National Vision Holdings Inc

Previous wording

We are one of the largest optical retailers in the U.S. and a leader in the attractive value segment of the U.S. optical retail industry. We believe that vision is central to quality of life and that people deserve to see their best to live their best, regardless of their budget. We achieve this by providing eye exams, eyeglasses and contact lenses to value seeking and lower income consumers with an opening price point that strives to be among the lowest in the industry, enabled by our low-cost operating platform. We reach our customers through a diverse portfolio of 1,216 retail stores across four brands as well as multiple consumer websites as of June 29, 2024.

Current wording

We are one of the largest optical retailers in the U.S. and a leader in the attractive value segment of the U.S. optical retail industry. We believe that vision is central to quality of life and that people deserve to see their best to live their best, regardless of their budget. We achieve this by providing eye exams, eyeglasses and contact lenses to value seeking and lower income consumers with an opening price point that strives to be among the lowest in the industry, enabled by our low-cost operating platform. We reach our customers through a diverse portfolio of 1,231 retail stores across four brands as well as multiple consumer websites as of September 28, 2024.

Previous wording

As of June 29, 2024, our operations consisted of one reportable segment. During the six months ended June 29, 2024, our Walmart store operations, including our former Legacy reportable segment and components of our Corporate/Other category met the requirements to be classified as discontinued operations; refer to Part I. Item 1. Note 2. “Discontinued Operations” for more information on discontinued operations.

Current wording

As of September 28, 2024, our operations consisted of one reportable segment. During the nine months ended September 28, 2024, our Walmart store operations, including our former Legacy reportable segment and components of our Corporate/Other category met the requirements to be classified as discontinued operations; refer to Part I. Item 1. Note 2. “Discontinued Operations” for more information on discontinued operations.

Previous wording

•Owned & Host - As of June 29, 2024, our owned brands consisted of 1003 America’s Best Contacts and Eyeglasses retail stores and 130 Eyeglass World retail stores. Our Host brands consisted of 54 Vista Optical locations on select military bases and 29 Vista Optical locations within select Fred Meyer stores as of June 29, 2024. All brands utilize our centralized laboratories. This segment also includes sales from our America’s Best, Eyeglass World, and Military omni-channel websites.

Current wording

•Owned & Host - As of September 28, 2024, our owned brands consisted of 1,019 America’s Best Contacts and Eyeglasses retail stores and 130 Eyeglass World retail stores. Our Host brands consisted of 53 Vista Optical locations on select military bases and 29 Vista Optical locations within select Fred Meyer stores as of September 28, 2024. All brands utilize our centralized laboratories. This segment also includes sales from our America’s Best, Eyeglass World, and Military omni-channel websites.

Previous wording

We have announced a new phase of our transformation efforts, which includes new additions to our executive leadership team, continued expansion of exam capacity, new traffic-driving initiatives and initiatives to strengthen the foundation of the business for profitable growth. As part of this endeavor, the Company has initiated a review of our portfolio of stores to optimize our fleet for profitability and strategic alignment.

Current wording

As previously announced, we are taking new actions to accelerate our transformation, which include new additions to our executive leadership team, continued expansion of exam capacity, new traffic-driving initiatives, and initiatives to strengthen the foundation of the business for profitable growth. As part of this endeavor, we have completed a comprehensive review of our portfolio of stores to optimize our fleet for profitability and overall performance. Following the comprehensive review, we currently plan to close 39 stores and convert four Eyeglass World stores to America’s Best stores by the end of 2026. In connection with this review, we have recorded certain impairment of intangible assets, property and equipment and ROU assets, as well as one-time non-recurring exit charges associated with the fiscal 2024 and fiscal 2025 closures. Refer to Part I. Item 1. Note 1. “Description of Business and Basis of Presentation” and Note 5. “Fair Value Measurement” for information on the impairment charges and costs incurred related to the store fleet review.

