National Vision Holdings, Inc. (EYE) Q3 2026 Earnings Call Transcript

Operator: Good day, and thank you for standing by. Welcome to National Vision's Third Quarter 26 Earnings Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. You will then hear an automated message advising your hand is raised, To withdraw your question, please press 1, 1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tamara Gonzalez, Head of Investor Relations and Communications. Please go ahead.

Tamara Gonzalez: Thank you, and good morning, everyone. Welcome to National Vision's Third Quarter 26 Earnings Call. Joining me on the call today are Alexander N. Wilkes, CEO; and Christopher 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 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, but 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 supplemental presentation. We would like to draw your attention to slide 2 in today's presentation for information about forward looking statements and non GAAP measures. As a reminder, National Vision provides investor presentations and supplemental materials for investor reference, in the Investors section of our website. And with that, I will now turn the call over to Alexander. Alexander?

Alexander N. Wilkes: Thanks, Tamara, and good morning, everyone. Thank you for joining us today for our third quarter earnings call. Our third quarter results demonstrate that we are building a more profitable business while investing in the capabilities that will support our next phase of growth and while navigating a challenging and dynamic environment. Disciplined operational execution drove 23 basis points of adjusted operating margin expansion and adjusted earnings per share more than doubled versus last year. We continue to see strong growth in managed care with high single digit comps and positive traffic alongside stronger premium product attachment. Ticket growth of nearly 9% supported by mix improvements is helping translate sales growth into stronger earnings. At Investor Day last November, we outlined a clear profitability algorithm. Expand operating margins and grow earnings while improving our commercial model to gain share. Our leadership and field teams are executing against this strategy. These actions are creating a stronger operating model improving profitability, funding strategic priorities that all enable us to accelerate growth earlier than initially planned. In 2027, we are now planning to increase new store growth to approximately 50 to 55 openings. that is a year ahead of our original plan and reflects our confidence in the stronger foundation we are building. This positions us to continue to gain share even as a dynamic consumer backdrop contributes to longer purchase cycles particularly for lower value transactions. Now on to third quarter results. For the quarter, net revenue increased 4.8% to $511 million and adjusted comp store sales increased 2.8%. Ticket increased nearly 9% while traffic declined 5.6%. As we share, our strategy is to drive high quality traffic. And we are continuing to deliver on that priority. We successfully launched store segmentation and Nikon Eyes lenses, both of which are yielding positive early results. Our approach to marketing and customer acquisition is also contributing to our ability to attract higher value customers. As a result, we are seeing stronger value transactions support a more profitable sales mix. In fact, the top 25% of our transactions drove positive ticket and traffic growth meaningfully contributing to our profitability increase. This is an acceleration of the expected shift in customer mix and is representative of our longer term strategic margin expansion ambition. As we look at the quarter in more detail, there are 3 important things to understand about the traffic dynamic. First, based on our industry checks, the category is experiencing some overall softness particularly among cash pay consumers. Second, consistent with this, we saw a deceleration in the purchase cycle from Q2. And third, this deceleration continues to be concentrated in lower value transactions. Taking a closer look at traffic by transaction value provides additional detail for the quarter and further supports our strategy. Traffic loss was concentrated in transactions below the average ticket amount. To provide additional context, the bottom 25% of transactions by ticket value which includes our entry bundle offer, represents only a high single digit percentage of total sales and an even lower percentage of our total gross profit. Simply put, these transactions represent a very small portion of our overall enterprise profit. Against this backdrop, greater operating discipline gave us flexibility to invest across the business and yielded stronger than expected bottom line results. Adjusted operating income for the quarter was $37 million and adjusted operating margin was 7.3%, an increase of 23 basis points versus the prior year quarter. This led to adjusted EPS of $0.30 per share more than double the prior year period. We are building a more profitable business, and that puts us in a stronger position to grow. Let me expand on the growth opportunities we have shared. Reaching more higher value customers building on our ticket gains and accelerating new store openings. Then I will share how we are bringing stores, clinical care, digital capabilities together to make things easier for customers and earn their next purchase. At our investor day, we identified customer groups and product categories where National Vision has a smaller presence than the broader optical market. Closing those gaps is a clear opportunity to grow. Those opportunities connect 2 parts of our strategy, reaching more customers, whose needs we can serve and increasing attachment of products that meet those needs. A year later, we are making meaningful strides against these opportunities. In addition to growing with higher value customers, we are increasing penetration in anti reflective coatings, transitions, and advanced lens materials. We are broadening the relevance of our brand with a trusted clinical experience and an assortment of frames and lenses that serves more of our customers' vision, health, and lifestyle needs. We are