National Vision (EYE) Q4 2025 Earnings Transcript

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DATE

Wednesday, March 4, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Alex Wilkes
• Chief Financial Officer — Christopher Laden
• Investor Relations — Tamara Gonzalez

TAKEAWAYS

• Net Revenue -- $1.99 billion for the year, up 9%.
• Adjusted Comparable Store Sales -- Increased 6% for the year; Q4 comp store sales rose 4.8%.
• Adjusted Operating Income -- Grew 56% to $102.5 million for the year; Q4 adjusted operating income was $17.6 million.
• Adjusted Operating Margin -- Expanded by 160 basis points to 5.2% for the year; Q4 margin reached 3.5%, an increase of 280 basis points year over year.
• Adjusted Earnings Per Share -- $0.80 for the year, up from $0.52; Q4 adjusted EPS was $0.15 versus a Q4 loss of $0.04 last year.
• Managed Care Revenue Mix -- Managed care accounted for 42% of total revenue at year-end; managed care comp sales grew at a low double-digit percentage rate.
• Customer Traffic -- Total annual traffic declined 0.5%, driven by self-pay declines offset by growth in higher-value customer groups.
• Average Ticket -- Rose 6% for the year; Q4 average ticket increased 5.8%.
• Premium Frame Assortment -- The percentage of frames priced above $99 doubled from 20% to 40% by year-end; branded frames expected to reach 70% of assortment by year-end 2026.
• New and Closed Stores -- 12 America's Best stores opened and 4 closed in Q4; the company ended the year with 1,250 stores.
• Smart Glasses (Meta) -- Currently in 300 stores; company plans to roll out Meta glasses chainwide by end of Q2 2026 due to above-expectation sell-through.
• Balance Sheet and Cash Flow -- Year-end cash balance of $38.7 million; full-year operating cash flow was $146.3 million, and net debt to adjusted EBITDA stood at 1.1x.
• Debt Repayment -- Repaid $101.3 million of convertible notes during the year; total debt at year-end was $245.9 million (net of discounts).
• Share Repurchase Authorization -- New $50 million authorization approved, valid through December 28, 2030.
• 53rd Week Impact -- Extra week contributed $35.6 million of net revenue and $3.5 million of adjusted operating income for the year; this impact was excluded from comp metrics.
• 2026 Guidance -- Projected net revenue of $2.03 billion-$2.09 billion; adjusted comp store sales growth of 3%-6%; adjusted operating income of $107 million-$133 million; adjusted EPS of $0.85-$1.09.
• Store Expansion and Optimization -- Plans to open 30–35 new stores and close 10–15 in 2026, with America's Best stores weighted toward openings.
• Investments in Offering -- Premium lens penetration targeted to approach 60% for premium materials and 50% for anti-reflective coating from current 50% and 40% respectively.
• Cost Savings Initiative -- On track for $10 million in annualized cost savings for 2026, contributing to SG&A leverage.
• Technology Investments -- ERP and data platform upgrades executed, including Oracle ERP and Adobe CRM/Digital Experience Platform roll-outs.

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RISKS

• Chief Executive Officer Wilkes said, "November kind of as expected, but then we did see some slowing in December, in particular with the cash pay customer," indicating lingering volatility in the self-pay segment.
• Chief Executive Officer Wilkes described the cash pay customer as "still a bit more fickle than what we have previously experienced in years past," which may hamper broad-based traffic recovery.
• Chief Financial Officer Laden noted Q4 customer traffic declined 2.5% year over year, and explained, "healthy trends in our managed care business continue to offset softer traffic in our cash pay business," highlighting segment divergence.
• Chief Executive Officer Wilkes stated, "When you market two pair of eyewear for a certain price including an eye exam, and that is your primary lead offer that you deploy most of your marketing spend against, you are speaking to one customer type that is really sensitive to price. As you begin to shift that marketing expense into a marketing expense that is more targeted, you are making a conscious decision to walk away potentially from some of those cash pay consumers as you are reinvesting into the acquisition of the more valuable customer group," reflecting a strategic risk in shifting customer mix.

SUMMARY

National Vision Holdings (NASDAQ:EYE) reported substantial adjusted margin expansion and double-digit growth in adjusted operating income, driven by a deliberate shift to higher-value customer cohorts and premium products. Management confirmed that managed care customers now account for a greater revenue share, with strong low double-digit comp sales and growing adoption of premium frames and lenses. The rollout of Meta smart glasses exceeded expectations and is slated for full deployment by end of the second quarter, adding a differentiated product category with high transaction value. The 2026 outlook emphasizes continued progress on product mix, targeted marketing investment, and cost savings, while supporting incremental store openings and digital modernization, all underpinned by a new capital return plan.

• Chief Executive Officer Wilkes confirmed, "We started last year with about 20% of our frame board priced over $99. We ended the year at 40%," providing momentum for ongoing ticket growth from frame premiumization.
• Chief Financial Officer Laden said the 53rd week accounted for $35.6 million in revenue and $3.5 million in adjusted operating income, clarifying one-time factors affecting headline growth.
• Chief Executive Officer Wilkes described managed care as "the North Star" with a long-term goal of reaching 50% of revenue, reiterating the multiyear nature of the mix shift strategy.
• Management cited high prescription lens attachment and premium mix in Meta smart glass transactions as contributing to higher-value sales than legacy product lines.
• Chief Executive Officer Wilkes reported, "One of the things that I was most pleased by in 2025 was, in a category where eye exams were declining between the mid- to high-single-digit range, we actually grew eye exams in the plus-one range," demonstrating outperformance versus sector headwinds.

INDUSTRY GLOSSARY

• Adjusted Operating Income (AOI): Operating income excluding certain non-recurring or non-cash charges, used by management to assess underlying business performance.
• Managed Care: Revenue derived from customers whose eye care purchases are reimbursed through insurance or managed health plans, generally yielding higher average transaction values.
• Outside Rx: Customers who purchase eyewear using prescriptions written by eye doctors not affiliated with National Vision Holdings' in-store optometrists.
• Comp Store Sales (Comps): Growth measure based on sales from stores open for a full comparable period, excluding new and closed locations.
• Premium Frame Board: The assortment of higher-priced frames (above $99) offered for sale, as opposed to basic or value-priced frames.
• Smart Glasses / Meta: Wearable eyewear integrating digital technology or augmented reality features; in this context, refers specifically to Ray-Ban Meta collaboration products.
• Remote Exam Technology: Platform for providing eye exams via telemedicine, allowing doctors to examine patients at multiple locations remotely.

Full Conference Call Transcript

Operator: Thank you for standing by, and welcome to National Vision Holdings, Inc.'s fourth quarter and fiscal 2025 earnings conference call. At this time, participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. I would now like to hand the call over to Tamara Gonzalez, Investor Relations. Please go ahead.

