented on a cash basis, including point of sales for managed care payors and excluding the effects of unearned and deferred revenue, consistent with what the CODM regularly reviews. Asset information is not included in the following summary since the CODM does not regularly review such information for the reportable segment.
The following table is a summary of certain financial data for our Owned & Host reportable segment, and other categories, and includes a reconciliation to the Company’s consolidated earnings (loss) from continuing operations before income taxes.
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Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| In thousands | |||||||||||||||||||||||
| Owned & Host revenue: | |||||||||||||||||||||||
| Net product sales | $ | $ | $ | $ | |||||||||||||||||||
| Net sales of services and plans | |||||||||||||||||||||||
| Total Owned & Host revenue | |||||||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Owned & Host costs applicable to revenue (exclusive of depreciation and amortization) | |||||||||||||||||||||||
| Cost of products | |||||||||||||||||||||||
| Cost of services and plans | |||||||||||||||||||||||
| Owned & Host SG&A | |||||||||||||||||||||||
Owned & Host segment EBITDA | |||||||||||||||||||||||
Other segments EBITDA (1) | ( | ( | ( | ( | |||||||||||||||||||
| Corporate and other | ( | ( | ( | ( | |||||||||||||||||||
| Effects of unearned and deferred revenue | ( | ||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | |||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
Earnings (loss) from continuing operations before income taxes | $ | $ | ( | $ | $ | ||||||||||||||||||
(1) Includes results related to our dedicated e-commerce website and FirstSight.
The following table presents a reconciliation of revenue:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| In thousands | June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Owned & Host | $ | $ | $ | $ | |||||||||||||||||||
| Other segments revenue | |||||||||||||||||||||||
| Effects of unearned and deferred revenue | ( | ||||||||||||||||||||||
| Total consolidated revenue | $ | $ | $ | $ | |||||||||||||||||||
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10. Earnings (Loss) Per Share
A reconciliation of the numerators and denominators of the basic and diluted earnings / (loss) per share (“EPS”) calculations is as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| In thousands, except per share amounts | June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
Income (loss) from continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
Loss from discontinued operations, net of tax | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Net income (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average shares outstanding, Basic | |||||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Stock options | |||||||||||||||||||||||
| Restricted stock units | |||||||||||||||||||||||
| Weighted average shares outstanding, Diluted | |||||||||||||||||||||||
Basic earnings (loss) per share: | |||||||||||||||||||||||
| Continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
| Discontinued operations | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Total | $ | $ | ( | $ | $ | ||||||||||||||||||
Diluted earnings (loss) per share: | |||||||||||||||||||||||
| Continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
| Discontinued operations | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Total | $ | $ | ( | $ | $ | ||||||||||||||||||
| Anti-dilutive securities excluded from diluted weighted average common shares | |||||||||||||||||||||||
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following contains management’s discussion and analysis of our financial condition and results of operations and should be read together with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Form 10-Q (this “Form 10-Q”) and the audited consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2025 (the “2024 Annual Report on Form 10-K.”) This discussion contains forward-looking statements that reflect our plans, estimates and beliefs as of the date hereof and we undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. These forward-looking statements involve numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of the 2024 Annual Report on Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the SEC. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” in this Form 10-Q.
Overview
We are one of the largest optical retailers in the U.S. and a leader in the value segment of the U.S. optical retail industry. We believe that vision is central to quality of life and that people deserve to see their best to live their best, regardless of their budget. Our mission is to make quality eye care and eyewear affordable and accessible to all Americans. We achieve this by providing eye exams, eyeglasses and contact lenses to value-seeking consumers. We deliver exceptional value and convenience to our customers, with attractive price points that provide value for a range of consumers. We reach our customers through a diverse portfolio of 1,240 retail stores across four brands and associated omni-channel consumer websites as of June 28, 2025.
Brand and Segment Information
As of June 28, 2025, our operations consisted of one reportable segment. During fiscal year 2024, our Walmart store operations, including our former Legacy reportable segment and components of our AC Lens operating segment met the requirements to be classified as discontinued operations. Refer to Part II. Item 8. Note 2. “Discontinued Operations” of the 2024 Annual Report on Form 10-K for more information on discontinued operations.
•Owned & Host - As of June 28, 2025, our owned brands consisted of 1,045 America’s Best Contacts and Eyeglasses (“America’s Best”) retail stores and 122 Eyeglass World retail stores. Our Host brands consisted of 53 Vista Optical locations on select military bases and 20 Vista Optical locations within select Fred Meyer stores as of June 28, 2025. All brands utilize our centralized laboratories. This segment also includes sales from our America’s Best, Eyeglass World, and Military omni-channel websites.
Our consolidated results also include the following:
•Results of other operating segments — Our dedicated e-commerce website, which was previously managed by AC Lens and was transitioned to NVI. Our e-commerce website sells contact lenses and optical accessory products to retail customers, and recognizes revenue when products have been delivered to the customer. Managed care business conducted by FirstSight, our wholly-owned subsidiary that is licensed as a single-service health plan under California law, which issues individual vision plans in connection with our America’s Best operations in California.
•Corporate and other — Our corporate and other category represents unallocated corporate overhead expenses, which are a component of selling, general and administrative expenses and are comprised of various home office expenses such as payroll, occupancy costs and consulting and professional fees. Corporate overhead expenses also include field services for our four retail brands. Other expenses included in this category include certain non-cash charges, including asset impairment, stock-based compensation expense, and the impact of certain events, gains, or losses excluded from the assessment of segment performance.
•Effects of unearned and deferred revenue — Reportable segment information is presented on the same basis as our consolidated financial statements, except reportable segment sales which are presented on a cash basis, including point of sales for managed care payors and excluding the effects of unearned and deferred revenue, consistent with what our chief operating decision maker (“CODM”) regularly reviews. We present the effects of unearned and deferred revenues separately from our reportable segment information. See Note 9. “Segment Reporting” in our condensed consolidated financial statements. Deferred revenue represents the timing difference of when we collect the cash from the customer and when services related to product protection plans and eye care club memberships are performed. Increases or decreases in deferred revenue during the reporting period represent cash collections in excess of, or below the recognition of, previous deferrals. Unearned revenue
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represents the timing difference of when we collect cash from the customer and delivery/customer acceptance, and includes sales of prescription eyewear during approximately the last seven to ten days of the reporting period.
Trends and Other Factors Affecting Our Business
We continue to focus on expanding our target demographic, implementing new pricing architecture, enhancing the customer and patient experience, and optimizing cost structure, which are initiatives designed to strengthen our core business, improve our results of operations, and drive long-term shareholder value.
The overall economic environment continues to be uncertain and macroeconomic factors that may affect customer spending patterns, and thereby our results of operations, include trade restrictions such as sanctions, tariffs, reciprocal and retaliatory tariffs, and other tariff-related measures; inflation; employment rates; business conditions; changes in the housing market; the availability of credit; interest rates; tax rates and policies; fuel and energy costs; and overall consumer confidence in future economic conditions, as well as global political, socio-economic, cultural, and geopolitical uncertainty.
The United States has recently announced changes to U.S. trade policy, including increasing tariffs on imports, in some cases significantly, and potentially negotiating, or terminating existing, trade agreements. For example, on April 2, 2025, the United States announced a new universal baseline tariff of 10%, plus an additional country-specific tariff for select trading partners, on all U.S. imports. These actions, and retaliatory tariffs imposed by other countries on U.S. exports, have led to significant volatility and uncertainty in global markets, which is continuing. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Less than 10% of our costs applicable to revenue are directly subject to tariffs from China. In Mexico, where our exposure relates to our outsourcing relationship with our third-party laboratory, we have mitigation plans in place and we estimate that less than one percent of our costs applicable to revenue are subject to tariffs in Mexico. We are continuing to evaluate these developments, including resulting impacts on our supply chain, commodity costs, and consumer spending, and our ability to offset a portion of these costs to mitigate the impact on our business, consolidated results of operations, and financial condition.
