DULUTH, Ga.—National Vision Holdings Inc.
(NASDAQ:EYE) reported Tuesday that steady same-store sales gains helped the company boost net revenue by 10.3 percent to $408 million in the first quarter ended March 31. The comparable-store sales growth of 4.6 percent in the quarter also marked the 65th consecutive quarter of positive comparable-store sales growth, National Vision reported. The same-store sales growth was driven by increases in both customer transactions and average ticket, National Vision reported. (The Eyeglass World unit led the way with same-store sales growth of 6.3 percent in the quarter, executives said on a conference call with securities analysts on Tuesday morning.)
The company’s net income increased 46.7 percent to $25.0 million (compared with $17.1 million in the first quarter of 2017), while adjusted net income rose 15.5 percent to $26.9 million.
“We opened 15 stores during the first quarter, including locations in the greater New York metropolitan area, and continue to see a long runway for store growth,” National Vision chief executive officer Reade Fahs said in the announcement. “Our optometrists and associates remain committed to making quality eye exams and eyewear more affordable throughout the United States. Importantly, we remain on track to achieve the financial targets we established at the beginning of the year,” added Fahs, who said the company will continue to focus on “improved execution at the store level” going forward.
On the conference call, he also noted that the company “continues to believe that we’re gaining market share” and that there are additional opportunities to expand relationships with managed vision care insurance providers.
Addressing its 2018 outlook and financial targets, National Vision reaffirmed the following; the opening of about 75 new stores and achieving same-store sales growth in the 3 percent to 5 percent range. The company also projects annual sales of between $1.485 billion and $1.515 billion in fiscal 2018, with adjusted net income in the range of $52 million to $56 million. The company expects to open its sixth lab facility (fourth in the U.S.) in Texas in the first quarter of 2019.
National Vision opened 15 new stores (all under the America’s Best banner), closed one store and ended the quarter with 1,027 stores, according to the announcement. The overall store count grew 6.8 percent between April 1, 2017, and March 31, 2018. Fahs said the company’s “pipeline of [new] locations” remains strong going into 2019.
In its announcement, National Vision said that FirstSight Vision Services Inc., the company's HMO subsidiary, ceased the sale of vision care products in Walmart locations that are not operated by the company in the fourth quarter of 2017. This reduced net revenue and associated costs by approximately $1.8 million, with an immaterial impact on income from operations, the announcement noted.
In the recent quarter, National Vision reported adjusted EBITDA of $61.1 million, an increase of 3.7 percent. The adjusted total included an approximately $3 million, or 500 basis points, impact from certain items.
Interest expense decreased by $2.2 million (net) compared with the first quarter of 2017, driven by a $3.4 million decrease resulting from the payoff of the $125 million in second lien term loans and $235 million in outstanding amount of first lien term loans during the fourth quarter of fiscal year 2017, the company reported. This was partially offset by a $1.5 million increase related to interest payments due to counterparties associated with the company’s derivative cash flow hedges.