also extending that approach to Smart Eyewear, where our strategy is to build on an existing foundation Meta Smart glasses are already available across our entire store network giving us a platform to be a leader in the category. We see a clear opportunity. To lead in Smart Eyewear by combining our national store footprint clinical capabilities, and prescription expertise with a broader curated assortment. Our strategy is to be a destination where customers can experience and compare Smart Eyewear across brands with trusted guidance to find the right fit. As the category evolves, we plan to expand our offering across styles, features, and price points, bringing innovation to more customers while meeting their vision and lifestyle needs. Beginning in Q4, we are launching a merchandising partnership with Meta to build our presence in this emerging category. Together, we will bring co branded advertising to Meta apps, supported by in store signage, field support, and product to help our teams introduce customers to Smart Eyewear. The partnership also gives customers another way to find us. All of our stores that carry Meta Eyewear will now appear in the prescription locator on meta.com. With referrals and direct links to our store pages. We look forward to sharing more about our progress in the coming quarters. Alongside these product opportunities, we are growing with customer groups that represent substantial value creation potential for our Managed care demonstrates that opportunity. Comp-store sales in this group are growing high single digits supported by both strong mix driven ticket growth and positive comp store traffic. Growth in these higher value customer groups is driving stronger ticket and product attachment improving the economics of our business. To reach more of these customers, we are expanding the scale and scope of our targeted marketing. During the quarter, we expanded our targeted marketing at America's Best to reach more managed care members progressive lens wearers, and online shoppers with messages relevant to each group's needs. That same focus is shaping how we go to market. With connected television, search, social, Fox College football Saturdays, and more targeted creative, this new college football support delivered over 30 million linear TV impressions with reach across our targeted cohorts. If you follow us on social media, you have likely seen these new ads. And if you have watched a Big 10 football game this fall, or better yet, went in person, you likely saw our America's Best Tailgate and event marketing in action. Ticket growth remains 1 of the clearest proof points that our strategy is working. The majority of our ticket growth in Q3 came from mix rather than like for like price, which is why the source of our ticket growth matters. It reflects the improving quality of our sales. We are making progress in 3 areas that can support ticket growth over time. Increasing product attachment, improving customer mix, and helping customers understand which product options best meet their needs. And you will see each of these elements come together in our new America's Best store format. We continue to have meaningful runway in premium categories as we remain under relative to the broader optical market. The gains in attachment I mentioned show that we are making progress closing those gaps. That progress reflects more than changes to our assortment. it is also about how we sell. Our customized OptiCam digital selling tool supports a more consultative approach helping associates explain advanced lenses, materials, and frame choices. to customers. In traditional retail, changing the assortment may provide a limited period of benefit. In optical, we can build those gains over time and that is an important difference in optical retail. Our employee driven consultative selling model gives us the ability to build on those gains. As associates gain experience, they can help customers better understand their options. As we continue to improve how we sell and increase product attachment, we see a long runway for ticket growth. That is what gives us confidence that ticket is a durable growth lever. And we remain in the early innings of this opportunity. Moving on to our brands. America's Best delivered comparable store sales growth of 3.4% during the quarter, contributing to our positive consolidated comp performance. At America's Best, we are seeing the benefits of the strategies we implemented. As ticket is strengthening through improved product attachment and customer mix. The work to improve the customer experience is translating into performance that reinforces our ability to gain share while improving the economics of the business. 3 areas of work underpin that performance. Sharper segmentation, more relevant assortments, and stronger customer engagement in store and online. We completed the rollout of our store segmentation initiative in America's Best. Across 5 store segments, from value to more premium assortments, we are matching products to local demands lifestyle needs and price points. By putting the right brands, products, and price points in the right stores, segmentation makes our offering more relevant to the customers each location serves. With the rollout complete, we are still in early innings of realizing the benefits of segmentation in our expanded product offering. Across the business, ticket growth accelerated from 7.1% in Q2 to nearly 9% in Q3, with the majority of Q3 ticket growth coming from mix. At Eyeglass World, comparable store sales declined 2.5%. We now have several strategic initiatives in place that we believe will position Eyeglass World for stronger, higher quality growth over time. Including the rebrand, store segmentation, premium assortment, and lab model evolution. These are foundational steps to sharpen what Eyeglass World stands for, with customers as we reset the business for long term success. This starts with making the brand more clear, more distinctive, and more relevant to the customers we want to serve. Our new Eyeglass World branding went live in September with the change your glasses, change your world campaign. We want customers to see Eyeglass World as a distinctive destination for style and