Inflation has resulted in increased costs and greater profitability pressure. We have experienced wage rate pressure and increases in raw materials prices, which we expect to continue. Inflationary pressures, including elevated wages, consumer confidence and preferences and increased raw material costs could impact our profitability and lead us to attempt to offset such increases through various pricing actions. We have historically employed a simple low price/high value strategy and seek to balance our pricing and growth in a way that consistently delivers savings to our customers. From time to time, and increasingly in connection with our new transformation initiatives, we may take pricing actions and introduce limited-time promotions or new offers designed to increase traffic, awareness and sales. Several factors may impact the level of success of such actions and promotions, including consumer sentiment, macroeconomic conditions and marketing effectiveness, and as a result, if they do not meet our expectations, they could negatively impact our margins and profitability.
Additionally, our ability to continue to attract and retain qualified vision care professionals impacts exam capacity and our operations. We believe factors such as an increasingly challenging recruiting market (in particular for new graduates), preferences for adjusted work schedules, and the demand for optometrists exceeding supply in certain areas have caused constraints in vision care professional availability, and therefore exam capacity, which are continuing. As a result, recruiting and retaining optometrists has become more challenging and the costs to employ or retain optometrists have increased and may increase further, potentially materially. Further, a limited number of professional corporations or similar entities provide for the vision care services at a number of our retail locations, exposing us to some concentration risk. A material change in our relationship with vision care professionals, whether resulting from constraints in exam capacity, a dispute with an eye care practitioner or a group of eye care practitioners controlling multiple practice locations, a government or regulatory authority challenging our operating structure or our relationship with vision care professionals, or other changes to applicable laws or regulations (or interpretations of the same), or the loss of these relationships, could impair our ability to provide services to our customers, cause our customers to go elsewhere for their optical needs, or result in legal sanctions against us. From time to time, we may elect to make strategic changes to our doctor model or otherwise make changes to our relationships with one or more of these practices, which could also lead to any of these risks.
Historically, our business has experienced seasonality in the first half of the year that we believe is primarily attributable to the timing of customers’ income tax refunds and health insurance start/reset periods. We believe that many customers in our target market of value-seeking consumers may rely on tax refunds to pay for eyewear and eye care. A delay in the issuance of tax refunds or changes in the amount of tax refunds can, accordingly, have a negative impact on our quarterly financial results in the first half of the year. Consumer behavior with respect to the utilization of tax refund proceeds is also subject to change.
Refer to Part I, Item 1A. “Risk Factors” in the Company’s 2024 Annual Report on Form 10-K for a more complete discussion of the risk factors we face.
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How We Assess the Performance of Our Business
We consider a variety of financial and operating measures in assessing the performance of our business. The key measures we use to determine how our consolidated business and operating segments are performing are net revenue, costs applicable to revenue, and selling, general, and administrative expenses. In addition, we also review store growth, Adjusted Comparable Store Sales Growth, Adjusted Operating Income, Adjusted Operating Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Diluted EPS.
Net Revenue
We report as net revenue amounts generated in transactions with retail customers who are the end users of our products, services and plans. Comparable store sales growth and new store openings are key drivers of net revenue and are discussed below. Also, the timing of unearned revenue can affect revenue recognized in a particular period.
Costs Applicable to Revenue
Customer tastes and preferences, product mix, changes in technology, significant increases or slowdowns in production, and other factors impact costs applicable to revenue. The components of our costs applicable to revenue may not be comparable to other retailers.
Selling, General and Administrative
SG&A expenses generally fluctuate consistently with revenue due to the variable store, field office and corporate support costs; however, some fixed costs may decrease as a percentage of net revenue as our net revenues grow over time.
New Store Openings
The total number of new stores per year and the timing of store openings has had an impact, and we expect will continue to have an impact, on our results. We plan to open approximately 32 new stores in fiscal year 2025 to allow us to invest capital in existing operations to enhance the overall store experience. We are continuing to monitor and determine our plans for future new store openings at a level appropriate for incremental free cash flow generation.
Adjusted Comparable Store Sales Growth
We measure Adjusted Comparable Store Sales Growth as the increase or decrease in sales recorded by the comparable store base in any reporting period, compared to sales recorded by the comparable store base in the prior reporting period, which we calculate as follows: (i) sales are recorded on a cash basis (i.e., when the order is placed and paid for or submitted to a managed care payor, compared to when the order is delivered), utilizing cash basis point of sale information from stores; (ii) stores are added to the calculation during the 13th full fiscal month following the store’s opening; (iii) closed stores are removed from the calculation for time periods that are not comparable; (iv) sales from partial months of operation are excluded when stores do not open or close on the first day of the month; and (v) when applicable, we adjust for the effect of the 53rd week. Quarterly, year-to-date and annual adjusted comparable store sales are aggregated using only sales from all whole months of operation included in both the current reporting period and the prior reporting period. When a partial month is excluded from the calculation, the corresponding month in the subsequent period is also excluded from the calculation. There may be variations in the way in which some of our competitors and other retailers calculate comparable store sales. As a result, our adjusted comparable store sales may not be comparable to similar data made available by other retailers.
Adjusted Comparable Store Sales Growth is a non-GAAP financial measure, which we believe is useful because it provides timely and accurate information relating to the two core metrics of retail sales: number of transactions and value of transactions. We use Adjusted Comparable Store Sales Growth as the basis for key operating decisions, such as allocation of advertising to particular markets and implementation of special marketing programs. Accordingly, we believe that Adjusted Comparable Store Sales Growth provides timely and accurate information relating to the operational health and overall performance of each brand. We also believe that, for the same reasons, investors find our calculation of Adjusted Comparable Stores Sales Growth to be meaningful.
Adjusted Operating Income, Adjusted Operating Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Diluted EPS (collectively, the “Company Non-GAAP Measures”)
The Company Non-GAAP Measures are key measures used by management to assess our financial performance. The Company Non-GAAP Measures are also frequently used by analysts, investors and other interested parties. We use the Company Non-GAAP Measures to supplement U.S. GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures. See “Non-GAAP Financial Measures” for definitions of the Company Non-GAAP Measures and for additional information.
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Results of Operations
The following table summarizes key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net revenue.
