National Vision Holdings Inc

3. Costs Related to Wind Down Activities

Arlington Contacts Lens Service, Inc. (“AC Lens”), a wholly-owned subsidiary of the Company, has delivered notices of non-renewal of the agreements it has with Walmart and its affiliate Sam’s Club regarding wholesale contact lenses distribution and related services, such that these agreements will terminate as of June 30, 2024, unless an earlier date is agreed by the parties, and the Company will wind down its remaining AC Lens operations, including the closure of its Ohio distribution center, which largely supported the wholesale distribution and e-commerce contact lens services that the Company provided to Walmart and Sam’s Club. In the first quarter of 2024, we incurred costs related to the termination of the Walmart MSA and the wind-down of AC Lens operations, as well as an immaterial amount of costs related to the actions taken in fiscal year 2023 to streamline corporate overhead. While our operations related to the Walmart MSA are now classified in discontinued operations, certain of these aforementioned costs are related to the continuing operations of the Company, and are discussed further below.

We anticipate incurring approximately $3 million of additional costs in 2024 related to winding down the AC Lens business. The table below summarized the Company’s Other payables and accrued expenses balance related to wind down activities.

Employee compensation benefits

During the three months ended March 30, 2024, we recognized $0.2 million in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income, in the Corporate/Other category, related to wind down activities. The liability for employee compensation benefits is recorded in Other payables and accrued expenses in the Condensed Consolidated Balance Sheets.

Other Costs

During the three months ended March 30, 2024, we recognized $0.7 million in Selling, general, and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income, in the Corporate/Other category, related to professional fees and other costs to assist with wind down activities.