Tamara Gonzalez: Thank you, and good morning, everyone. Welcome to National Vision Holdings, Inc.'s fourth quarter and fiscal 2025 earnings call. Joining me on the call today are Alex Wilkes, CEO, and Chris Laden, CFO. Our earnings release issued this morning and the presentation accompanying our call are both available in the Investors section of our website, ir.nationalvision.com. A replay of the audio webcast will be archived in the Investors section after the call. Before we begin, let me remind you that our earnings materials and today's presentation include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, are not limited to, the factors identified in the release and our filings with the Securities and Exchange Commission. The release and today's presentation also includes certain non-GAAP measures. Reconciliation of these measures is included in our release and the supplemental presentation. I would like to draw your attention to slide two in today's presentation for additional information about forward-looking statements and non-GAAP measures. Further, please note that all financial measures in today's commentary are based on a continuing operations basis unless otherwise noted.

As a reminder, National Vision Holdings, Inc. provides presentations and supplemental materials for investor reference in the Investors section of our website. I will now turn the call over to Alex. Alex?

Alex Wilkes: Thanks, Tamara, and good morning, everyone. Thanks for joining us today for our fourth quarter and fiscal 2025 earnings call. I'll start off by saying we had a great year. We enhanced our leadership team, laid out an ambitious transformational roadmap, and rallied the entire organization around initiatives focused on modernizing every aspect of the business, from customer engagement and in-store digital tools to product, pricing, presentation, data, and technology infrastructure. We delivered strong mid-single-digit comp store sales and modernized our business, all while driving significant operating margin expansion.

I'm proud of how our teams executed with urgency, and I'm confident in our ability to continue expanding our market share as we close the gap in areas where we are underdeveloped compared to the category. In 2025, the number of exams performed by our doctor network increased over last year, and metrics across ticket, NPS, and conversion moved in the right direction, contributing to healthy profit expansion, a key tenet of our path forward and in line with the expectations we set out to achieve. I am also pleased with how our target customer cohorts are embracing the changes underway.

We're expanding our customer base with more profitable customers, such as those who use managed care, progressive lenses, or bring in a prescription from another doctor, or what we call Outside Rx. This highly intentional customer mix shift we are driving resulted from key initiatives around new selling techniques in our store and a new approach to merchandising to give these customers the products they want. These initiatives were instrumental in driving the strong results we reported in fiscal 2025. Our 2025 results exceeded the expectations we laid out at the start of the year and are proof points to the power of our transformation. In fiscal 2025, net revenue grew 9% to $1,990,000,000. Adjusted comp store sales were 6%.

Adjusted operating income grew 56% to $102,500,000 versus $65,500,000 in 2024, with AOI margin expansion of 160 basis points over 2024, landing at 5.2%. This all contributed to adjusted EPS of $0.80 for fiscal 2025, compared with $0.52 in 2024. We finished the year strong with fourth-quarter comps tracking as expected within our long-term financial algorithm, and bottom-line results supported by our initiatives and strong execution. In the fourth quarter, net revenue grew 15.1% to $503,000,000. Adjusted comp store sales were 4.8%.

Adjusted operating income was $17,600,000, with AOI margin improving to 3.5% compared to 0.7% in the fourth quarter last year, and adjusted EPS in the fourth quarter came in at $0.15 per share compared with a loss of $0.04 per share last year. It's important to call out that in the fourth quarter, we saw traffic growth in our managed care, progressive, and Outside Rx customers combined, along with strong average ticket growth. Overall, I'm incredibly pleased with the performance, consumer resilience, and the execution of our strategy during the fourth quarter. Chris will cover more detail on the quarter in just a few minutes. We're happy with the execution of our strategies and the results they are delivering.

And first quarter to date, we're seeing continued confirmation of our strategy with comp store sales in the mid-single-digit range despite the weather challenges we've experienced so far this year. The success we saw in 2025 reflected early wins on the strategy we laid out at our Investor Day last fall. As we shared, our strategic initiatives are focused on four growth vectors, each with long runways, which include expanding with underdeveloped customers, evolving our product offering where we are underdeveloped, enhancing the patient and customer experience, and new store growth, while also remaining disciplined and intensely focused on operating margin expansion. During 2025, we began to expand with underdeveloped customers.

Through data-driven insights, we recognized that our customer audience is skewed more middle-income and was much broader than our historical targeted approach reflected. This intentional shift in customer mix delivered exactly the kind of performance we expected, driving stronger comps and healthier traffic from higher-value segments such as managed care, Outside Rx, and progressive customers. During fiscal 2025, we saw the benefit of our initiatives reflected in average ticket growth of 6% for the year and driven by meaningful progress to close the pricing and product mix gap relative to the category. Managed care comp sales grew low double digits in 2025, and we ended the year with 42% of revenues attributable to managed care.

Traffic declined half a percent overall for the year, reflecting declines with self-pay customers offsetting strong traffic gains with our more profitable customer cohorts. While some attrition among less profitable self-pay customers is anticipated and is reflected in our overall traffic results, the growing influx of more profitable customers is strengthening the quality of our business, and it is reflected in the profit expansion we are achieving. On the product side, our strategy to target areas of underdevelopment versus the category is paying off. We made a significant pivot in fiscal 2025 to attract a greater share of the more profitable customer cohorts already shopping in our stores, notably those paying with insurance.

As we refocused on attracting a broader, more profitable customer base, we transformed our merchandising strategy to better meet their needs. These are customers who seek premium frames and can spend more, whether through insurance benefits or higher disposable income. This evolution in customer and product approach allows us to better serve more profitable customers while still delivering compelling value to customers across all income demographics. In 2025, our shift towards more premium frames and branded assortments drove higher ticket and resonated strongly with existing customers while attracting new customers in the higher-income band demographics. With a higher mix of our customers using insurance, we evolved the mix of frames sold in our stores to better serve their needs.

We ended the year with approximately 40% of frames for sale in our stores priced above $99, up from 20% at the start of the year, and we have more to do on that front to continue modernizing our stores. We introduced more branded products, new brands like Lam, Ted Baker, Hugo Boss, Jimmy Choo, and, in the fourth quarter, Kendra Scott, and we're really excited that in early innings, these are turning above market benchmarks. These products proved critical to serving our target customers.

The timing of our business modernization could not be better, from expanding our premium assortment and refreshing our brand to strengthening the selling capabilities required to win in the premium and in particular in smart eyewear. Since launching Meta AI glasses last spring, our sell-through has exceeded expectations. As of the fourth quarter, Meta is available in 300 stores, and, based on this performance, we expect Meta will be available in all stores by the end of the second quarter. Our early success in smart glasses is a proof point to the attractiveness of America's Best to these customers. We're proud to offer this technology with access to eye care at scale in the U.S.

As we look ahead, we're being methodical and strategically phasing efforts to enhance our offerings across frames, lenses, and contact lenses. In 2026, we have an exciting year lined up for frame introductions. Some of the new frame brands coming to America's Best include a range of sought-after premium, fast fashion, and lifestyle brands like Burberry, True Religion, Kate Spade, Polo Ralph Lauren, and Costa. These advancements to our product mix also complement our pricing strategy, which progressed over the year from no-regrets pricing actions to modernizing our ticket on the bundle, and ultimately to enabling us to implement product segmentation in our stores.