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
In thousands, except earnings per share, percentage and store data | June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Net product sales | $ | 394,589 | $ | 361,967 | $ | 807,354 | $ | 750,050 | |||||||||||||||
| Net sales of services and plans | 91,834 | 89,766 | 189,393 | 184,477 | |||||||||||||||||||
| Total net revenue | 486,423 | 451,733 | 996,747 | 934,527 | |||||||||||||||||||
| Costs applicable to revenue (exclusive of depreciation and amortization): | |||||||||||||||||||||||
| Products | 114,686 | 111,213 | 231,600 | 224,417 | |||||||||||||||||||
| Services and plans | 85,685 | 82,367 | 173,961 | 164,709 | |||||||||||||||||||
| Total costs applicable to revenue | 200,371 | 193,580 | 405,561 | 389,126 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative expenses | 247,167 | 231,353 | 502,699 | 471,481 | |||||||||||||||||||
| Depreciation and amortization | 22,536 | 22,692 | 45,499 | 45,913 | |||||||||||||||||||
| Asset impairment | — | 3,519 | 502 | 3,975 | |||||||||||||||||||
| Other expense (income), net | (100) | (2) | (100) | (1) | |||||||||||||||||||
| Total operating expenses | 269,603 | 257,562 | 548,600 | 521,368 | |||||||||||||||||||
Income from operations | 16,449 | 591 | 42,586 | 24,033 | |||||||||||||||||||
| Interest expense, net | 4,210 | 3,196 | 8,782 | 7,452 | |||||||||||||||||||
Earnings (loss) from continuing operations before income taxes | 12,239 | (2,605) | 33,804 | 16,581 | |||||||||||||||||||
Income tax provision (benefit) | 3,514 | (1,564) | 10,893 | 5,869 | |||||||||||||||||||
Income (loss) from continuing operations | 8,725 | (1,041) | 22,911 | 10,712 | |||||||||||||||||||
| Loss from discontinued operations, net of tax (See Note 2) | — | (2,084) | — | (2,152) | |||||||||||||||||||
Net income (loss) | $ | 8,725 | $ | (3,125) | $ | 22,911 | $ | 8,560 | |||||||||||||||
| Supplemental operating data: | |||||||||||||||||||||||
| Number of stores open at end of period | 1,240 | 1,216 | 1,240 | 1,216 | |||||||||||||||||||
| New stores opened during the period | 8 | 17 | 17 | 31 | |||||||||||||||||||
| Adjusted Operating Income from continuing operations | $ | 23,801 | $ | 14,073 | $ | 65,076 | $ | 47,967 | |||||||||||||||
Diluted earnings (loss) per share from continuing operations | $ | 0.11 | $ | (0.01) | $ | 0.29 | $ | 0.14 | |||||||||||||||
| Adjusted Diluted EPS from continuing operations | $ | 0.18 | $ | 0.15 | $ | 0.52 | $ | 0.44 | |||||||||||||||
| Adjusted EBITDA from continuing operations | $ | 46,168 | $ | 36,383 | $ | 110,237 | $ | 93,117 | |||||||||||||||
| Percentage of net revenue: | |||||||||||||||||||||||
| Total costs applicable to revenue | 41.2 | % | 42.9 | % | 40.7 | % | 41.6 | % | |||||||||||||||
| Selling, general and administrative expenses | 50.8 | % | 51.2 | % | 50.4 | % | 50.5 | % | |||||||||||||||
| Total operating expenses | 55.4 | % | 57.0 | % | 55.0 | % | 55.8 | % | |||||||||||||||
Income (loss) from continuing operations | 1.8 | % | (0.2) | % | 2.3 | % | 1.1 | % | |||||||||||||||
| Adjusted Operating Income from continuing operations | 4.9 | % | 3.1 | % | 6.5 | % | 5.1 | % | |||||||||||||||
| Adjusted EBITDA from continuing operations | 9.5 | % | 8.1 | % | 11.1 | % | 10.0 | % | |||||||||||||||
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Three Months Ended June 28, 2025 compared to Three Months Ended June 29, 2024
Certain components of our operations met the requirements to be classified as discontinued operations. Refer to Note 2. “Discontinued Operations” in Part II. of the 2024 Annual Report on Form 10-K for information related to our discontinued operations. Unless otherwise noted, the discussion of U.S. GAAP results below is based on results from continuing operations.
Net revenue
The following presents, by segment and by brand, comparable store sales growth, stores open at the end of the period and net revenue from continuing operations for the three months ended June 28, 2025 compared to the three months ended June 29, 2024.
Comparable store sales growth from continuing operations(1) | Stores open at end of period | Net revenue(1)(2) | ||||||||||||||||||||||||||||||||||||||||||
| In thousands, except percentage and store data | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | June 28, 2025 | June 29, 2024 | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | ||||||||||||||||||||||||||||||||||||||
| Owned & Host segment | ||||||||||||||||||||||||||||||||||||||||||||
| America’s Best | 6.3 | % | 2.9 | % | 1,045 | 1,003 | $ | 416,775 | 85.7 | % | $ | 381,647 | 84.5 | % | ||||||||||||||||||||||||||||||
| Eyeglass World | 2.8 | % | (0.5) | % | 122 | 130 | 49,105 | 10.1 | % | 49,489 | 11.0 | % | ||||||||||||||||||||||||||||||||
| Military | 4.4 | % | (0.1) | % | 53 | 54 | 5,844 | 1.2 | % | 5,625 | 1.2 | % | ||||||||||||||||||||||||||||||||
| Fred Meyer | 6.9 | % | (2.7) | % | 20 | 29 | 2,428 | 0.5 | % | 2,724 | 0.6 | % | ||||||||||||||||||||||||||||||||
| Owned & Host segment total | 1,240 | 1,216 | $ | 474,152 | 97.5 | % | $ | 439,485 | 97.3 | % | ||||||||||||||||||||||||||||||||||
| Other segments revenue | — | % | — | % | — | — | 5,719 | 1.2 | % | 8,099 | 1.8 | % | ||||||||||||||||||||||||||||||||
| Effects of unearned and deferred revenue | — | % | — | % | — | — | 6,552 | 1.3 | % | 4,149 | 0.9 | % | ||||||||||||||||||||||||||||||||
| Total | 6.5 | % | 2.2 | % | 1,240 | 1,216 | $ | 486,423 | 100.0 | % | $ | 451,733 | 100.0 | % | ||||||||||||||||||||||||||||||
Effect of deferred and unearned revenue on comparable store sales | (0.6) | % | 0.2 | % | ||||||||||||||||||||||||||||||||||||||||
Adjusted Comparable Store Sales Growth from continuing operations | 5.9 | % | 2.4 | % | ||||||||||||||||||||||||||||||||||||||||
(1)We calculate total comparable store sales from continuing operations based on consolidated net revenue from continuing operations excluding the impact of (i) other segments net revenue, (ii) sales from stores opened less than 13 months, (iii) stores closed in the periods presented, (iv) sales from partial months of operation when stores do not open or close on the first day of the month and (v) if applicable, the impact of a 53rd week in a fiscal year. Brand-level comparable store sales growth and net revenue are calculated based on cash basis revenues consistent with what the CODM reviews, and consistent with reportable segment revenues presented in Note 9. “Segment Reporting” in our unaudited condensed consolidated financial statements included in Part I. Item 1. of this Form 10-Q.
(2)Percentages reflect line item as a percentage of net revenue, adjusted for rounding.
Total net revenue of $486.4 million for the three months ended June 28, 2025 increased $34.7 million, or 7.7%, from $451.7 million for the three months ended June 29, 2024. Approximately 70% of the increase was driven by growth from Adjusted Comparable Store Sales Growth from continuing operations and approximately 40% of the increase was driven by new store sales, partially offset by approximately 10% from effects of closed stores. Net revenue includes a positive 0.6% impact from the timing of unearned revenue for the three months ended June 28, 2025 as compared to three months ended June 29, 2024
Comparable store sales growth from continuing operations and Adjusted Comparable Store Sales Growth from continuing operations for the three months ended June 28, 2025 were 6.5% and 5.9%, respectively, both reflecting a higher average ticket and continued strength in the managed care cohort, partially offset by a slight decrease in customer traffic.
In the three months ended June 28, 2025, we opened eight America’s Best stores and closed five America’s Best stores. We also converted four Eyeglass World stores to America’s Best stores from June 29, 2024 to June 28, 2025. Overall, store count grew 2.0% from June 29, 2024 to June 28, 2025 (exclusive of the aforementioned conversions, we had 38 net new America’s Best stores, nine net closures of Fred Meyer stores, four net closures of Eyeglass World stores, and one net closure of a Military store).