Previous wording

Current macroeconomic conditions, including elevated inflation and interest rates and overall consumer sentiment, have negatively impacted and may continue to have adverse effects on our business, results of operations and financial condition, which could be material. Inflation has resulted in increased costs and greater profitability pressure. We have experienced wage rate pressure and increases in raw materials prices, which we expect to continue. Inflationary pressures, including elevated wages, consumer confidence and preferences and increased raw material costs could impact our profitability and lead us to attempt to offset such increases through various pricing actions.We generally employ a simple low price/high value strategy that consistently delivers savings to our customers without the need for extensive promotions. From time to time we introduce limited-time promotions or new offers designed to increase demand and drive sales. Several factors may impact the level of success of such promotions, including consumer sentiment, macroeconomic conditions and marketing effectiveness, and as a result, if they do not meet our expectations, they could negatively impact our margins and profitability.

Current wording

Current macroeconomic conditions, including elevated inflation and interest rates and overall consumer sentiment, have negatively impacted and may continue to have adverse effects on our business, results of operations and financial condition, which could be material. Inflation has resulted in increased costs and greater profitability pressure. We have experienced wage rate pressure and increases in raw materials prices, which we expect to continue. Inflationary pressures, including elevated wages, consumer confidence and preferences and increased raw material costs could impact our profitability and lead us to attempt to offset such increases through various pricing actions. We have historically employed a simple low price/high value strategy and seek to balance our pricing and growth in a way that consistently delivers savings to our customers. From time to time, and increasingly in connection with our new transformation initiatives, we may take pricing actions and introduce limited-time promotions or new offers designed to increase traffic, awareness and sales. Several factors may impact the level of success of such actions and promotions, including consumer sentiment, macroeconomic conditions and marketing effectiveness, and as a result, if they do not meet our expectations, they could negatively impact our margins and profitability.

Previous wording

Additionally, our ability to continue to attract and retain qualified vision care professionals may affect exam capacity. We believe the impacts of the COVID-19 pandemic on vision care professional availability, including a competitive recruiting market and preferences for adjusted work schedules, and the demand for optometrists exceeding supply in certain areas have caused constraints in exam capacity which are continuing. Due to these factors, among others, the ability to recruit and retain optometrists has become more challenging and the costs to employ or retain optometrists have increased and may increase further, potentially materially.

Current wording

Additionally, our ability to continue to attract and retain qualified vision care professionals impacts exam capacity. We believe factors such as an increasingly challenging recruiting market (in particular for new graduates), preferences for adjusted work schedules, and the demand for optometrists exceeding supply in certain areas have caused constraints in vision care professional availability, and therefore exam capacity, which are continuing. As a result, recruiting and retaining optometrists has become more challenging and the costs to employ or retain optometrists have increased and may increase further, potentially materially.

Previous wording

We believe that many customers in our target market are value seeking and lower income consumers who rely on tax refunds to pay for eyewear and eye care. Historically, our business has experienced seasonality in the first half of the year that we believe is primarily attributable to the timing of customers’ income tax refunds and health insurance start/reset periods. A delay in the issuance of tax refunds or changes in the amount of tax refunds can, accordingly. have a negative impact on our quarterly financial results in the first half of the year. Consumer behavior with respect to the utilization of tax refund proceeds is also subject to change.

Current wording

We believe that customers in our target market are value-seeking consumers, many of whom are lower income consumers and may rely on tax refunds to pay for eyewear and eye care. Historically, our business has experienced seasonality in the first half of the year that we believe is primarily attributable to the timing of customers’ income tax refunds and health insurance start/reset periods. A delay in the issuance of tax refunds or changes in the amount of tax refunds can, accordingly. have a negative impact on our quarterly financial results in the first half of the year. Consumer behavior with respect to the utilization of tax refund proceeds is also subject to change.

Previous wording

In the first half 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 we seek to reduce costs and replace lost business with new America’s Best or Eyeglass World stores and by other means, including anticipated non-headline pricing actions, we may not be successful in our efforts, which could impact our revenues and profitability.