Together, pricing, product mix, and the influx of targeted customers has driven comp store sales as reflected in the higher average ticket we saw over the course of the year. Looking to 2026, our pricing actions have become more sophisticated. This year, we're simplifying lens pricing and insurance pricing constructs to remove friction and make lens selection and upgrades easier for customers to understand. Throughout 2025, we made significant progress in our lens leadership initiative, and we have plenty of runway to grow. We grew in key lens products like anti-reflective coating, advanced materials, transitions, and progressives. For 2026, I think about our ambition for lenses similar to what we did in 2025 on frames.

We are going to begin providing more premium lenses within our assortment. We designed and executed tests for our lens leadership strategy around pricing and assortment simplification. In the coming months, we expect to begin offering Stellest, an FDA-approved lens designed to slow myopia progression while correcting refractive error in children with myopia. We are also offering more premium lenses to help managed care customers get more out of their benefits. One example of this is we plan to introduce a tier-four progressive lens later this year, which offers the widest, most natural, and distortion-free vision across all distances. This is a highly sought-after lens for progressive customers, reflecting strong demand for premium performance and a comfortable vision experience.

Our initiatives that enhance our lens offerings extend to key areas where we are underdeveloped when compared to the rest of the category. By 2026, we expect we will have made meaningful progress to close the gap versus the category when it comes to lenses. We expect lenses sold with premium materials to approach 60% from 50% today, which includes migrating from plastic to polycarbonate, and we expect anti-reflective would approach 50% of mix from approximately 40% today. In addition to specific frame and lens product enhancements, our focus for 2026 is to continue to build our retail excellence muscle to meet customers where they are.

We've changed how we think about product assortments in our stores and are moving to frame assortments by lifestyle or category and not just price point alone. Our goal is to drive greater relevance at the local level by aligning assortments more closely with the customer profiles we serve in each market. We're doing this through a disciplined, data-driven approach to segment assortments in both America's Best and Eyeglass World. We've identified distinct store merchandising clusters and expect to begin tailoring assortments later this year. Stores will be aligned into five merchandising tiers, each designed to serve defined customer cohorts.

As a result of this work, depending on the cohort of a store, the mix of branded frames is expected to increase from approximately 40% today to approximately 70% by the end of the year. Our merchandising strategy is working. By upgrading our frame and lens assortments, aligning pricing with higher-value customer needs, and tailoring assortments at the store level, we're driving higher ticket and healthier mix while preserving our overall value proposition. As we move into 2026, we're building on this momentum with disciplined product innovation and segmentation that we believe will position us to continue closing the gap versus the category and drive sustainable growth. Importantly, our merchandising strategy only works if it shows up in the experience.

That's where our focus on customer and patient experience becomes a critical growth driver. In early 2025, we began implementing a more consultative selling model in both our America's Best and Eyeglass World brands, which has played a meaningful role in closing the gaps across underdeveloped customer segments and product categories. These changes are taking hold in our stores, with a noticeable shift in frontline associates' behavior as they move beyond purely transactional interactions. The evolution of our selling approach is showing up in our average ticket, contributing meaningfully to our comp performance, and it is being well received by store teams. Importantly, our consultative selling approach really allows our associates to provide exceptional value for customers across demographics.

It's about creating a joyful shopping experience where you get the product that best meets your lifestyle needs. To support this transformation, we deployed iPads and digital tools enabling associates to more effectively match customers with products that best meet their needs. These tools, along with enhancements to our selling processes, have strengthened associate effectiveness and reinforced our move toward a consultative selling model. In parallel, we refreshed the in-store environment, updating visual elements such as graphics, pricing presentation, signage, and associate dress standards. The overall look and feel of our stores is materially different from a year ago.

Importantly, these improvements were achieved with relatively modest investments and without significant capital intensity, demonstrating our ability to drive meaningful change efficiently. Overall, these initiatives are improving performance with strong capital discipline. Our remote exam technology continues to provide important capacity flexibility across our network and remains integral to how we deliver care at scale. We are pleased with the progress our teams are making on our remote hybrid model where in-store doctors also perform exams in other stores remotely, and we continue to expand the number of doctors trained and participating in this program.

We believe this is an important way to deliver care more efficiently and give us greater flexibility in how we deploy our doctor network going forward. At our Investor Day, we shared that the Eyeglass World brand is a part of our portfolio that we call emerging brands, which today also includes the Vista Optical brand, with locations on select military bases and within select Fred Meyer stores. The foundational efforts in Eyeglass World to strengthen operations really gained traction, delivering solidly positive comps throughout the year. The focus has been on building a culture centered on accountability and ownership, implementing retail best practices, and driving overall operational execution.

During the year, we took a meaningful step to an employed OD model at our Eyeglass World locations, helping to standardize store execution and the patient experience. We are refining the Eyeglass World brand positioning. That work is underway now. We are thrilled with the work VML did for America's Best, and we'll share an update on what's coming with Eyeglass World later this year. We made tremendous strides in 2025, successfully transforming our brand marketing, shifting from a primarily promotional posture to a more strategic brand-led approach. Our focus in 2025 was on redefining the America's Best brand, including the launch of a new logo, a refreshed design, and our national creative campaign, Every Eye Deserves Better.

This campaign was designed to expand our audience targeting, allowing us to reach higher value such as managed care, Outside Rx, and progressive lens wearers, while remaining true to our value proposition, and performance of the campaign has been phenomenal. Since the launch, America's Best unaided awareness saw a noticeable uptick, reaching the highest in the category. Importantly, we continued targeting pragmatic buyers, those that are value-seeking self-pay consumers, reinforcing that our value proposition is compelling for customers across income demographics. As we reflect on the year, it's worth noting the journey we have taken at America's Best. Up until this past fall, America's Best was essentially a promotional all-the-time banner with the two-pair and eye exam offer.

In 2025, we started redeploying these promotional dollars to more targeted advertising, improving both efficiency and effectiveness. As a result, America's Best brand awareness is at its highest in recent memory, and a great accomplishment that we believe is yielding the traffic that we want. With America's Best new brand identity and campaign now launched, we're able to more fully leverage these refreshed assets to drive greater impact. This updated identity gives us significantly more flexibility to personalize our messaging and increase relevance with target customers. These are capabilities that were more limited under the prior Owl-led campaign.

This is a multiyear transformation, and in 2026, we're taking the next bold step forward with the addition of a new media partner, Infinite Roar, who brings a fresh perspective and more innovative thinking to how we deploy our marketing spend. Underpinning this evolution is a more segmented approach to messaging. Our 2026 strategy is designed to bridge broad brand awareness with more targeted content designed to engage our target customers. Importantly, we're also expanding into mid-funnel activities, with increased emphasis on influencers, social media platforms, audio, and sponsorships, creating a more balanced and effective media mix.