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Net product sales comprised 81.1% and 80.1% of total net revenue for the three months ended June 28, 2025 and June 29, 2024, respectively. Net product sales increased $32.6 million, or 9.0%, in the three months ended June 28, 2025 compared to the three months ended June 29, 2024, driven primarily by pricing and product mix initiatives in eyeglass sales of $29.9 million, contact lens sales of $2.6 million and other add-on sales.
Net sales of services and plans for the three months ended June 28, 2025 increased $2.1 million, or 2.3%, compared to the three months ended June 29, 2024, driven primarily by higher eye exam revenues of $1.8 million, or 3.2%.
Owned & Host segment net revenue. Net revenue increased $34.7 million, or 7.9%, driven primarily by comparable store sales growth and new store openings, partially offset by closed stores.
Effects of unearned and deferred revenue. Unearned and deferred revenue positively impacted net revenue by $2.4 million in the three months ended June 28, 2025 compared to the three months ended June 29, 2024, primarily driven by $2.6 million due to the timing of unearned revenue.
Costs applicable to revenue
Costs applicable to revenue of $200.4 million for the three months ended June 28, 2025 increased $6.8 million, or 3.5%, from $193.6 million for the three months ended June 29, 2024. As a percentage of net revenue, costs applicable to revenue decreased from 42.9% for the three months ended June 29, 2024 to 41.2% for the three months ended June 28, 2025. This decrease of 170 basis points as a percentage of net revenue was primarily driven by a margin improvement of 70 basis points of eyeglass frames, lenses and bundled packages and a favorable shift in product and service mix related to average customer ticket of 110 basis points, leveraging of optometrist-related costs of 60 basis points, partially offset by lower growth in eye exam margin and other add-ons revenue margin of 70 basis points.
Costs of products as a percentage of net product sales decreased from 30.7% for the three months ended June 29, 2024 to 29.1% for the three months ended June 28, 2025, primarily driven by a margin improvement of eyeglass frames, lenses and bundled packages and a favorable shift in product mix related to average customer ticket.
Owned & Host segment costs of products. Costs of products as a percentage of net product sales decreased from 29.7% for the three months ended June 29, 2024 to 28.3% for the three months ended June 28, 2025, primarily driven by a margin improvement of eyeglass frames, lenses and bundled packages and a favorable shift in product mix related to average customer ticket.
Costs of services and plans as a percentage of net sales of services and plans increased from 91.8% for the three months ended June 29, 2024 to 93.3% for the three months ended June 28, 2025. The increase was driven by lower growth in eye exam margin and other add-ons revenue.
Owned & Host segment costs of services and plans. Costs of services and plans as a percentage of net sales of services and plans increased from 91.3% for the three months ended June 29, 2024 to 92.6% for the three months ended June 28, 2025, and was driven by lower growth in eye exam margin and other add-ons revenue.
Selling, general and administrative
SG&A of $247.2 million for the three months ended June 28, 2025 increased $15.8 million, or 6.8%, from the three months ended June 29, 2024. As a percentage of net revenue, SG&A decreased from 51.2% for the three months ended June 29, 2024 to 50.8% for the three months ended June 28, 2025. SG&A as a percentage of net revenue was impacted by lower advertising investments of 60 basis points, lower legal and professional fees of 40 basis points, and lower occupancy expenses of 30 basis points, partially offset by higher variable incentive compensation expenses related to revenue and profitability growth of 90 basis points and other operating expenses.
Owned & Host SG&A. SG&A as a percentage of net revenue decreased from 39.6% for the three months ended June 29, 2024 to 38.1% for the three months ended June 28, 2025, primarily driven by lower advertising investments, occupancy expenses and other operating expenses.
Depreciation and amortization
Depreciation and amortization expense of $22.5 million for the three months ended June 28, 2025 decreased $0.2 million, or 0.7%, from $22.7 million for the three months ended June 29, 2024 primarily driven by lower amortization of intangible assets.
Asset Impairment
We recognized no impairment during the three months ended June 28, 2025, compared to $3.5 million impairment recognized during the three months ended June 29, 2024 for tangible long-lived assets and ROU assets associated with our retail stores. The store asset impairment charge during the three months ended June 29, 2024 is related to our Owned & Host segment and is driven by lower than projected customer sales and profitability in certain stores, and other entity-specific assumptions. We considered multiple factors including, but not limited to: forecasted scenarios related to store
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performance and the likelihood that these scenarios would be ultimately realized; and the remaining useful lives of the assets. Asset impairment expenses were recognized in corporate and other.
Interest expense, net
Interest expense, net, was $4.2 million for the three months ended June 28, 2025, compared to $3.2 million for the three months ended June 29, 2024. The change was primarily a result of lower interest income on cash balances of $1.7 million, partially offset by lower interest expense on our debt of $0.4 million.
Income tax provision (benefit)
Our effective tax rates for the three months ended June 28, 2025 and June 29, 2024 were 28.7% and 60.0%, respectively. The change in effective tax rates was primarily driven by the tax impacts of consolidated VIEs, coupled with non-deductible compensation and other effects of permanent items. The change in effective rates was also influenced by using the ETR method during the three months ended June 29, 2024 and the AETR method during the three months ended June 28, 2025.
Discontinued Operations
Loss from discontinued operations, net of tax of $2.1 million for the three months ended June 29, 2024 represents loss prior to the wind-down of the AC Lens operations. There were no discontinued operations results for the three months ended June 28, 2025.
Six Months Ended June 28, 2025 compared to Six Months Ended June 29, 2024
Certain components of our operations met the requirements to be classified as discontinued operations. Refer to Note 2. “Discontinued Operations” in Part II. of the 2024 Annual Report on Form 10-K for information related to our discontinued operations. Unless otherwise noted, the discussion of U.S. GAAP results below is based on results from continuing operations.
Net revenue
The following presents, by segment and by brand, comparable store sales growth, stores open at the end of the period and net revenue from continuing operations for the six months ended June 28, 2025 compared to the six months ended June 29, 2024.
Comparable store sales growth from continuing operations(1) | Stores open at end of period | Net revenue(1)(2) | ||||||||||||||||||||||||||||||||||||||||||
| In thousands, except percentage and store data | Six Months Ended June 28, 2025 | Six Months Ended June 29, 2024 | June 28, 2025 | June 29, 2024 | Six Months Ended June 28, 2025 | Six Months Ended June 29, 2024 | ||||||||||||||||||||||||||||||||||||||
| Owned & Host segment | ||||||||||||||||||||||||||||||||||||||||||||
| America’s Best | 6.1 | % | 2.0 | % | 1,045 | 1,003 | $ | 870,506 | 87.3 | % | $ | 792,791 | 84.8 | % | ||||||||||||||||||||||||||||||
| Eyeglass World | 2.9 | % | (2.9) | % | 122 | 130 | 101,591 | 10.2 | % | 106,449 | 11.4 | % | ||||||||||||||||||||||||||||||||
| Military | 3.0 | % | (0.8) | % | 53 | 54 | 12,010 | 1.2 | % | 11,714 | 1.3 | % | ||||||||||||||||||||||||||||||||
| Fred Meyer | 4.1 | % | (4.3) | % | 20 | 29 | 5,026 | 0.5 | % | 5,382 | 0.6 | % | ||||||||||||||||||||||||||||||||
| Owned & Host segment total | 1,240 | 1,216 | $ | 989,133 | 99.2 | % | $ | 916,336 | 98.1 | % | ||||||||||||||||||||||||||||||||||
Other segments revenue | — | — | — | — | 11,353 | 1.1 | % | 16,344 | 1.7 | % | ||||||||||||||||||||||||||||||||||
Effects of unearned and deferred revenue | — | — | — | — | (3,739) | (0.3) | % | 1,847 | 0.2 | % | ||||||||||||||||||||||||||||||||||
| Total | 5.2 | % | 1.8 | % | 1,240 | 1,216 | $ | 996,747 | 100.0 | % | $ | 934,527 | 100.0 | % | ||||||||||||||||||||||||||||||
Effect of deferred and unearned revenue on comparable store sales | 0.5 | % | (0.5) | % | ||||||||||||||||||||||||||||||||||||||||
Adjusted Comparable Store Sales Growth from continuing operations | 5.7 | % | 1.3 | % | ||||||||||||||||||||||||||||||||||||||||
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(1)We calculate total comparable store sales from continuing operations based on consolidated net revenue from continuing operations excluding the impact of (i) other segments revenue, (ii) sales from stores opened less than 13 months, (iii) stores closed in the periods presented, (iv) sales from partial months of operation when stores do not open or close on the first day of the month and (v) if applicable, the impact of a 53rd week in a fiscal year. Brand-level comparable store sales growth and net revenue are calculated based on cash basis revenues consistent with what the CODM reviews, and consistent with reportable segment revenues presented in Note 9. “Segment Reporting” in our unaudited condensed consolidated financial statements included in Part I. Item 1. of this Form 10-Q.