Current wording

In the first nine months 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 we seek to reduce costs and replace lost business with new America’s Best or Eyeglass World stores and by other means, including anticipated pricing actions, we may not be successful in our efforts, which could impact our revenues and profitability.

Previous wording

The total number of new stores per year and the timing of store openings has had an impact, and we expect will continue to have an impact, on our results. We expect to open 65 to 70 stores in the current year. We are continuing to monitor and determine our plans for future new store openings at a level appropriate for incremental free cash flow generation and healthy growth, and based on health, safety and economic conditions.

Current wording

The total number of new stores per year and the timing of store openings has had an impact, and we expect will continue to have an impact, on our results. We expect to open 65 to 70 stores in the current year. We plan to open 30-35 new stores in fiscal year 2025 to allow us to invest capital in existing operations to enhance the overall store experience. We are continuing to monitor and determine our plans for future new store openings at a level appropriate for incremental free cash flow generation and healthy growth, and based on health, safety and economic conditions.

Previous wording

Certain components of our operations met the requirements to be classified as discontinued operations as of June 29, 2024. Refer to Part I. Item 1. Note 2. “Discontinued Operations” for information related to our discontinued operations. Unless otherwise noted, the discussion of U.S. GAAP results below is based on results from continuing operations.

Current wording

Certain components of our operations met the requirements to be classified as discontinued operations. Refer to Part I. Item 1. Note 2. “Discontinued Operations” for information related to our discontinued operations. Unless otherwise noted, the discussion of U.S. GAAP results below is based on results from continuing operations.

Previous wording

(3)Adjusted Comparable Store Sales Growth from continuing operations includes the effect of deferred and unearned revenue as if such revenues were earned at the point of sale, resulting in an increase of 0.2% and an increase of 1.3% from total comparable store sales growth from continuing operations based on consolidated net revenue for the three months ended June 29, 2024 and July 1, 2023, respectively.

Current wording

(3)Adjusted Comparable Store Sales Growth from continuing operations includes the effect of deferred and unearned revenue as if such revenues were earned at the point of sale, resulting in a decrease of 0.5% and an increase of 0.6% from total comparable store sales growth from continuing operations based on consolidated net revenue from continuing operations for the three months ended September 28, 2024 and September 30, 2023, respectively.

Previous wording

Total net revenue of $451.7 million for the three months ended June 29, 2024 increased $19.9 million, or 4.6%, from $431.8 million for the three months ended July 1, 2023. Approximately 70% of the increase was driven by growth from new store sales and approximately 50% of the increase was driven by Adjusted Comparable Store Sales Growth from continuing operations, partially offset by effects of converted and closed stores.

Current wording

Total net revenue of $451.5 million for the three months ended September 28, 2024 increased $12.7 million, or 2.9%, from $438.8 million for the three months ended September 30, 2023. Approximately 110% of the increase was driven by growth from new store sales, approximately 30% of the increase was driven by Adjusted Comparable Store Sales Growth from continuing operations and 10% from the timing of unearned revenue, partially offset by approximately 20% from effects of converted and closed stores and 20% from lower e-commerce revenue.

Previous wording

Comparable store sales growth from continuing operations and Adjusted Comparable Store Sales Growth from continuing operations for the three months ended June 29, 2024 were 2.2% and 2.4%, respectively, both reflecting an increase in customer transactions and higher average ticket.

Current wording

Comparable store sales growth from continuing operations and Adjusted Comparable Store Sales Growth from continuing operations for the three months ended September 28, 2024 were 1.4% and 0.9%, respectively, both reflecting a higher average ticket and an increase in customer transactions.

Previous wording

In the three months ended June 29, 2024, we opened 14 America’s Best stores and three Eyeglass World stores and closed one America’s Best store and one Eyeglass World store. Overall, store count grew 5.6% from July 1, 2023 to June 29, 2024 (57 and seven net new America’s Best and Eyeglass World stores were added, respectively).