In parallel, our recent CRM improvements are designed to drive improved engagement post-purchase, including annual eye exam bookings and more tailored journeys designed to reactivate lapsed customers. Following the launch of our new CRM platform in 2025, we began with initial journeys focused on reengaging lapsed customers. In fact, in the fourth quarter, early results from our new lapsed customer journey were nearly twice as effective as our old approach, albeit on a smaller base as the program has just kicked off. Those early efforts delivered meaningful insights that sharpened our messaging and segmentation. That learning in hand, we're expanding our CRM activation to include enhanced lapsed customer outreach, post-exam engagement, and journeys tailored to our highest-value customer cohorts.

You've heard us talk about modernization a lot, and a big piece of that is expected to come from our technology strategy. Our goal is not just to keep pace with the industry, but to become an innovation leader supported by industry-leading technology foundations. This starts with an unwavering focus on creating a joyful customer experience, starting with our online presence where millions of customers begin their journey with our brands. It continues through a seamless experience into our retail locations and is maintained by meaningful ongoing connection points. In 2025, we launched the first phases of our elevated customer experience efforts rooted on the industry-leading Adobe Digital Experience Platform.

In 2026, we plan to expand that across all our brands and deepen the integration with our in-store experience. Complementing our digital experience platform, we're integrating Adobe CRM capabilities to enhance our customer insights, create more meaningful customer interactions, and build increased brand loyalty. To support the transformation across our customer experience, we are modernizing our foundational platforms, beginning with the launch of a new end-to-end Oracle ERP platform in 2025 with expanded capabilities planned in 2026 and 2027. We continue to deepen our investments in our modern data platforms, including our Microsoft and Databricks-based data warehouses as well as our data analytics and visualization platforms.

These investments are intended to create ongoing agility to allow us to continue to innovate quickly and realize the optimal benefit from emerging technologies, including AI and agentic commerce, among others, and we believe they provide us with the scale needed to meet our planned growth for years to come. We believe the work we've done across operations, merchandising, marketing, and modernizing our technology capabilities creates a more optimal environment for our customers. This is critically important where it matters most, helping our doctors deliver exceptional eye care for our patients. We had a strong year in 2025, with doctor retention and recruiting achieving well beyond our expectations, including over 10% of the recruiting class for new graduates.

Our doctor coverage remains healthy and stable, supported by innovative recruiting and retention strategies. To close, fiscal 2025 was a defining year for National Vision Holdings, Inc. We did what we said we would do. We executed our strategy, modernized our business, improved the quality of our customer base, delivered strong top- and bottom-line results. These results are the outcome of disciplined execution across merchandising, pricing, marketing, customer experience, and technology. I'd like to thank our teams for their dedication and continued commitment to our transformation. Your efforts have been instrumental in driving the progress we've seen. Just as important, the progress we've made this year positions us well for what's ahead.

We have clear opportunities to close the gaps and drive profitable growth. With our distinct growth vectors, strong industry tailwinds, and a team that has proven it can execute with urgency and precision, we're confident in our ability to deliver sustainable long-term value. Thank you for your time and continued support. With that, I'll turn it over to Chris to walk through our 2025 results and 2026 outlook in more detail. Chris?

Christopher Laden: Thank you, Alex, and good morning, everyone. As Alex shared, fiscal 2025 was a year of significant progress for National Vision Holdings, Inc. When I first spoke with you less than one year ago, I reinforced our commitment to a clear and focused mandate to expand our operating margins through disciplined execution and operational excellence. Through the collective efforts of our entire organization, we successfully rallied around this objective and implemented the foundational changes necessary to drive sustainable margin improvement in 2025. Key to our success has been instilling a culture of strong financial discipline across all levels of the enterprise. We strengthened our organizational processes to ensure every dollar spent drives measurable value creation.

The culmination of these efforts resulted in a 160 basis point expansion in operating margin in 2025. This progress reflects the dedication and alignment of our entire team, and I'm confident in our ability to build on these achievements as we enter fiscal 2026. Before I provide our outlook for 2026, let me first turn to our fourth quarter and fiscal year 2025 results, which, as a reminder, include an extra week compared to the prior year. The 53rd week represented $35,600,000 in net revenue and $3,500,000 in adjusted operating income.

All results reported today are inclusive of this 53rd week impact, with the exception of our comparable sales and adjusted comparable sales metrics, which are reported on a 52-week calendar. In addition, I will be referring to certain non-GAAP metrics in my discussion, and would refer you to today's press release for reconciliations of all non-GAAP financial measures to their most comparable GAAP financial measures. For the fourth quarter, net revenue increased 15.1% with adjusted comparable store sales growth of 4.8% and growth from new stores. During the quarter, we opened 12 new America's Best stores and closed four America's Best stores. We ended the quarter with a total of 1,250 stores.

Adjusted comparable store sales growth in the period was driven by an increase in average ticket of 5.8%, which reflects continued strength in the managed care cohort, including operational improvements that led to higher revenue in the quarter, along with execution of our pricing and merchandising initiatives. We expect to continue to benefit from improvements in our managed care operations going forward, though likely not to the magnitude we experienced in the fourth quarter. The increase in average ticket was partially offset by a 2.5% decline in overall customer traffic compared to the prior year, as healthy trends in our managed care business continue to offset softer traffic in our cash pay business.

As we have discussed, this intentional evolution of our customer mix to more profitable target customer cohorts is expected to create a healthier overall business, even if we see short-term traffic decline. To that end, in the fourth quarter, we saw traffic growth for managed care, progressive, and Outside Rx customers combined. As a reminder, the fourth quarter is unique for us, as it is typically our lowest revenue quarter of the year and one weighted toward the end of the period given seasonality with customers using benefits before expiration. To provide some additional context to our comps in Q4, there was a negative impact to our results driven by the calendar shift of the 53rd week.

We lost one of the highest-volume selling days in the comp calendar, which, for context, normalized, would have driven an additional 50 basis points improvement in our Q4 traffic comp. Overall, the trends we have talked about throughout the year remain consistent. We are excited about the revenue and operating margin performance for the quarter and the year. Our eye exam conversion to product sales has remained consistent with prior quarters, which is another key indicator of customer acceptance of our merchandising and pricing transformation. As a percentage of net revenue, costs applicable to revenue decreased approximately 40 basis points.

The resulting increase in gross margin is driven by our growth in average ticket from higher managed care revenues in the quarter and execution of pricing and product mix initiatives, partially offset by the expected slight increase in optometrist-related costs as we lapped a prior-year onetime benefit related to doctor incentive true-ups. Adjusted SG&A was $251,900,000 in the fourth quarter, and as a percentage of revenue, leveraged 180 basis points. This performance was primarily driven by operating leverage on lower associate-related expenses and advertising, partially offset by higher variable incentive compensation and health care expenses.

Adjusted operating income, reflecting the benefit of the 53rd week, increased to $17,600,000 compared to $3,200,000 in the prior-year period, and adjusted operating margin increased 280 basis points to 3.5% for the quarter. Net interest expense was $4,200,000 compared to $4,600,000 in the prior year. During the quarter, we entered into an interest rate hedge on a portion of our outstanding debt. This $100,000,000 hedge is at a fixed rate of 3.43% and is intended to reduce exposure to short-term rate volatility. Adjusted EPS was $0.15 per share in the fourth quarter, up from negative $0.04 per share last year.