(2)Percentages reflect line item as a percentage of net revenue, adjusted for rounding.
Total net revenue of $996.7 million for the six months ended June 28, 2025 increased $62.2 million, or 6.7%, from $934.5 million for the six months ended June 29, 2024. Of the $62.2 million increase, approximately 80% was driven by Adjusted Comparable Store Sales Growth from continuing operations and approximately 50% of the increase was driven by growth from new store sales, partially offset by approximately 20% from closed stores and approximately 10% by effects of unearned revenue for the period. Net revenue includes a negative (0.5)% impact from the timing of unearned revenue for the six months ended June 28, 2025 as compared to six months ended June 29, 2024.
Comparable store sales growth from continuing operations and Adjusted Comparable Store Sales Growth from continuing operations for the six months ended June 28, 2025 were 5.2% and 5.7%, respectively, both reflecting a higher average ticket, a slight increase in customer traffic and continued strength in the Company’s managed care cohort.
In the six months ended June 28, 2025, we opened 17 new America’s Best stores, closed nine Fred Meyer stores and eight America’s Best stores. We also converted four Eyeglass World stores to America’s Best stores from June 29, 2024 to June 28, 2025. Overall, store count grew 2.0% from June 29, 2024 to June 28, 2025 (exclusive of the aforementioned conversions, we had 38 net new America’s Best stores, nine net closures of Fred Meyer stores, four net closures of Eyeglass World stores, and one net closure of a Military store).
Net product sales comprised 81.0% and 80.3% of total net revenue for the six months ended June 28, 2025 and June 29, 2024, respectively. Net product sales increased $57.3 million, or 7.6%, in the six months ended June 28, 2025 compared to the six months ended June 29, 2024, primarily due to pricing and product mix initiatives in eyeglass sales of $51.5 million, contact lens sales of $4.6 million and other add-on sales.
Net sales of services and plans for the six months ended June 28, 2025 increased $4.9 million, or 2.7%, compared to the six months ended June 29, 2024, driven primarily by higher exam revenues of $5.3 million, or 4.4%.
Owned & Host segment net revenue. Net revenue increased $72.8 million, or 7.9%, driven primarily by comparable store sales growth and new store openings, partially offset by closed stores.
Effects of unearned and deferred revenue. Unearned and deferred revenue negatively impacted net revenue by $5.6 million in the six months ended June 28, 2025 compared to the six months ended June 29, 2024, primarily driven by $4.6 million due to the timing of unearned revenue.
Costs applicable to revenue
Costs applicable to revenue of $405.6 million for the six months ended June 28, 2025 increased $16.4 million, or 4.2%, from $389.1 million for the six months ended June 29, 2024. As a percentage of net revenue, costs applicable to revenue decreased from 41.6% for the six months ended June 29, 2024 to 40.7% for the six months ended June 28, 2025. This decrease of 90 basis points as a percentage of net revenue was primarily driven by a margin improvement of 60 basis points for eyeglass frames, lenses and bundled packages, a favorable shift in product and services mix related to average customer ticket of 80 basis points and leveraging of optometrist-related costs of 20 basis points, partially offset by lower growth in eye exam margin and other add-ons revenue margin of 60 basis points and a 10 basis point decrease in margins of contact lenses.
Costs of products as a percentage of net product sales decreased from 29.9% for the six months ended June 29, 2024 to 28.7% for the six months ended June 28, 2025 primarily driven by margin improvement of eyeglass frames, lenses and bundled packages and a favorable product mix shift related to average customer ticket, partially offset by a slight decrease in margins of contact lenses.
Owned & Host segment costs of products. Costs of products as a percentage of net product sales decreased from 28.9% for the six months ended June 29, 2024 to 27.8% for the six months ended June 28, 2025, primarily driven by margin improvement of eyeglass frames, lenses and bundled packages, partially offset by a slight decrease in margins of contact lenses.
Costs of services and plans as a percentage of net sales of services and plans increased from 89.3% for the six months ended June 29, 2024 to 91.9% for the six months ended June 28, 2025. The increase was primarily driven by lower growth in eye exam margin and other add-ons revenue.
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Owned & Host segment costs of services and plans. Costs of services and plans as a percentage of net sales of services and plans increased from 88.3% for the six months ended June 29, 2024 to 90.4% for the six months ended June 28, 2025. The increase was primarily driven by lower growth in eye exam margin and other add-ons revenue.
Selling, general and administrative
SG&A of $502.7 million for the six months ended June 28, 2025 increased $31.2 million, or 6.6%, from the six months ended June 29, 2024. As a percentage of net revenue, SG&A decreased from 50.5% for the six months ended June 29, 2024 to 50.4% for the six months ended June 28, 2025. SG&A as a percentage of net revenue was impacted by lower advertising investments of 60 basis points and a non-recurring litigation settlement from prior year of 50 basis points and other expenses of 10 basis points, partially offset by increases in variable incentive compensation expenses of 60 basis points primarily related to revenue and profitability growth and an increase in stock-based compensation of 50 basis points.
Owned & Host SG&A. SG&A as a percentage of net revenue decreased from 38.6% for the six months ended June 29, 2024 to 37.3% for the six months ended June 28, 2025, driven primarily by lower advertising investments and other operating expenses.
Depreciation and amortization
Depreciation and amortization expense of $45.5 million for the six months ended June 28, 2025 decreased $0.4 million, or 0.9%, from $45.9 million for the six months ended June 29, 2024 primarily driven by lower amortization of intangible assets.
Asset impairment
We recognized $0.5 million primarily for impairment related to tangible long-lived assets and ROU assets associated with our retail stores during the six months ended June 28, 2025, compared to $4.0 million impairment recognized during the six months ended June 29, 2024 for tangible long-lived assets and ROU assets associated with our retail stores. The store asset impairment charge is related to our Owned & Host segment and is driven by lower than projected customer sales and profitability in certain stores, and other entity-specific assumptions. We considered multiple factors including, but not limited to: forecasted scenarios related to store performance and the likelihood that these scenarios would be ultimately realized; and the remaining useful lives of the assets. Asset impairment expenses were recognized in corporate and other.
Interest expense, net
Interest expense, net was $8.8 million for the six months ended June 28, 2025, compared to $7.5 million for the six months ended June 29, 2024. The change was primarily a result of lower income on cash balances of $2.1 million, partially offset by lower interest expense on our debt of $0.7 million.