Current wording

In the three months ended September 28, 2024, we opened 18 America’s Best stores and closed two America’s Best and one Military store as a result of the host partner’s decision to cease its overall operations at the location. Overall, store count grew 4.9% from September 30, 2023 to September 28, 2024 (56 and three net new America’s Best and Eyeglass World stores were added, respectively, and one Military store closed). We also converted 20 Eyeglass World stores to America’s Best stores from September 30, 2023 to September 28, 2024.

Previous wording

Net product sales comprised 80.1% and 81.6% of total net revenue for the three months ended June 29, 2024 and July 1, 2023, respectively. Net product sales increased $9.8 million, or 2.8%, in the three months ended June 29, 2024 compared to the three months ended July 1, 2023, driven primarily by a $4.2 million, or 5.6%, increase in contact lens sales and a $4.2 million, or 1.5% increase in eyeglass sales.

Current wording

Net product sales comprised 80.4% and 80.8% of total net revenue for the three months ended September 28, 2024 and September 30, 2023, respectively. Net product sales increased $8.6 million, or 2.4%, in the three months ended September 28, 2024 compared to the three months ended September 30, 2023, driven primarily by a $8.4 million, or 3.0% increase in eyeglass sales.

Previous wording

Net sales of services and plans for the three months ended June 29, 2024 increased $10.2 million, or 12.8%, compared to the three months ended July 1, 2023, driven primarily by higher eye exam revenues of $9.7 million, or 20.2%.

Current wording

Net sales of services and plans for the three months ended September 28, 2024 increased $4.1 million, or 4.9%, compared to the three months ended September 30, 2023, driven primarily by higher eye exam revenues of $3.9 million, or 7.3%.

Previous wording

Owned & Host segment net revenue. Net revenue increased $20.7 million, or 5.0%, driven primarily by new store openings and comparable store sales growth, partially offset by converted and closed stores.

Current wording

Owned & Host segment net revenue. Net revenue increased $14.2 million, or 3.3%, driven primarily by new store openings and comparable store sales growth, partially offset by converted and closed stores.

Previous wording

Net revenue reconciliations. The impact of reconciliations negatively impacted net revenue by $0.5 million in the three months ended June 29, 2024 primarily due to higher sales of club memberships and product protection plans in the three months ended June 29, 2024 compared to the three months ended July 1, 2023.

Current wording

Net revenue reconciliations. The impact of reconciliations positively impacted net revenue by $1.5 million in the three months ended September 28, 2024. Net revenue was positively impacted by $1.7 million due to the timing of unearned revenue. Net revenue was negatively impacted by $0.2 million as a result of higher sales of club memberships, partially offset by higher recognition of product protection plan revenue in the three months ended September 28, 2024 compared to the three months ended September 30, 2023.

Previous wording

Costs applicable to revenue of $193.6 million for the three months ended June 29, 2024 increased $13.3 million, or 7.4%, from $180.3 million for the three months ended July 1, 2023. As a percentage of net revenue, costs applicable to revenue increased from 41.8% for the three months ended July 1, 2023 to 42.9% for the three months ended June 29, 2024. This increase as a percentage of net revenue was primarily driven by lower eyeglass mix of 150 basis points, growth in optometrist-related costs of 100 basis points and 30 basis points from other mix and margin effects. These costs were partially offset by a 170 basis point effect from higher exam revenue.

Current wording

Costs applicable to revenue of $189.9 million for the three months ended September 28, 2024 increased $6.1 million, or 3.3%, from $183.8 million for the three months ended September 30, 2023. As a percentage of net revenue, costs applicable to revenue increased from 41.9% for the three months ended September 30, 2023 to 42.1% for the three months ended September 28, 2024. This increase as a percentage of net revenue was primarily driven by growth in optometrist-related costs of 60 basis points and 10 basis points from other mix and margin effects. These costs were partially offset by a 50 basis point effect from higher exam revenue.