Turning now to our financial results for fiscal 2025 as compared to fiscal 2024, we delivered adjusted comparable store sales growth of 6%, adjusted operating margin expansion of 160 basis points to 5.2%, and adjusted EPS growth of approximately 54% to $0.80 compared to the prior year. Turning next to our balance sheet, we ended fiscal 2025 with a cash balance of $38,700,000 and total liquidity of $332,000,000, including available capacity from our revolving credit facility. During fiscal 2025, we repaid $101,300,000 in long-term debt convertible notes, bringing our total debt outstanding, net of unamortized discounts, to $245,900,000 at the end of 2025. We ended the year with a net debt to adjusted EBITDA of 1.1 times.

For the full year, we generated operating cash flow of $146,300,000 and invested $72,800,000 in capital expenditures, primarily driven by investments in new and existing stores and information technology. We also had non-capital investments related to our IT infrastructure, including our finance ERP and new CRM and our e-commerce platforms during the year. We continue to maintain a strong balance sheet and healthy cash flow to support our growth and capital allocation priorities. Our Board of Directors recently approved a new share repurchase authorization following the expiration of our prior authorization on January 3.

While our priorities are focused on the growth initiatives underway, we are pleased to have the authorization in place to repurchase up to $50,000,000 of shares until December 28, 2030. Moving now to our fiscal 2026 outlook, which is consistent with the initial view we shared at our Investor Day last fall, reflecting continued momentum from our transformation initiatives, confidence in our strategic direction, as well as consideration for a range of scenarios with respect to the macro environment and consumer demand. For fiscal 2026, which, as a reminder, is a 52-week year, we currently expect net revenue between $2,030,000,000 and $2,090,000,000, supported by adjusted comparable store sales growth of 3% to 6%.

Our comp outlook assumes a similar mix of ticket and traffic as we saw in 2025 and incorporates strong quarter-to-date results despite the significant weather events during the quarter. With respect to profitability for 2026, we expect adjusted operating income between $107,000,000 and $133,000,000, which includes a range for depreciation and amortization of $88,000,000 to $92,000,000. At the midpoint, our outlook assumes fiscal 2026 adjusted operating margin expansion of approximately 100 basis points relative to fiscal 2025, excluding the 53rd week. This expansion in adjusted operating margin is expected to be primarily driven by SG&A leverage. Our guidance takes into account our multiyear cost savings plan, and we remain on track to realize approximately $10,000,000 in annualized savings this year.

Interest expense is expected to be between $14,000,000 and $16,000,000. We expect our effective tax rate to be approximately 28%, excluding the impact of vesting of restricted stock units and stock option exercises. Bringing this all together, we expect adjusted diluted EPS to be between $0.85 and $1.09 per share, which assumes approximately 82,000,000 weighted average diluted shares outstanding. We expect capital expenditures to be between $73,000,000 and $78,000,000, which includes investments to open approximately 30 to 35 new stores this year. Store openings will be relatively balanced throughout the year and will be weighted towards America's Best brand stores.

We also expect to close approximately 10 to 15 stores as part of our ongoing fleet optimization efforts, resulting in net new store growth of approximately 20 to 25 stores. We expect store closures beginning in the second quarter, continuing with a relatively balanced cadence through the fourth quarter. As we consider the impact of returning to a 52-week fiscal year, the quarterly profile of the business will be affected. Taking into account factors such as the loss of the 53rd week, holiday shifts, changes in selling days, and the timing of our investments, our expectation for adjusted operating margin is for Q1 and Q3 to drive more favorable year-over-year growth, with Q2 and Q4 yielding flat to modest growth.

In summary, we are proud of the results we have delivered for fiscal 2025. We believe the strategic initiatives we have put in place position us well to deliver on both our near- and long-term targets and will drive shareholder value. And with that, I would like to thank you for your participation in today's call. Operator, we're now ready for questions.

Tamara Gonzalez: Thank you.

Operator: As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. Please limit yourself to one question and one follow-up to allow everyone the opportunity to participate. Our first question comes from the line of Michael Lasser of UBS. Please go ahead, Michael.

Michael Lasser: Good morning. Thank you so much for taking my question. You're providing a lot of evidence that your strategy is working and leading a very effective performance. The key question from here is going to be whether there could be a pause in the trade-off between the growth you're getting from the insurance, more richer-pay customers versus the traditional customers that National Vision Holdings, Inc. has served. So are you seeing any evidence of that, whether it was the shape or cadence of the fourth quarter or what you've seen quarter to date, that there could be a disruption in this growth rate as you have that potential handoff over time?

Alex Wilkes: Hey, Michael. Good morning. Thanks for the question. I will address a bit of the shape of the fourth quarter and step a little bit through what we are seeing in the first quarter and then provide a little bit of color on the cash pay customer versus the managed care customer. So, the fourth quarter certainly was an interesting quarter for us. We started October off actually pretty darn strong, and were happy with the results. November kind of as expected, but then we did see some slowing in December, in particular with the cash pay customer.

An important nuance of December, though, was as soon as we cleared Christmas, actually, our week 53 was pretty darn fantastic, and we saw consumer demand come back. I think a little bit of that was related to the compressed timeline between Thanksgiving and Christmas where folks might not have been as much in the optical game as we would have liked, and there was a fair amount of macro noise. As we moved into January, that demand continued.

We were super happy with our results all through essentially January 22 when winter storms, I think, put not just our business but a lot of other businesses a little bit on our heels with the winter weather that impacted, frankly, a large swath of the U.S. Again, super pleased with where we are sitting through the first quarter, two months in, sitting in the mid-single-digit range, seeing sequential acceleration in traffic. So really, really quite pleased with that. Now a little bit deeper into your question on the managed care versus the cash pay cohort. Again, continuing to see strength with the managed care consumer.

The cash pay customer is still a bit more fickle than what we have previously experienced in years past. We did start to see a little bit of improvement last year, and then late last year, there was a little bit of continued macro wobble. But we do think that we will comp positively with the cash pay consumer in 2025. One of the interesting things that we have talked about is that the cash pay consumer has actually opted into some of the more premium products that we have rolled out at a faster clip than what we had anticipated, and that was also a contributor to our success in 2025.

So, Michael, I hope I got to most of your question.

Michael Lasser: You did. You did a great job, Alex. So you expect cash pay to comp positive. What would that compare to the comp from that cohort of consumers in 2025, just so we have a relative frame of reference? And what have you factored in from both the tax refunds as well as smart glasses that will be fully deployed to your stores by the second quarter into your guidance for this year, just to help us assess the degree of conservatism that could be baked into the outlook? Thank you so much.