Income tax provision
Our effective tax rates for the six months ended June 28, 2025 and June 29, 2024 were 32.2% and 35.4%, respectively. The change in effective tax rates reflects tax impacts of consolidated VIEs, non-deductible compensation, discrete effects related to stock-based compensation and other effects of permanent items.
Discontinued Operations
Loss from discontinued operations, net of tax, of $2.2 million for the six months ended June 29, 2024 represents loss prior to the termination of our partnership with Walmart and the wind-down of the AC Lens operations. There were no discontinued operations results for the six months ended June 28, 2025.
Non-GAAP Financial Measures
Adjusted Operating Income, Adjusted Operating Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Diluted EPS
We refer to these measures as the “Company Non-GAAP Measures.” We define Adjusted Operating Income as net income (loss), plus interest expense (income), net and income tax provision (benefit), further adjusted to exclude stock-based compensation expense, (gain) loss on extinguishment of debt, asset impairment, litigation settlement, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, amortization of acquisition intangibles, ERP and CRM implementation expenses, shareholder activism costs, severance and employee-related costs associated with organizational restructuring and certain other expenses. We define Adjusted Operating Margin as Adjusted Operating Income as a percentage of net revenue. We define EBITDA as net income (loss), plus interest expense (income), net, income tax provision (benefit) and depreciation and amortization. We define Adjusted EBITDA as
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net income (loss), plus interest expense (income), net, income tax provision (benefit) and depreciation and amortization, further adjusted to exclude stock-based compensation expense, (gain) loss on extinguishment of debt, asset impairment, litigation settlement, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, amortization of acquisition intangibles, ERP and CRM implementation expenses, shareholder activism, severance and employee-related costs associated with restructuring and certain other expenses. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of net revenue. We define Adjusted Diluted EPS as diluted earnings (loss) per share, adjusted for the per share impact of stock-based compensation expense, (gain) loss on extinguishment of debt, asset impairment, litigation settlement, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, amortization of debt discounts and deferred financing costs of our term loan borrowings, amortization of the conversion feature and deferred financing costs related to our 2025 Notes when not required under U.S. GAAP to be added back for diluted earnings (loss) per share, derivative fair value adjustments, ERP and CRM implementation expenses, shareholder activism, severance and employee-related costs associated with restructuring, and certain other expenses, less the tax effect of these adjustments, including tax expense (benefit) from stock-based compensation.
When presenting Adjusted Operating Income from continuing operations, EBITDA from continuing operations and Adjusted EBITDA from continuing operations we use the same definitions for Adjusted Operating Income, EBITDA and Adjusted EBITDA, respectively, and also exclude income (loss) from discontinued operations, net of tax. When presenting Adjusted Diluted EPS from continuing operations, we use the same definition for Adjusted Diluted EPS, and also exclude diluted earnings (loss) per share from discontinued operations. When presenting Adjusted Operating Margin from continuing operations, we use Adjusted Operating Income from continuing operations as a percentage of total net revenue. When presenting Adjusted EBITDA Margin from continuing operations, we use Adjusted EBITDA from continuing operations as a percentage of total net revenue.
The Company Non-GAAP Measures can vary substantially in size from one period to the next, and certain types of expenses are non-recurring in nature and consequently may not have been incurred in any of the periods presented below.
The Company Non-GAAP Measures have been presented as supplemental measures of financial performance that are not required by, or presented in accordance with U.S. GAAP, because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes The Company Non-GAAP Measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. We also use The Company Non-GAAP Measures to supplement U.S. GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures. Management supplements U.S. GAAP results with Non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than U.S. GAAP results alone. We continue to evaluate our use of the Company Non-GAAP measures in the context of the development of our business, and may introduce or discontinue certain measures in the future as we deem appropriate.
The Company Non-GAAP Measures are not recognized terms under U.S. GAAP and should not be considered as an alternative to net income or income from operations as a measure of financial performance or cash flows provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with U.S. GAAP. Additionally, these measures are not intended to be a measure of free cash flow available for management’s discretionary use as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. In evaluating The Company Non-GAAP Measures, we may incur expenses in the future that are the same as or similar to some of the adjustments in this presentation. Our presentation of The Company Non-GAAP Measures should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on our U.S. GAAP results in addition to using The Company Non-GAAP Measures.
The presentations of these measures have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:
•they do not reflect costs or cash outlays for capital expenditures or contractual commitments;
•they do not reflect changes in, or cash requirements for, our working capital needs;
•EBITDA, Adjusted EBITDA and Adjusted Operating Income do not reflect the interest expense (income), net, or the cash requirements necessary to service interest or principal payments, on our debt;
•EBITDA, Adjusted EBITDA and Adjusted Operating Income do not reflect period to period changes in taxes, income tax provision or the cash necessary to pay income taxes;
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•they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements; and
•other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.
Because of these limitations, The Company Non-GAAP Measures should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness.
The following table reconciles our Adjusted Operating Income from continuing operations, Adjusted Operating Margin from continuing operations, EBITDA from continuing operations, Adjusted EBITDA from continuing operations, and Adjusted EBITDA Margin from continuing operations to net income (loss) from continuing operations; and Adjusted Diluted EPS from continuing operations to diluted EPS from continuing operations for the periods presented:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| In thousands | June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 8,725 | 1.8 | % | $ | (3,125) | (0.7) | % | $ | 22,911 | 2.3 | % | $ | 8,560 | 0.9 | % | |||||||||||||||||||
| Loss from discontinued operations, net of tax (See Note 2) | — | — | % | (2,084) | (3.9) | % | — | — | % | (2,152) | (1.6) | % | |||||||||||||||||||||||
Income (loss) from continuing operations | 8,725 | 1.8 | % | (1,041) | (0.2) | % | 22,911 | 2.3 | % | 10,712 | 1.1 | % | |||||||||||||||||||||||
| Interest expense, net | 4,210 | 0.9 | % | 3,196 | 0.7 | % | 8,782 | 0.9 | % | 7,452 | 0.8 | % | |||||||||||||||||||||||
Income tax provision (benefit) | 3,514 | 0.7 | % | (1,564) | (0.3) | % | 10,893 | 1.1 | % | 5,869 | 0.6 | % | |||||||||||||||||||||||
Stock-based compensation expense (a) | 5,306 | 1.1 | % | 4,750 | 1.1 | % | 12,335 | 1.2 | % | 7,164 | 0.8 | % | |||||||||||||||||||||||
Asset impairment (b) | — | — | % | 3,519 | 0.8 | % | 502 | 0.1 | % | 3,975 | 0.4 | % | |||||||||||||||||||||||
Litigation settlement (c) | — | — | % | — | — | % | — | — | % | 4,450 | 0.5 | % | |||||||||||||||||||||||
Amortization of acquisition intangibles (d) | 169 | 0.0 | % | 382 | 0.1 | % | 338 | 0.0 | % | 763 | 0.1 | % | |||||||||||||||||||||||