Previous wording

Owned & Host segment costs of products. Costs of products as a percentage of net product sales increased from 29.3% for the three months ended July 1, 2023 to 29.7% for the three months ended June 29, 2024, primarily driven by lower eyeglass mix and other product mix and margin effects.

Current wording

Owned & Host segment costs of products. Costs of products as a percentage of net product sales decreased from 28.8% for the three months ended September 30, 2023 to 28.5% for the three months ended September 28, 2024, primarily driven by higher contact lens margin, partially offset by lower eyeglass mix.

Previous wording

Owned & Host segment costs of services and plans. Costs of services and plans as a percentage of net sales of services and plans decreased from 93.1% for the three months ended July 1, 2023 to 91.3% for the three months ended June 29, 2024. The decrease was primarily driven by an increase in eye exam revenue, partially offset by growth in optometrist-related costs.

Current wording

Owned & Host segment costs of services and plans. Costs of services and plans as a percentage of net sales of services and plans increased from 92.4% for the three months ended September 30, 2023 to 94.2% for the three months ended September 28, 2024. The increase was primarily driven by growth in optometrist-related costs, partially offset by higher eye exam revenue.

Previous wording

SG&A of $231.4 million for the three months ended June 29, 2024 increased $8.4 million, or 3.8%, from the three months ended July 1, 2023. As a percentage of net revenue, SG&A decreased from 51.6% for the three months ended July 1, 2023 to 51.2% for the three months ended June 29, 2024. The decrease in SG&A as a percentage of net revenue was primarily driven by lower performance-based incentive compensation expense of 90 basis points and lower advertising expense of 40 basis points, partially offset by higher legal and professional expense of 40 basis points, higher occupancy expense of 30 basis points and other operating expenses.

Current wording

SG&A of $234.0 million for the three months ended September 28, 2024 increased $6.5 million, or 2.8%, from the three months ended September 30, 2023. As a percentage of net revenue, SG&A was 51.8% for the three months ended September 30, 2023 compared with 51.8% for the three months ended September 28, 2024. SG&A as a percentage of net revenue was impacted by lower performance-based incentive compensation expense of 80 basis points, offset by higher payroll expense of 40 basis points and other operating expenses, including higher IT investments and occupancy expense.

Previous wording

Owned & Host SG&A. SG&A as a percentage of net revenue was 39.6% for the three months ended June 29, 2024 and July 1, 2023.

Current wording

Owned & Host SG&A. SG&A as a percentage of net revenue increased from 39.2% for the three months ended September 30, 2023 to 40.3% for the three months ended September 28, 2024, primarily driven by an increase in payroll and other operating expenses.

Previous wording

Depreciation and amortization expense of $22.7 million for the three months ended June 29, 2024 increased $0.6 million, or 2.7%, from $22.1 million for the three months ended July 1, 2023 primarily driven by new store openings and investments in remote medicine technology.

Current wording

Depreciation and amortization expense of $22.7 million for the three months ended September 28, 2024 increased $0.2 million, or 1.0%, from $22.5 million for the three months ended September 30, 2023 primarily driven by investments in remote medicine technology and new store openings, partially offset by lower depreciation of labs and distribution center.

Previous wording

We recognized $3.5 million primarily for impairment of tangible long-lived assets associated with our retail stores during the three months ended June 29, 2024, compared to $0.9 million impairment recognized during the three months ended July 1, 2023. The store asset impairment charge is related to our Owned & Host segment and is driven by lower than projected customer sales volume in certain stores, and other entity-specific assumptions. We considered multiple factors including, but not limited to: forecasted scenarios related to store performance and the likelihood that these scenarios would be ultimately realized; and the remaining useful lives of the assets. Asset impairment expenses were recognized in Corporate/Other.