Alex Wilkes: You got it. So on the cash pay consumer side, again, it is a combination of both traffic and ticket. As we are introducing more products and rolling out smart eyewear to more stores, we absolutely think that cash pay consumer is going to participate in that. We are still being a bit more conservative on our traffic expectations with the cash pay consumer until we start to see a bit more acceleration in the repurchase cycle of that consumer cohort. But, again, on an overall comp basis, because they are opting into the more premium offerings we are launching, we do feel positive about the cohort on a comp basis.

On the second point on tax refunds in 2026 outlook as that relates to smart eyewear, clearly, we think having more money in the consumer's pocket is a good thing for us and a good thing for consumption of the category in general. As we step through the next couple months, we will hopefully see some of that flow through at a higher rate to our business than what we have even experienced quarter to date. Again, optimistic. We obviously think cash in the consumer's pocket is a good thing.

But with our stronger resiliency with the managed care consumer, we are not necessarily as dependent on the tax refund tax seasonality now as we may have been in years past. As it relates to smart eyewear and 2026 outlook, we are super excited that we are going to be deploying Ray-Ban Meta to the balance of our fleet by the end of the second quarter. Again, this has been one of the really pleasant surprises of our business, that it is one of the hottest-selling products that we have in our assortment. We are ecstatic with the performance of Ray-Ban Meta within our stores.

The transaction value of that consumer is significantly higher, among the highest of our consumer types. So nothing really but enthusiasm and good news for us as it pertains to that product category.

Michael Lasser: Understood. Thank you so much, and good luck.

Alex Wilkes: Thanks, Michael.

Operator: Thank you. Our next question comes from the line of Simeon Siegel of Guggenheim Securities. Please go ahead, Simeon.

Simeon Siegel: Thanks. Hey, good morning, everyone. Nice job. Sorry if I missed it, Alex. I know, and maybe this is following up on the last one a little, but just any way to help us think about how you're breaking apart the pieces of that net traffic between those two pieces? So thinking about the puts and takes of the gains from the profitable target customers versus what you think you will walk away from. This is something about for the future: what you think you will still walk away from? I'm just curious when we can start having the reset offset behind us and the traffic is more of a simple story of the new target customer growth.

Then maybe, Chris, really impressive SG&A leverage. How much of that was cutting expenses versus leveraging fixed costs on higher sales? And how are you thinking about that SG&A dynamic into next year? Maybe the same idea of leverage versus opportunities to cut costs? Thanks, guys.

Alex Wilkes: I will take the traffic one and then turn it to Chris on the leverage question. We think we have multiple years of work ahead of us to be very deliberate on our consumer cohort shift. Again, I spoke a little bit about this in my prepared statements, that historically we were really an always-on promotional company. When you market two pair of eyewear for a certain price including an eye exam, and that is your primary lead offer that you deploy most of your marketing spend against, you are speaking to one customer type that is really sensitive to price.

As you begin to shift that marketing expense into a marketing expense that is more targeted, you are making a conscious decision to walk away potentially from some of those cash pay consumers as you are reinvesting into the acquisition of the more valuable customer group. So, yes, Simeon, we do believe that this is a multiyear strategy. We are winning with the more profitable customers that we are seeking. We have rebuilt our acquisition platform to accomplish just that, and not just my message externally but internally to the team here has been we need to ensure that we are winning with the customer cohort to drive the profitability of the company.

Again, Chris talked about this at length too. That is the primary mission of this management team: to continue to expand operating margin, and we are doing that through this intentional shift of the customer cohort. Long story short, we think we have multiple years of runway to go as we work on this customer shift, and what we are measuring ourselves on is our effectiveness at driving the customers that we want into our stores.

Christopher Laden: On the cost front, the operating leverage expansion that we are seeing is really a healthy mix of both things. Our comps at 6% for the year certainly help leverage our more traditional fixed costs, but we have unpacked every line item within our SG&A portfolio over the course of the last twelve months. We have seen in 2025, and we expect to see over the next couple of years, about $20,000,000 of cost out in those line items.

We joked a little bit at Investor Day: things as big as relooking at our logistics contracting for national freight to something as minor as looking at what kinds of paper our stores are ordering and making sure that we are optimizing there. What we see in the future is a continued ongoing, precise view of how we spend, both at the support center and our stores. The team has embraced it with open arms. It is something that the entire enterprise has rallied around and is excited about.

Simeon Siegel: Great. Thanks so much, guys. Congrats again. Best of luck for the year.

Alex Wilkes: Thanks, Simeon.

Operator: Thank you. Our next question comes from the line of Dylan Carden of William Blair. Please go ahead, Dylan.

Dylan Carden: Thanks. Alex, what do you make of the projections for sort of a softer end market this year? I think some of the ones out there are down low single digits for the total industry, and then obviously last year was sort of soft. Is that sort of the corollary that you see in traffic being kind of your cash customer more subject to those types of declines, and your business is sort of staying above the fray given all your initiatives? Is there sort of more of a turbocharge capacity for the other end of it?

Alex Wilkes: You know, Dylan, first and foremost, I think we control our own destiny on a lot of these elements. One of the things that I was most pleased by in 2025 was, in a category where eye exams were declining between the mid- to high-single-digit range, we actually grew eye exams in the plus-one range. I think that speaks to the strength of our brands. It speaks to the strength of our strategy and how we are communicating with the consumer about the offerings that we provide across our banners.

Even in the face of some macro challenges and some uncertainty, I think our strategies are paying off, and it is showing in outstripping the category from an acquisition and eye exam growth perspective. When we think about things that can help us to continue to outperform, it is that we are the obvious destination for value in the category. We are not shifting away from that, but we are refining exactly what that means. We think elements like continuing to introduce more premium products—to your question on turbocharging our business—continuing to introduce more premium products, making the in-store environment a bit more joyful.

We did not talk about it at length during the call, but I am happy with the momentum we are seeing at Eyeglass World and the change in trajectory there. In 2024, that was a negative-comping business, and Eyeglass World was plus 4.2% last year. I think all of those things are pulling in the right direction and cumulatively are having a nice strong impact on our business, even in the face of some macro uncertainty. That being said, as you know from following our story, we do prepare for all sorts of scenarios, which is why our guidance continues to be incredibly prudent.

Dylan Carden: Excellent. And then CapEx stepping down for kind of a second year in a row, is there any bigger lift or investment necessary for sort of store experience as you cater to a higher-income consumer?

Alex Wilkes: I think we have been pretty intentional about the investments we are making in kind of refreshing the stores, particularly with the America's Best rebranding, have been intentionally focused on things that require minimal capital. So we can refresh these stores, we can introduce some of the new branding assets at a pretty nominal rate for CapEx relative to the size of the business. As we reported on CapEx, we said during Investor Day we are looking to spend 4% to 5% of revenue in CapEx over the next few years.

In the very immediate term, when we are directing more of those investments at modernization of the business and organic investments, you will see a lot of this show up in our traditional CapEx. Also, some of that does not come through kind of traditional CapEx. There are still cash investments we are making that we will see build through other assets in the balance sheet.

Christopher Laden: So the dollars are still being reinvested in the business, but unlike when we were growing at a faster pace with new stores, not all of that is showing up in the CapEx line.