ERP and CRM implementation expenses (g) | 1,846 | 0.4 | % | 2,141 | 0.5 | % | 4,161 | 0.4 | % | 2,657 | 0.3 | % | |||||||||||||||||||||||
Other (h) | 31 | 0.0 | % | 2,690 | 0.6 | % | 5,154 | 0.5 | % | 4,925 | 0.5 | % | |||||||||||||||||||||||
| Adjusted Operating Income from continuing operations / Adjusted Operating Margin from continuing operations | $ | 23,801 | 4.9 | % | $ | 14,073 | 3.1 | % | $ | 65,076 | 6.5 | % | $ | 47,967 | 5.1 | % | |||||||||||||||||||
Note: Percentages reflect line item as a percentage of net revenue, adjusted for rounding. Some of the percentage totals in the table above do not foot due to rounding differences. | |||||||||||||||||||||||||||||||||||
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| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| In thousands | June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 8,725 | 1.8 | % | $ | (3,125) | (0.7) | % | $ | 22,911 | 2.3 | % | $ | 8,560 | 0.9 | % | |||||||||||||||||||
| Loss from discontinued operations, net of tax (See Note 2) | — | — | % | (2,084) | (3.9) | % | — | — | % | (2,152) | (1.6) | % | |||||||||||||||||||||||
Income (loss) from continuing operations | 8,725 | 1.8 | % | (1,041) | (0.2) | % | 22,911 | 2.3 | % | 10,712 | 1.1 | % | |||||||||||||||||||||||
| Interest expense, net | 4,210 | 0.9 | % | 3,196 | 0.7 | % | 8,782 | 0.9 | % | 7,452 | 0.8 | % | |||||||||||||||||||||||
Income tax provision (benefit) | 3,514 | 0.7 | % | (1,564) | (0.3) | % | 10,893 | 1.1 | % | 5,869 | 0.6 | % | |||||||||||||||||||||||
| Depreciation and amortization | 22,536 | 4.6 | % | 22,692 | 5.0 | % | 45,499 | 4.6 | % | 45,913 | 4.9 | % | |||||||||||||||||||||||
| EBITDA from continuing operations | 38,985 | 8.0 | % | 23,283 | 5.2 | % | 88,085 | 8.8 | % | 69,946 | 7.5 | % | |||||||||||||||||||||||
Stock-based compensation expense (a) | 5,306 | 1.1 | % | 4,750 | 1.1 | % | 12,335 | 1.2 | % | 7,164 | 0.8 | % | |||||||||||||||||||||||
Asset impairment (b) | — | — | % | 3,519 | 0.8 | % | 502 | 0.1 | % | 3,975 | 0.4 | % | |||||||||||||||||||||||
Litigation settlement (c) | — | — | % | — | — | % | — | — | % | 4,450 | 0.5 | % | |||||||||||||||||||||||
ERP and CRM implementation expenses (g) | 1,846 | 0.4 | % | 2,141 | 0.5 | % | 4,161 | 0.4 | % | 2,657 | 0.3 | % | |||||||||||||||||||||||
Other (h) | 31 | 0.0 | % | 2,690 | 0.6 | % | 5,154 | 0.5 | % | 4,925 | 0.5 | % | |||||||||||||||||||||||
| Adjusted EBITDA from continuing operations / Adjusted EBITDA Margin from continuing operations | $ | 46,168 | 9.5 | % | $ | 36,383 | 8.1 | % | $ | 110,237 | 11.1 | % | $ | 93,117 | 10.0 | % | |||||||||||||||||||
| Note: Percentages reflect line item as a percentage of net revenue, adjusted for rounding. Some of the percentage totals in the table above may not foot due to rounding differences. | |||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| In thousands, except per share amounts | June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||
| Diluted EPS | $ | 0.11 | $ | (0.04) | $ | 0.29 | $ | 0.11 | |||||||||||||||
| Diluted EPS from discontinued operations | — | (0.03) | — | (0.03) | |||||||||||||||||||
| Diluted EPS from continuing operations | 0.11 | (0.01) | 0.29 | 0.14 | |||||||||||||||||||
Stock-based compensation expense (a) | 0.07 | 0.06 | 0.15 | 0.09 | |||||||||||||||||||
Asset impairment (b) | — | 0.04 | 0.01 | 0.05 | |||||||||||||||||||
Litigation settlement (c) | — | — | — | 0.06 | |||||||||||||||||||
Amortization of acquisition intangibles (d) | 0.00 | 0.00 | 0.00 | 0.01 | |||||||||||||||||||
Amortization of debt discount and deferred financing costs (e) | 0.00 | 0.01 | 0.01 | 0.02 | |||||||||||||||||||
Derivative fair value adjustments (f) | — | 0.04 | — | 0.07 | |||||||||||||||||||
ERP and CRM implementation expenses (g) | 0.02 | 0.03 | 0.05 | 0.03 | |||||||||||||||||||
Other (h) | 0.00 | 0.03 | 0.07 | 0.06 | |||||||||||||||||||
Tax effects (i) | (0.02) | (0.05) | (0.06) | (0.09) | |||||||||||||||||||
| Adjusted Diluted EPS from continuing operations | $ | 0.18 | $ | 0.15 | $ | 0.52 | $ | 0.44 | |||||||||||||||
| Weighted average diluted shares outstanding | 80,057 | 78,575 | 79,658 | 78,774 | |||||||||||||||||||
(a)Non-cash charges related to stock-based compensation programs, which vary from period to period depending on the timing of awards and performance vesting conditions.
(b)Reflects write-off related to non-cash impairment charges of long-lived assets, primarily impairment of property, equipment and lease-related assets on closed or underperforming stores.
(c)Expenses associated with settlement of certain litigation.
(d)Amortization of the increase in carrying values of finite-lived intangible assets resulting from the application of purchase accounting following the acquisition of the Company by affiliates of KKR & Co. Inc.
(e)Amortization of deferred financing costs and other non-cash charges related to our debt. We adjust for amortization of deferred financing costs related to the 2025 Notes only when adjustment for these costs is not required in the calculation of diluted earnings per share under U.S. GAAP.
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(f)The adjustments for the derivative fair value (gains) and losses have the effect of adjusting the (gain) or loss for changes in the fair value of derivative instruments and amortization of AOCL for derivatives not designated as accounting hedges. This results in reflecting derivative (gains) and losses within Adjusted Diluted EPS during the period the derivative is settled.
(g)Costs related to the Company’s ERP and CRM implementation.
(h)Other adjustments include amounts that management believes are not representative of our operating performance (amounts in brackets represent reductions in Adjusted Operating Income, Adjusted Diluted EPS and Adjusted EBITDA), which are primarily related to shareholder activism costs of $2.1 million and severance and employee-related costs associated with organizational restructuring of $2.1 million for the six months ended June 28, 2025, costs associated with the digitization of paper-based records of $2.3 million and $4.1 million for the three and six months ended June 29, 2024, respectively, and other expenses and adjustments.
(i)Represents the income tax effect of the total adjustments at our combined statutory federal and state income tax rates, including tax expense (benefit) from stock-based compensation.
Liquidity and Capital Resources
Our primary cash needs are for inventory, payroll, store rent, advertising, capital expenditures associated with new stores and updating existing stores, as well as information and remote medicine technology and infrastructure, including our corporate office, distribution centers, and laboratories. When appropriate, the Company may utilize excess liquidity towards debt service requirements, including voluntary debt prepayments, or required interest and principal payments, if any, as well as repurchases of common stock or other securities, based on excess cash flows. The most significant components of our operating assets and liabilities are inventories, accounts receivable, prepaid expenses and other assets, accounts payable, deferred and unearned revenue and other payables and accrued expenses. We exercise prudence in our use of cash and closely monitor various items related to cash flow including, but not limited to, cash receipts, cash disbursements, payment terms and alternative sources of funding. We continue to be focused on these items in addition to other key measures we use to determine how our consolidated business and operating segments are performing. We believe that cash on hand, cash expected to be generated from operations and the availability of borrowings under our revolving credit loans in an aggregate principal amount of $300.0 million (the “Revolving Loans”) will be sufficient to fund our working capital requirements, liquidity obligations, anticipated capital expenditures, and payments due under our existing debt for the next 12 months and thereafter for the foreseeable future. Depending on our liquidity levels, conditions in the capital markets and other factors, we may from time to time consider the prepayment, refinancing or issuance of debt, issuance of equity or other securities, the proceeds of which could provide additional liquidity for our operations, as well as modifications to our $247.6 million outstanding principal first lien term loan (“Term Loan A”) where possible.
