National Vision Holdings, Inc. ( EYE Quick Quote EYE - Free Report) delivered adjusted earnings per share (EPS) of 17 cents in the second quarter of 2023, down 19% year over year. However, the figure topped the Zacks Consensus Estimate by 13.3%.
The adjustment excludes the impact of certain non-recurring charges like stock compensation expenses, asset impairment and the amortization of acquisition intangibles, among others.
GAAP EPS in the quarter was 7 cents, marking a decline of 41.7% from the prior-year figure.
Revenues in Detail
Revenues in the second quarter totaled $525.3 million, surpassing the Zacks Consensus Estimate by 0.03%. The top line rose 3.1% from the year-ago quarter’s number, led by growth from new store sales and an increase in adjusted comparable store sales growth.
Net revenues were negatively impacted by 0.2% due to the timing of unearned revenues in the quarter under review.
In the second quarter, comparable store sales declined 0.1%. Adjusted comparable store sales growth was 1%. National Vision opened 24 new stores (21 new America's Best and three Eyeglass World) to reach a store count of 1,381 at the end of the quarter. Overall, the store count rose 5.1% year over year.
National Vision provides its principal products and services through two reportable segments — Owned & Host and Legacy.
Owned & Host segment reported revenues of $418.8 million, up 4.9% year over year. Our model projected the segment’s revenues to improve 4.4%.
Revenues from the
Legacy segment increased 1.7% year over year to $38.5 million. The metric fell behind our model’s projected improvement of 16%.
Corporate/Other category (comprising the results of other operating segments, AC Lens and FirstSight, as well as corporate overhead support) reported a 2.3% increase in revenues of $63.3 million. Our model’s projected improvement was 7.4%. Margins
The gross profit in the reported quarter was $277.5 million, up 0.9% from the prior-year quarter’s levels. The gross margin of 52.8% contracted 114 basis points (bps).
SG&A expenses rose 7.1% to $243.9 million. The adjusted operating margin was 6.4% contracted 287 bps year over year.
National Vision exited the second quarter of 2023 with cash and cash equivalents of $254.6 million compared with $299.4 million as of Dec 31, 2022.
The cumulative net cash flow from operating activities at the end of the quarter was $112.2 million compared with $88 million a year ago.
National Vision reiterated its full-year 2023 guidance, which it originally announced on the fourth-quarter 2022 earnings call.
For 2023, net revenues are expected in the range of $2.08-$2.14 billion (unchanged from the previous outlook). The Zacks Consensus Estimate for the metric is currently pegged at $2.12 billion.
Adjusted EPS is estimated in the band of 42-60 cents (unchanged). The Zacks Consensus Estimate for the same is currently pegged at 55 cents.
Adjusted comparable store sales are expected in the range of 0%-3% (unchanged).
National Vision reported second-quarter 2023 results with better-than-expected earnings and revenues. The performance reflected strength in the managed care business as well as progress made in terms of expanding exam capacity through enhanced optometrist retention and recruitment efforts. Adjusted comparable store sales growth was driven by an increase in the average ticket and customer transactions.
Last month, National Vision announced the termination of the Walmart partnership in 2024, positioning the company to emphasize core strategic initiatives to grow its freestanding brands — America’s Best and Eyeglass World. Planned new store openings of around 65-70 this year remain well on track.
Meanwhile, the year-over-year decline in the bottom line does not bode well for the company. A contraction of both margins is worrisome. Higher SG&A expenses in the quarter reflected increases in performance-based incentives and stock-based compensations, payroll and occupancy expenses.
Zacks Rank and Key Picks
National Vision currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are
Abbott Laboratories ( ABT Quick Quote ABT - Free Report) , Elevance Health, Inc. ( ELV Quick Quote ELV - Free Report) and Intuitive Surgical, Inc. ( ISRG Quick Quote ISRG - Free Report) .
Abbott, carrying a Zacks Rank of 2 (Buy), reported a second-quarter 2023 adjusted EPS of $1.08, beating the Zacks Consensus Estimate by 3.8%. Revenues of $9.98 billion outpaced the consensus mark by 2.9%. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.4%.
Elevance Health reported a second-quarter 2023 adjusted EPS of $9.04, beating the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12.1%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 2.8%.
Intuitive Surgical reported a second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 14.5%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 4.2%.