Alex Wilkes: And then, Dylan, I want to double down on something again, a statement I made during my prepared remarks. One of the things I am super proud of this company for having done over years is investing in doctor equipment, ensuring that the stores are well maintained, ensuring that our stores are orderly and clean. We do not have anything that is massively out of sorts. Where we did have opportunity is to make the environment a bit more joyful by modernizing the dress code of our associates. Again, those are not capital- or even expense-intensive items. These were minor investments along visual merchandising.

For those of you who have not been in one of our stores recently, I would say go into one of our stores and take a real look around at the environment, at our people, at our teams, and compare them to what it looked like a year ago. I think you will see and feel a noticeable difference in the environment, again, even in context of some very, very cost-efficient and minor tweaks from a capital structure.

Dylan Carden: Really appreciate it. Thank you.

Operator: Thank you. Our next question comes from the line of Brian Tanquil of Jefferies. Your line is open, Brian.

Brian Tanquil: Hey, good morning, guys, and congrats. Maybe just as I think about the comment you made that what you're realizing is that your current target customer is probably more of a middle-class or middle-income customer. How durable do you think that is? I mean, as we think about maybe a down trade that is happening right now, and then how do you mesh that with all the strategies that you're putting in? Just trying to get a sense of the stickiness of this customer base that is now showing up at your stores.

Alex Wilkes: Brian, I will tell you this. Thanks for the question. I think we feel even better about it today than we would have a year ago because that middle-income consumer has higher expectations of product. They have higher expectations of experience, and those are all things that we are continuing to deliver on. Again, it is important to think through the lens of our price and value gap versus the category. We are delivering better products, a better experience.

We are delivering better stickiness through our investment in CRM and shifting our marketing and acquisition expense into areas that are in particular pointed at the notion of retention, all while maintaining a significant gap versus the category—an intentional gap versus the category—in terms of average dollar ticket transaction. Again, yes, we are absolutely focusing on driving our ticket growth through introduction of more premium frames and being more deliberate on pricing. That being said, we still are the obvious destination for value in the category.

Introducing more premium product while still maintaining our value positioning in the market—we actually think that is the winning recipe to continue to be a destination of choice, in particular for that consumer that you spoke of.

Brian Tanquil: Got it. And then just on the weather impact from the quarter, looks like you have a decent number of stores in the Northeast, New York, New Jersey. So just curious how you think, or how we should be thinking about the impact from that from a modeling perspective. Thanks.

Alex Wilkes: We had probably about 15% of our fleet that sat right in the crosshairs of the winter storms that we had to weather through the end of January and even into February. Again, I am really happy with how the team has responded to call patients back and get them back in stores for appointments that potentially they could not make due to store closures and road closures and all those things that we had to manage through.

Sitting here today, two months through the first quarter in the mid-single-digit range with sequential traffic acceleration from the fourth quarter, I could not be more pleased with how the team has responded to those challenges that we faced in the first couple months.

Tamara Gonzalez: Thank you.

Operator: Our next question comes from the line of Robert Ohmes of Bank of America. Your question please, Robert.

Robert Ohmes: Good morning. Thanks for taking my question. Actually, Alex, and maybe Chris, just on 2026 and thinking about the most important potential tailwinds, or maybe just highlighting more of the tailwinds. How significant—you mentioned simple lens pricing—could you give us maybe some more color on that? Also, remote exams, is that a driver still or sort of tailwind for 2026? And then maybe just a little bit more on the advertising. You mentioned a new media partner. As you go through 2026, what incremental could we see on the marketing side?

Alex Wilkes: Thanks, Robbie. On tailwinds, we are really excited about the new product introductions that are coming throughout the year. Similar to last year, those new product introductions are going to be phased in throughout the course of the year, and we think we are going to see continued momentum from that. On the lens side, lens purchasing in this category is a very complicated and non-consumer-friendly activity. With our deployment of iPads with the OptiCam, all intended to demystify the lens shopping experience, we think that is going to continue to help.

We are looking at simplifying our lens assortment, especially once we have our tier-four lens introduced, so that we can create a more simple lens hierarchy so that consumers understand the good-better-best architecture a bit better than what they do today with all the different degrees of add-ons and lens materials and all the different combinations that exist today. We are testing our way through that at the moment to understand exactly how to create that narrative and create that experience the most efficient way for the consumer. We think that will be ready for commercial application towards the back half of the year. Certainly, we think that is a win for our consumers.

We think that is a win for the business as well and helps us towards our goal of migration to more premium lens materials and lens add-ons. Remote exams continue to be a winning recipe for our business, and, frankly, I think it is one of the reasons that we were able to weather the weather impact of the first quarter in the way that we have, by having doctors that could see patients remotely when they may not have been able to travel into a location. What a great asset to have during that time period. Again, super excited about the opportunity that we can provide doctors to both practice in store and practice remotely.

We think that is a differentiator and, frankly, one of the reasons that we had a really strong recruiting class in 2025. Our doctor retention and doctor recruiting was at an all-time high for the year, and we think offering remote as a mode of practice is certainly one of the contributors to that. On your last question on advertising and the media partner, I think this is our next bold step in the transformation of our marketing capabilities. If you think of 2025 as really a year around creating new brand assets and a new identity and a new campaign, 2026 is around how we take those assets and deploy them differently.

I have spoken about this in the past. Historically, we spent a lot on linear TV advertising, we spent a lot on search, and we have not really done a particularly good job in mid-funnel activation and digital, in targeted advertising where more and more consumers are actually consuming their media. With our new partner, we are making some deliberate shifts this year in how we deploy our acquisition expense, in particular, in the mid-funnel range of acquisition. All of that is intended to pull in the same direction and help us to attract those customers that we spoke about: the managed care, the Outside Rx, and the progressive customers that are so important to our profitability expansion story.

Robert Ohmes: Sounds great. Thank you.

Operator: Thank you. Our next question comes from the line of Anthony Chukumba of Loop Capital Markets. Please go ahead, Anthony.

Anthony Chinonye Chukumba: First off, thank you for taking my question. Second off, congrats on a really wonderful 2025, and it is very encouraging to hear that you are doing mid-single-digit comps in the first quarter given the weather challenges that have impacted so many retailers. I just wanted to drill down a little bit on smart glasses. Obviously, you are selling the Ray-Ban Meta. It is going really well for you. You are expanding to all your stores. I just want to clarify—two parts to the question. First off, you do not have any type of exclusive arrangement with Meta, do you, where you can only sell their smart glasses?

Related to that, obviously, there is going to be Android XR that will be coming out. Do you foresee a scenario in which you could potentially be selling some of those glasses as well? Thank you.

Alex Wilkes: We do not have an exclusive relationship with Meta, but we are super happy with the partnership that we have with Ray-Ban Meta and with our partners at EssilorLuxottica. Again, I think it is just a great proof point for us that we can be highly successful in selling smart eyewear in our store environment. I cannot wait for this to be scaled to the remainder of the fleet by the end of the second quarter.