choice while retaining the accessibility and service they expect from the brand. Alongside the new branding, we have reinvented the ecommerce experience. Together, those changes are an important part of making Eyeglass World a more modern, competitive brand both in stores and online. We have also rolled out store segmentation, expanded the premium frame and lens assortment, and evolved our lab operating model. Customers now have access to more advanced progressive lens designs, and coatings at scale because we move progressive lens manufacturing to our centralized labs. But we continue to offer same day single vision service for those customers who need it. there is more work to do, but we are building the foundation for the next chapter of Eyeglass World and are excited about what is ahead. Strengthening our brands is also about building a better model for growth. At America's Best, our new store format is designed to deliver a better experience for customers and better economics for the business. Nearly 2 years ago, we made a deliberate decision to slow new store growth so we can strengthen the model, modernize the brand experience, and build a store format designed for better unit economics. We are ahead of our transformation roadmap in building the foundational capabilities that matter most. Brand clarity, segmentation, assortment, merchandising, pricing architecture, and store design. Stores opened this year have materially higher average ticket than prior year openings, thanks to the product mix improvements and sales training we have implemented. Along side higher ticket, a more flexible operating model at lower volume stores strengthens the model we are preparing to scale as we accelerate openings. With the stronger operating foundation, our new store format brings the customer experience to life. Just last week, we celebrated the grand opening of the new America's Best flagship store at Avalon in Alpharetta, Georgia, right across from our new office. This new store brings to life our vision for a more connected, customer centric optical experience. It also brings retail, clinical care, and digital shopping together in 1 omnichannel experience, designed around how customers choose to shop. We focused on the moments that matter most, from discovering frames and understanding eye health to receiving eyewear with personalized guidance and trusted care at each step. Our goal is to make it easier for customers to move between online and in-store experiences, And this format is a deliberate step toward a more connected omnichannel future. The store is also built to evolve with our rapidly changing industry. With the flexibility to support an expanded selection of smart eyewear, advances in clinical technology. The store is the tangible and physical manifestation of the experience we are building. It also provides a scalable blueprint that we can adapt across value to premium segments store sizes, and locations. This store design is even more critical as we move into unified commerce. Our stores need to be more than a destination. They need to be connected to the customer's journey. Wherever that journey begins, and that is what Unified Commerce is about. Connecting the customer's experience across stores and online from the doctor and eye exam to the prescription, managed care benefit, product selection, and ultimately purchase. We believe National Vision is uniquely positioned to build this model at scale. With more than 1200 points of physical distribution, approximately 2,000 employed optometrists, centralized labs, and millions of annual patient and customer interactions. Our advanced ecommerce capabilities help connect those physical and clinical assets to the digital experience we are building. For customers, the benefit is simple. The convenience of shopping online backed by expert care and support in our stores. Want customers to know we have got their back. We want them to move easily between digital shopping in our stores knowing expert help is available when they need an exam, an adjustment or support from an optician. More personalized digital guidance, combined with the confidence of knowing expert care is close by, This is how our technology investment begins to change the optical experience for customers. Those investments include Adobe CRM and our new website platform. Our aim is to earn the customer's next purchase and build a lasting relationship by connecting the entire optical experience not just helping them find great quality frames. Every interaction, online or in store, should feel like part of 1 conversation. We are excited to share more about our unified commerce vision at our analyst meeting in December, which will host at our new home office and webcast live. We will show how we are connecting our stores, clinical, and digital capabilities around the consumer. As we look ahead, we are focused on sustaining the momentum and profitability. Continuing to gain share in our strongest banners and investing behind the capabilities that will support durable growth. The third quarter demonstrated the earnings power of the business. Positive comp store sales, higher ticket, better mix and operating discipline helped drive EPS to more than double last year. While we continued investing for the future. And importantly, stronger earnings support the next phase of growth, building on managed care and product attachment while preparing to reaccelerate store growth. We cannot control the external environment. But we can control our execution. And our execution is producing results. We are improving the profitability of the business growing in higher value customer cohorts, and positioning America's Best in eyeglass world to capture share over time. We are building a more profitable and more connected and more valuable national vision. Our exceptional team is executing a significant transformation while delivering stronger earnings that gives me great confidence in the path ahead. I want to thank all of our teams for their ongoing dedication and commitment to delivering results day in and day out. With that, I will turn the call over to Christopher Laden to walk through our third quarter financial results and outlook in more detail. Christopher Laden?