Our ability to maintain sufficient liquidity may be affected by numerous factors, many of which are outside of our control. We primarily fund our working capital needs using cash provided by operations. Our working capital requirements for inventory will increase as we continue to open additional stores.
During the three months ended June 28, 2025, we fully repaid the $84.8 million outstanding principal balance of the 2025 Notes using a combination of cash on hand and liquidity from our Revolving Loans.
As of June 28, 2025, we had $48.5 million in cash and cash equivalents, $15.0 million borrowings under our Revolving Loans with $278.6 million of remaining availability, which includes $6.4 million in outstanding letters of credit.
As of June 28, 2025, we had $247.6 million of Term Loan A outstanding under our credit agreement. We were in compliance with all covenants related to our debt as of June 28, 2025.
The following table summarizes cash flows provided by (used for) operating activities, investing activities and financing activities for the periods indicated:
| Six Months Ended | |||||||||||
| In thousands | June 28, 2025 | June 29, 2024 | |||||||||
| Cash flows provided by (used for): | |||||||||||
| Operating activities | $ | 86,500 | $ | 75,448 | |||||||
| Investing activities | (32,924) | (38,043) | |||||||||
| Financing activities | (78,825) | (7,440) | |||||||||
| Net change in cash, cash equivalents and restricted cash | $ | (25,249) | $ | 29,965 | |||||||
Net Cash Provided by Operating Activities
Cash flows provided by operating activities increased by $11.1 million to $86.5 million, during the six months ended June 28, 2025 from $75.4 million for the six months ended June 29, 2024 as a result of an increase in net income of $14.4 million and changes in net working capital and other assets and liabilities of $1.9 million. These were partially offset by a decrease in non-cash adjustments of $5.2 million primarily driven by changes in deferred income taxes and asset impairment.
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Working capital was primarily impacted by year-over-year changes in other liabilities, accounts payable, other assets, inventory and trade receivables. Increases in other liabilities contributed $34.3 million in year-over-year cash, primarily due to increases in compensation-related and other accruals. Increases in accounts payable contributed $29.0 million in year-over-year cash due to working capital initiatives. These were partially offset by increases in other assets which used $28.1 million in year-over-year cash, primarily due to increased cloud-based software investments related to CRM and ERP. Increases in inventory used $23.5 million in year-over-year cash due to product mix initiatives. Increases in trade receivables used $20.7 million in year-over-year cash and were primarily driven by year-over-year changes in sales. Year-over-year cash changes in working capital were also impacted by the AC Lens wind down and the termination of the Walmart partnership in 2024 that did not recur in 2025.
Net Cash Used for Investing Activities
Net cash used for investing activities decreased by $5.1 million, to $32.9 million, during the six months ended June 28, 2025 from $38.0 million during the six months ended June 29, 2024. The year-over-year decrease was primarily due to lower store openings, partially offset by higher investments in doctor and other in-store equipment in existing stores.
Net Cash Used For Financing Activities
Net cash used for financing activities was $78.8 million during the six months ended June 28, 2025 as compared to $7.4 million during the six months ended June 29, 2024. The $71.4 million year-over-year increase was primarily due to the repayment of the 2025 Notes in the second quarter of 2025, partially offset by borrowings on our Revolving Loans of $15.0 million.
There were no material changes outside the ordinary course of business in our material cash requirements and commercial commitments from those reported in the 2024 Annual Report on Form 10-K.
We follow U.S. GAAP in making the determination as to whether to record an asset or liability related to our arrangements with third parties. Consistent with current accounting guidance, we do not record an asset or liability associated with long-term purchase, marketing and promotional commitments, or commitments to philanthropic endeavors. We have disclosed the amount of future commitments associated with these items in the 2024 Annual Report on Form 10-K. We are not a party to any other material off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Management has evaluated the accounting policies used in the preparation of the Company’s unaudited condensed consolidated financial statements and related notes and believes those policies to be reasonable and appropriate. Certain of these accounting policies require the application of significant judgment by management in selecting appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on historical experience, trends in the industry, information provided by customers and information available from other outside sources, as appropriate. The most significant areas involving management judgments and estimates may be found in the 2024 Annual Report on Form 10-K, in the “Critical Accounting Policies and Estimates” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” There have been no material changes to our critical accounting policies as compared to the critical accounting policies described in the 2024 Annual Report on Form 10-K.
Adoption of New Accounting Pronouncements
There have been no material changes due to recently issued or adopted accounting standards since those disclosed in our 2024 Annual Report on Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
A significant portion of our debt bears interest at variable rates. If market interest rates increase, the interest rate on our variable rate debt will increase and will create higher debt service requirements, which would adversely affect our cash flow and could adversely impact our results of operations.
As of June 28, 2025, $262.6 million of combined term loan and revolving loans borrowings were subject to changes in variable market interest rates. A 1.0% increase in market rates would result in a $2.6 million increase in annual interest expense. For more information about quantitative and qualitative disclosures about market risk, please see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in Part II. of the 2024 Annual Report on Form 10-K.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
In accordance with Rule 13a-15(b) of the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of its management, including its CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of June 28, 2025. Based on that evaluation, the CEO and the CFO have concluded that the Company’s current disclosure controls and procedures are effective in ensuring that material information relating to the Company required to be disclosed in the Company’s periodic filings with the SEC is made known to them in a timely manner.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the second quarter of fiscal year 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
See Note 8. “Commitments and Contingencies” in our condensed consolidated financial statements included in Part I. Item 1. of this Form 10-Q for information regarding certain legal proceedings in which we are involved, which discussion is incorporated herein by reference.
Item 1A. Risk Factors.
For information regarding factors that could affect the Company’s results of operations, financial condition and liquidity, see the risk factors discussed in Part I. Item 1A. “Risk Factors” in our 2024 Annual Report on Form 10-K. There have been no material changes to the risk factors described in our 2024 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
(c) Except as set forth below, during the three months ended June 28, 2025, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted , terminated
On May 28, 2025 , L. Reade Fahs , the Company’s prior Chief Executive Officer at such time, adopted a trading arrangement for the sale of the Company’s common stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of the Exchange Act Rule 10b5-1(c). Mr. Fahs’ Rule 10b5-1 Trading Plan provides for the sale of up to 150,000 shares of common stock pursuant to one or more limit orders from August 28, 2025 until April 30, 2026 .
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Item 6. Exhibits.
Exhibit Index
| Exhibit No. | Exhibit Description | |||||||
| Third Amended and Restated Certificate of Incorporation of National Vision Holdings, Inc. - incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 10, 2021. | ||||||||
| Fourth Amended and Restated Bylaws of National Vision Holdings, Inc. - incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 12, 2023. | ||||||||
Executive Chair Agreement, dated April 28, 2025, by and between National Vision Holdings, Inc. and L. Reade Fahs. | ||||||||
| Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | ||||||||
| Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | ||||||||
| Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | ||||||||
| Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | ||||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within Inline XBRL document. | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104 | The cover page of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2025, formatted in Inline XBRL (included within the Exhibit 101 attachments). | |||||||
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| National Vision Holdings, Inc. | ||||||||
| Dated: August 7, 2025 | By: | /s/ Alex Wilkes | ||||||
Alex Wilkes | ||||||||
| Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
| Dated: August 7, 2025 | By: | /s/ Christopher Laden | ||||||
Christopher Laden | ||||||||
| Senior Vice President, Chief Financial Officer | ||||||||
| (Principal Financial and Accounting Officer) | ||||||||
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