Current wording

We recognized $13.7 million primarily for impairment related to the Fred Meyer contracts and relationships intangible asset and tangible long-lived assets and ROU assets associated with our retail stores during the three months ended September 28, 2024, compared to $1.5 million impairment recognized during the three months ended September 30, 2023 for tangible long-lived assets and ROU assets associated with our retail stores. Refer to Part I. Item 1. Note 1. “Description of Business and Basis of Presentation” for more details on the Fred Meyer contracts and relationships intangible asset. The store asset impairment charge is related to our Owned & Host segment driven by lower than projected customer sales volume, and other entity-specific assumptions, and also reflects the effects of certain store closure decisions made as part of the Company’s store optimization review in the current period. We considered multiple factors including, but not limited to: forecasted scenarios related to store performance and the likelihood that these scenarios would be ultimately realized; and the remaining useful lives of the assets. Asset impairment expenses were recognized in Corporate/Other.

Previous wording

Interest expense, net, was $3.2 million for the three months ended June 29, 2024, compared to $1.8 million for the three months ended July 1, 2023. The change was primarily a result of lower derivative income of $2.7 million, partially offset by lower interest expense on our long-term debt of $0.9 million.

Current wording

Interest expense, net, was $4.1 million for the three months ended September 28, 2024, compared to $3.7 million for the three months ended September 30, 2023. The change was primarily a result of lower interest income on cash balances of $1.0 million, partially offset by lower interest expense on our debt of $0.8 million.

Previous wording

Our effective tax rates for the three months ended June 29, 2024 and July 1, 2023 were 60.0% and 2.4%, respectively. The change in effective tax rates reflects our statutory federal and state rates of 25.2% and 25.4%, respectively, tax impacts of consolidated VIEs as well as effects of other permanent items.

Current wording

Our effective tax rates for the three months ended September 28, 2024 and September 30, 2023 were 30.1% and (109.1)%, respectively. The change in effective tax rates reflects our statutory federal and state rates of 25.2% and 25.4%, respectively, tax impacts of consolidated VIEs, as well as effects of other permanent items.

Previous wording

Income (loss) from discontinued operations, net of tax of $(2.1) million for the three months ended June 29, 2024, decreased $4.1 million from $2.0 million for the three months ended July 1, 2023. Net revenue, costs applicable to revenue and SG&A from discontinued operations decreased by $40.1 million, $17.6 million and $14.5 million, respectively, as compared to the three months ended July 1, 2023, primarily due to the current year including the discontinued operations results only for a partial period prior to the Walmart MSA termination date and the wind-down of AC Lens operations. Income tax expense (benefit) decreased by $1.4 million, due to lower income (loss) before income taxes in the current period as compared to the prior year, as well as other permanent items related to discontinued operations, primarily related to tax impacts of consolidated VIEs.

Current wording

Income (loss) from discontinued operations, net of tax of $(0.0) million for the three months ended September 28, 2024, increased $73.4 million from $(73.4) million for the three months ended September 30, 2023. Net revenue, costs applicable to revenue, SG&A, and asset impairment from discontinued operations decreased by $93.6 million, $68.2 million, $22.4 million and $79.2 million, respectively, as compared to the three months ended September 30, 2023, primarily due to the prior year including the discontinued operations results and impairments of intangible assets and property and equipment related to our former Legacy and AC Lens segments prior to the Walmart MSA termination date and the wind-down of AC Lens operations. Income tax expense (benefit) decreased by $4.7 million, due to lower income (loss) before income taxes in the current period as compared to the prior year and the disallowance of the Legacy segment goodwill impairment loss for income tax purposes in the prior year period as well as other permanent items related to discontinued operations.

Previous wording

Certain components of our operations met the requirements to be classified as discontinued operations as of June 29, 2024. Refer to Part I. Item 1. Note 2. “Discontinued Operations” for information related to our discontinued operations. Unless otherwise noted, the discussion of U.S. GAAP results below is based on results from continuing operations.