Christopher Laden: Thank you, Alexander, and good morning, everyone. Before I review our results, as a reminder, my remarks will include certain non GAAP metrics. And I refer you to today's press release for reconciliations of all non GAAP financial measures to their most comparable GAAP financial measures. I will start by saying that I am proud of the performance of our business in the third quarter. We delivered significant year over year adjusted operating margin expansion and earnings growth driven primarily by SG and A leverage. This outcome reflects strong execution of our deliberate shift toward a higher value customer mix with greater attachment of premium frames and lenses. Strong progress on our cost savings plan, and disciplined operating efficiencies in our stores. We achieved a sequential increase in our average ticket from the launch of store segmentation and Nikon Eyes lenses, which was partially offset by continued traffic pressure from an extension of the purchase cycle which remains concentrated in lower value transactions. Now turning to our results in more detail. For the third quarter, net revenue increased 4.8% with adjusted comparable store sales growth of 2.8% and a negative 0.8% impact from the timing of unearned revenue. By brand, America's Best delivered adjusted comparable store sales growth of 3.4%, while Eyeglass World declined 2.5%. As Alex shared, Eyeglass World's rebrand and store segmentation came together at the end of the quarter, and we believe these will position Eyeglass World for stronger higher quality growth over time. We ended Q3 with a total of 1280 stores. Reflecting 8 America's Best openings, 3 America's Best closures, and 1 Eyeglass World closure during the period. Adjusted comparable store sales growth was driven by an increase in average ticket of 8.9% partially offset by a 5.6% decline in customer traffic. As Alex shared, growth in higher value transactions supported a more profitable sales mix. While traffic pressure was concentrated in transactions with below average transaction values. These lower value transactions including our entry level bundle offer, contribute a lower proportion of our total gross profit. Average ticket accelerated to 8.9% from 7.1% in the second quarter. In line with the 100 to 200 basis points of second half contribution we expected from the implementation of our store segmentation strategy and the introduction of Nikon Eyes lenses. The majority of our Q3 ticket growth came from mix rather than like for like pricing. Reflecting improvements in customer mix and product attachment. Ticket growth accelerated in both our managed care and cash pay cohort and we saw positive comp traffic within our managed care cohort as well. Turning now to profitability. Costs applicable to revenue increased approximately 3.4% compared to the prior year, and gross profit increased 5.8% or $16.3 million driven by the strength in our average ticket and the recovery of our IEPA tariff refunds. Excluding this 1-time $4.7 million benefit from the tariff refunds, gross profit increased approximately 4% and our gross margin rate declined approximately 40 basis points. With both reflecting the mix shift toward a higher value product offerings partially offset by leverage of optometrist related costs on higher exam revenues. As we have said before, gross margin rate dilution is an expected outcome of our strategy. As we deliver higher gross margin dollars and leverage SG&A. Adjusted SG and A was $241.2 million in the third quarter, and as a percentage of revenue, leveraged 250 basis points. This performance reflects efficiencies in our store labor operating model, lower variable incentive compensation, and continued execution of our cost optimization efforts. To expand on our store labor efficiencies, we are implementing more sophisticated scheduling processes to better match labor hours to consumer demand. Beginning in Q2, and moving into Q3, our focus has been on improving productivity in our lower volume stores. We are still early, and are continuing to refine our approach to ensure we are optimizing the right balance of store labor with traffic. While most importantly ensuring that we continue to deliver a great customer experience through our commercial transformation. As we discussed last quarter, we plan to increase marketing in the back half, including reinvesting our tariff refund in customer acquisition and brand awareness. About half of that investment was reflected in the third quarter, and we expect the remainder to impact the fourth quarter as we support the Eyeglass World relaunch and our holiday and benefit season campaigns. Adjusted operating income increased to $37.1 million compared to $19.8 million in the prior year period. Adjusted operating margin increased 23 basis points to 7.3% for the quarter. This expansion was driven primarily by the SG&A leverage we just unpacked. As well as by the 1 time benefit of tariff recovery and was achieved despite a $2.9 million headwind from the net change in margin on unearned revenue. Excluding the impact of tariff refunds, adjusted operating margin expanded 32 basis points in the quarter. Net interest expense was $3 million compared to $4.1 million in the prior year. This year over year decrease was primarily driven by a year-over-year decrease in average debt balances and SOFR rates. Adjusted earnings per share was $0.30 for the third quarter up from $0.13 per share last year. For the 9 months of fiscal 26, delivered adjusted comparable store sales growth of 3.2%, adjusted operating income margin expansion of 32 basis points, and nearly 55.4% growth in adjusted earnings per share compared to last year. Turning to our balance sheet. We ended the third quarter with a cash balance