Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net revenue increased by 4.2% compared to the prior year, driven primarily by growth from new store sales.
- Adjusted comparable store sales growth for the quarter was 0.4%, supported by an increase in average ticket due to pricing actions taken at the end of the previous year.
- Remote exam technology has been successfully implemented in over 550 locations, enhancing exam capacity and flexibility in doctor recruitment.
- Managed care continues to show strength, representing about 35% of the business, and contributing positively to the revenue mix.
- The company reaffirmed its earnings outlook for the year, indicating confidence in its strategic initiatives and financial discipline.
Negative Points
- Comparable store sales growth of 0.4% remains below the target of mid-single digit growth, indicating potential challenges in market demand.
- The macroeconomic environment continues to pressure the core uninsured consumer base, reflecting in cautious consumer spending and impacting sales.
- Eyeglass World segment underperformed, necessitating strategic adjustments and increased marketing efforts to improve brand performance.
- The company faces inflationary pressures, although it has been offsetting these through pricing actions and increased doctor productivity.
- The rollout of remote exam technology is still dependent on state-by-state regulatory environments, which can limit expansion pace and scope.
Q & A Highlights
Q: Given the underperformance of the Eyeglass World segment, which tends to cater to a slightly higher income demographic, are there other factors at play that are weighing on sales outside of just the macro environment?
A: Reade Fahs, CEO, explained that the key challenges for Eyeglass World are not primarily due to the demographic but internal factors such as inadequate coverage and operational inefficiencies. The company is addressing these issues by improving marketing, standardizing operations, and implementing remote technology in select stores.
Q: How should we think about the flow through or where you would land on the profitability side, if you come in at the lower end of your sales range for the year?
A: Melissa Rasmussen, CFO, noted that while March and April comps were in line with the lower end of their range, they plan to pull various levers related to revenue, such as rolling out remote exam capabilities in Texas, which is expected to significantly impact the second half of the year. They also plan to continue disciplined expense management to support profitability.
Q: How was ticket versus transaction in March and April, and how are you thinking about the transactions playing out over the course of the year?
A: Reade Fahs mentioned that the period was more transaction-driven, with a higher ticket offsetting a decrease in transactions. They are focusing on various programs to drive sales and continue strong performance in managed care.
Q: Can you provide some insights into the performance of the converted stores? How are their openings, and how do the ramps you're seeing compare to new store openings?
A: Reade Fahs indicated that the converted stores are transitioning well, with training in the new model progressing as expected. The company is optimistic about these stores adapting successfully to the new operational model.
Q: What are the expectations for remote exam capabilities, particularly with the recent regulatory changes allowing expansion into Texas?
A: Reade Fahs highlighted the significant progress with remote exam technology, especially with the recent regulatory changes in Texas. The company plans to enable remote technology in over 100 additional locations in Texas, which is expected to enhance exam capacity and overall sales.
Q: Could you discuss the impact of the pricing actions taken on exam revenues and how they compare to the market?
A: Reade Fahs affirmed that the pricing actions have been successful, particularly noting that exam net revenue fully offset doctor costs for the first time in 12 months. He emphasized that their exam prices remain highly competitive in the market, providing significant value to customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