Current wording

Certain components of our operations met the requirements to be classified as discontinued operations. Refer to Part I. Item 1. Note 2. “Discontinued Operations” for information related to our discontinued operations. Unless otherwise noted, the discussion of U.S. GAAP results below is based on results from continuing operations.

Previous wording

The following presents, by segment and by brand, comparable store sales growth, stores open at the end of the period and net revenue from continuing operations for the six months ended June 29, 2024 compared to the six months ended July 1, 2023.

Current wording

The following presents, by segment and by brand, comparable store sales growth, stores open at the end of the period and net revenue from continuing operations for the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023.

Previous wording

(3)Adjusted Comparable Store Sales Growth from continuing operations includes the effect of deferred and unearned revenue as if such revenues were earned at the point of sale, resulting in a decrease of 0.5% and a decrease of 0.4% from total comparable store sales growth from continuing operations based on consolidated net revenue for the six months ended June 29, 2024 and July 1, 2023, respectively.

Current wording

(3)Adjusted Comparable Store Sales Growth from continuing operations includes the effect of deferred and unearned revenue as if such revenues were earned at the point of sale, resulting in a decrease of 0.5% and a decrease of 0.1% from total comparable store sales growth from continuing operations based on consolidated net revenue from continuing operations for the nine months ended September 28, 2024 and September 30, 2023, respectively.

Previous wording

Total net revenue of $934.5 million for the six months ended June 29, 2024 increased $37.9 million, or 4.2%, from $896.6 million for the six months ended July 1, 2023. Approximately 80% of the increase was driven by growth from new store sales, approximately 30% was driven by Adjusted Comparable Store Sales Growth from continuing operations, and approximately 10% was driven by the timing of unearned revenue, partially offset by effects of converted and closed stores.

Current wording

Total net revenue of $1,386.0 million for the nine months ended September 28, 2024 increased $50.6 million, or 3.8%, from $1,335.4 million for the nine months ended September 30, 2023. Approximately 90% of the increase was driven by growth from new store sales, approximately 30% was driven by Adjusted Comparable Store Sales Growth from continuing operations, and approximately 10% from the timing of unearned revenue, partially offset by approximately 20% by effects of converted and closed stores and 10% from lower e-commerce revenue.

Previous wording

Comparable store sales growth from continuing operations and Adjusted Comparable Store Sales Growth from continuing operations for the six months ended June 29, 2024 were 1.8% and 1.3%, respectively, both reflecting an higher average ticket and an increase in customer transactions.

Current wording

Comparable store sales growth from continuing operations and Adjusted Comparable Store Sales Growth from continuing operations for the nine months ended September 28, 2024 were 1.7% and 1.2%, respectively, both reflecting a higher average ticket and an increase in customer transactions.

Previous wording

In the six months ended June 29, 2024, we opened 28 new America’s Best stores and three Eyeglass World stores, closed two America’s Best stores and one Eyeglass World store and converted 20 Eyeglass World stores to America’s Best stores. Overall, store count grew 5.6% from July 1, 2023 to June 29, 2024 (57 and seven net new America’s Best and Eyeglass World stores, respectively).

Current wording

In the nine months ended September 28, 2024, we opened 46 new America’s Best stores and three Eyeglass World stores, closed four America’s Best stores, one Eyeglass World store, and one Military store as a result of the host partner’s decision to cease its overall operations at the location and converted 20 Eyeglass World stores to America’s Best stores. Overall, store count grew 4.9% from September 30, 2023 to September 28, 2024 (56 and three net new America’s Best and Eyeglass World stores, respectively, and one Military store closed). We also converted 20 Eyeglass World stores to America’s Best stores from September 30, 2023 to September 28, 2024.

Previous wording

Net product sales comprised 80.3% and 81.7% of total net revenue for the six months ended June 29, 2024 and July 1, 2023, respectively. Net product sales increased $17.7 million, or 2.4%, in the six months ended June 29, 2024 compared to the six months ended July 1, 2023, primarily due to a $10.1 million, or 1.8%, increase in eyeglass sales and a $5.7 million, or 3.7%, increase in contact lens sales.