Absolutely, we believe that we will be participants in the smart eyewear space across different platforms, and the success that we have had with Meta so far is the proof point that we will be a very meaningful player in smart eyewear for years to come.

Anthony Chinonye Chukumba: Got it. Keep up the good work, guys.

Alex Wilkes: Thanks, Anthony.

Operator: Thank you. Our next question comes from the line of Adrian Yee of Barclays. Please go ahead, Adrian.

Angus Kelleher: Hi. This is Angus Kelleher on for Adrian Yee. You talked about consultative selling driving higher ticket and better mix. How scalable is that across the full fleet? How many stores were you deploying that in at year-end? What is the level of investment or turnover or upskilling needed to roll that out nationwide?

Alex Wilkes: Angus, great question. We are rolling it out nationwide. However, as you can imagine, moving 14,000 people along the journey of consultative selling is quite the task. It requires reinforcement. It requires focus. It requires center-stage activity during our national sales meetings. This is not a one-and-done thing. Our field sales organization is continuously focused on ensuring that we are sustaining those behaviors, but it is a multiyear journey to get our associate base to the point where we want them to be. OptiCam and the launch of OptiCam in Q4—one of the things that we really loved about that is that it becomes the tangible tool to help our associates along with that journey.

It is really the combination of a selling tool with content that we have created to, again, demystify the experience and help consumers through the journey combined with the behaviors and the selling techniques and the consultative selling techniques that we are teaching and reinforcing. That will help along the journey of consultative selling. By simplifying the lens experience, we will make it easier for our associates to engage in consultative selling because it just makes it that much easier to have the conversation with the consumer.

Angus Kelleher: Great. Thank you. Good color. Then just a quick follow-up. Can you help us size up how much of your managed care customer base is Medicare Advantage or skewed to older demographics? As you think about potential changes to Medicare Advantage plan benefits, do you see any potential risk to vision coverage or customer retention within that cohort? Thank you.

Alex Wilkes: We really do not see any risk in changes to Medicare Advantage as they participate in the managed care realm. Medicare Advantage generally participates in managed care through a third-party TPA relationship with a managed care provider. It is not something we, frankly, track, but the conversations that we have with our managed care partners indicate this is not something that we should be concerned about or believe that will be a material impact to our business.

Angus Kelleher: Okay. Sounds good. Best of luck.

Operator: Thank you. Our next question comes from the line of Matt Koranda of Roth Capital. Please go ahead, Matt.

Matthew Butler Koranda: Hey, guys. A lot has been asked and answered, but I wanted to hear, as it pertains to the mid-single-digit comp guide for 2026, how important the continued frame assortment optimization is in that plan versus the premium lens penetration assumptions that you are making. Then, did you explicitly have any tailwind baked into the comp from AI glasses? Let's start there.

Christopher Laden: A couple of things to unpack there. First of all, when we think about our average ticket increase through 2026, it is really going to be a healthy mix of both our frame assortment evolution and lens leadership. Something to keep in mind is we still have tailwinds coming from 2025. We started last year with about 20% of our frame board priced over $99. We ended the year at 40%. That was a phased approach throughout the year. We are continuing to see tailwinds even in Q1 and the first half of the year from some of that evolution.

At the same time, we are continuing that evolution through the rest of this year, targeting around 60% of the frame board by the end of this year. I think we will continue to see some tailwind on the frame side, as Alex mentioned. The simplification of our lens portfolio and some of our selling tools and techniques around simplifying the customer journey on lenses, we think, will ultimately yield improvements in average ticket as well. As we think about the AI impact and smart glass impact to our comp, we could not be more excited about the acceleration of that product category.

At the same time, it is in 200 stores today, and it does not represent a material impact to the business, but we are super excited about its contributions over time. That is likely a multiyear journey where that becomes something that is a material impact to our comp.

Matthew Butler Koranda: Okay. And then on AI glasses, what are you seeing in terms of prescription lens attach rates? I know you guys are very different than some of the traditional venues in which the Meta product is sold, which is more sun-related. Are you seeing higher rates of prescription lens attach rates? How do you think about premium lens attach rates to AI glasses as you move forward with the strategy?

Alex Wilkes: Matt, it is a really, really good question. One of the reasons we are most bullish on this technology is that, in fact, we are seeing a very high degree of premium lens attachment with the Meta smart eyewear glasses that we are selling. The vast majority of what we are selling is coming with a prescription lens, and the vast majority of those lens sales are coming with the attachment of premium lens additions and lens products. The overall package purchase of a Meta AI transaction is among the highest-value transactions that we are seeing, and it is significantly, in part, related to what we are seeing from a lens attachment perspective.

Matthew Butler Koranda: Great to hear. Thanks, guys.

Operator: Thank you. Our next question comes from the line of Simeon Gutman of Morgan Stanley. Please go ahead, Simeon.

Lauren (for Simeon Ari Gutman): Hi. This is Lauren on for Simeon. Thank you for taking our question. Just first, really quickly, curious on the managed care versus self-pay consumer in 2026 as it relates to your 3% to 6% comp. Could you elaborate more on the comp expectations for managed care versus self-pay at the low end versus the high end of the guide? Thanks.

Alex Wilkes: Our planning scenarios assume with the high end that we can see a positive comp across both consumer cohorts. Again, what we saw in 2025 is that our self-pay consumers were leaning into some of our more premium assortments at actually a faster clip than even some of our managed care consumers. That being said, at the low end of our range, our assumptions for negative traffic would likely come out of the self-pay cohort. To unpack that a little bit further, we are trying to drive the right traffic within the business.

When we think about our guide of 3% to 6%, we are still anticipating and feel confident that we are going to drive the right traffic with our customer cohorts that we are targeting, even at the low end of the range. But at that point, you are still essentially in the negative traffic comp for the self-pay consumer.

Lauren (for Simeon Ari Gutman): Okay. Great. Thank you. Then you also previously shared expectations for managed care to reach around 50% of revenues, and today you shared it is around 42%. So is 50% still the right goal? If so, what is your line of sight to achieving that 50%?

Alex Wilkes: We still feel great about 50% being the North Star. The 42% is on a base where both self-pay and managed care are growing. In order for managed care to hit that 50%, we expect to see disproportionate growth in there, but we still feel great about 50% being a North Star. We still look at a multiyear journey to get there, but all the strategies we discussed at Investor Day are specifically targeted at exactly that, and all the proof points thus far have been very positive.

Lauren (for Simeon Ari Gutman): Okay. Great. Thank you.

Tamara Gonzalez: Thank you. I would now like to turn the conference back to Alex Wilkes for closing remarks. Sir?

Alex Wilkes: You got it. Thanks so much, and thank you for your questions today. Let me just wrap with this. To my National Vision Holdings, Inc. teammates listening to the call today, thank you for your dedication in 2025. It was a remarkable year, and to the 14,000 people who contributed to this, thank you on behalf of the leadership team for remarkable performance, and I cannot wait to see what we do in 2026. Thank you, guys.

Tamara Gonzalez: This concludes today's conference call. Thank you for participating. You may now disconnect.

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