Current wording

Net product sales comprised 80.3% and 81.4% of total net revenue for the nine months ended September 28, 2024 and September 30, 2023, respectively. Net product sales increased $26.3 million, or 2.4%, in the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023, primarily due to a $18.6 million, or 2.2%, increase in eyeglass sales and a $5.5 million, or 2.4%, increase in contact lens sales.

Previous wording

Net sales of services and plans for the six months ended June 29, 2024 increased $20.2 million, or 12.3%, compared to the six months ended July 1, 2023, driven primarily by higher exam revenues of $19.3 million, or 19.0%.

Current wording

Net sales of services and plans for the nine months ended September 28, 2024 increased $24.3 million, or 9.8%, compared to the nine months ended September 30, 2023, driven primarily by higher exam revenues of $23.1 million, or 15.0%.

Previous wording

Owned & Host segment net revenue. Net revenue increased $35.7 million, or 4.1%, driven primarily by new store openings and comparable store sales growth, partially offset by converted and closed stores.

Current wording

Owned & Host segment net revenue. Net revenue increased $49.8 million, or 3.8%, driven primarily by new store openings and comparable store sales growth, partially offset by converted and closed stores.

Previous wording

Net revenue reconciliations. The impact of reconciliations positively impacted net revenue by $3.1 million in the six months ended June 29, 2024 compared to the six months ended July 1, 2023. Net revenue was positively impacted by $2.8 million due to the timing of unearned revenue. Net revenue was positively impacted by $0.3 million primarily due to lower sales of product protection plans and higher recognition of product protection plan revenue in the six months ended June 29, 2024 compared to the six months ended July 1, 2023.

Current wording

Net revenue reconciliations. The impact of reconciliations positively impacted net revenue by $4.6 million in the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023. Net revenue was positively impacted by $4.5 million due to the timing of unearned revenue. Net revenue was positively impacted by $0.1 million primarily due to higher recognition of product protection plan revenue, partially offset by higher sales of club memberships in the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023.

Previous wording

Costs applicable to revenue of $389.1 million for the six months ended June 29, 2024 increased $22.7 million, or 6.2%, from $366.4 million for the six months ended July 1, 2023. As a percentage of net revenue, costs applicable to revenue increased from 40.9% for the six months ended July 1, 2023 to 41.6% for the six months ended June 29, 2024. This increase as a percentage of net revenue was primarily driven by lower eyeglass mix of 120 basis points, growth in optometrist-related costs of 100 basis points and 10 basis points from other mix and margin effects. These costs were partially offset by a 160 basis point effect from higher exam revenue.

Current wording

Costs applicable to revenue of $579.1 million for the nine months ended September 28, 2024 increased $28.8 million, or 5.2%, from $550.3 million for the nine months ended September 30, 2023. As a percentage of net revenue, costs applicable to revenue increased from 41.2% for the nine months ended September 30, 2023 to 41.8% for the nine months ended September 28, 2024. This increase as a percentage of net revenue was primarily driven by growth in optometrist-related costs of 80 basis points, lower eyeglass mix of 80 basis points, and other mix and margin effects of 20 basis points. These costs were partially offset by a 120 basis point effect from higher exam revenue.

Previous wording

Owned & Host segment costs of products. Costs of products as a percentage of net product sales increased from 28.7% for the six months ended July 1, 2023 to 28.9% for the six months ended June 29, 2024, primarily driven by lower eyeglass mix and other product mix and margin effects.

Current wording

Owned & Host segment costs of products. Costs of products as a percentage of net product sales increased from 28.7% for the nine months ended September 30, 2023 to 28.8% for the nine months ended September 28, 2024, primarily driven by lower eyeglass mix, partially offset by other mix and margin effects.