of $60 million and total liquidity of $353.3 million including available capacity from our revolving credit facility. During Q3 26, we repaid $3.3 million in long term debt. Bringing our total debt outstanding net of unamortized discounts, to $233.6 million at the end of the quarter. For the trailing 12 months, our net debt to adjusted EBITDA was approximately 0.7x. Year to date, we generated operating cash flows of $134.9 million and invested $55.5 million in capital expenditures. Primarily driven by investments in new and existing stores and information technology. During the third quarter, we repurchased approximately 1.1 million shares for $20 million which was an opportunistic deployment of capital given the underlying performance of the business. We are also pleased to announce that our Board recently authorized a new $100 million share repurchase program through December 2030, replacing our previous authorization which had $10 million remaining capacity at the time of its replacement. This provides us with additional flexibility to drive shareholder returns as part of our long term capital allocation plans. Now moving to our outlook. The execution of our strategy is strengthening the earnings power of the business. With higher value customer growth, improvements in product mix, and disciplined cost management driving greater profitability in line with our long term algorithm. That progress allows us to expand margins, continuing to invest in the capabilities that support our next phase of growth. Against that backdrop, our updated outlook for fiscal 2026 includes revising our top line expectations to reflect continued traffic pressure among lower value transactions in the current consumer environment. For the full year, we now expect net revenue between $2.02 billion and $2.04 billion supported by adjusted comparable store sales growth of approximately 2% to 3%. Our outlook reflects the continued mix shift to higher value transactions including managed care, which support more profitable sales growth. Our fiscal 26 outlook reflects our Q4 quarter to date trends. As well as the expectation that improvements in customer mix, and our merchandising initiatives continue to drive strong and consistent ticket expansion. Our operating execution is enabling margin expansion at a lower rate of comparable store sales growth. Underscoring the earnings power of our evolving business model this year. Turning to profitability for 2026. We now expect adjusted operating income between $119 million and $131 million which includes a range for depreciation and amortization of $92 million to $93 million At the midpoint, we expect adjusted operating margin expansion approximately 110 basis points for fiscal 26 relative to 2025, excluding the 50 third week, driven primarily by SG and A leverage. For the fourth quarter, we expect a deceleration in our adjusted operating margin rate as we enter our lower seasonal sales period and continue to invest back in the business. Including the reinvestment of our Q3 tariff refund benefit into incremental marketing to support brand awareness and growth. As a reminder, the profitability algorithm that we shared at our Investor Day last year was to expand operating margin approximately 50 to 150 basis points on average each year with mid single digit comps and the assumption of no deterioration in the macroeconomic environment. We are pleased that the midpoint of our guidance lands us at the higher end of that profitability algorithm for the second straight year especially in the context of the current pressured environment. Unpacking our full year guidance further, we remain on track to realize approximately $10 million in annualized savings from our multi year cost savings plan. Interest expense is expected to be between $11 million and $13 million We expect our effective tax rate to be approximately 30%, excluding the impact of vesting on restricted stock units and stock option exercises. Bringing this all together, we continue to expect adjusted diluted earnings per share to be between $0.95 and $1.03 per share, which assumes approximately 81 million weighted average diluted shares outstanding. We expect CapEx to be between $72 million and $74 million for fiscal 26, which includes investments to open approximately 30 new America's Best and Eyeglass World stores this year, and excludes the expansion of our military locations completed at the end of the first quarter. As a reminder, our openings are heavily weighted towards America's Best branded stores. After taking into account closures, we expect net growth of 17 stores this year excluding the 20 military locations added in the first quarter. Looking to fiscal 2027, as Alexander mentioned, we plan to accelerate new store openings to approximately 50 to 55 stores. About 1 year ahead of our timeline that we shared at our Investor Day. The key elements of our commercial transformation store format, and operating model are now all in place. And that gives us confidence in increasing investments in this area. We will share more details on 2027 openings closures, and capital when we provide our 2027 outlook. In closing, I am proud of how our teams executed this quarter. We are building a more profitable business a stronger foundation for growth. In a challenging consumer environment, we were able to expand operating margin further strengthen our balance sheet, and meaningfully invest in store growth, technology and share repurchases. Most importantly, provided customers and patients with best in class eye care and eyewear at a value offering that remains second to none. And with that, operator, we are now ready for questions.

Operator: Thank you. Press 1, 1 on your telephone. If your question has been answered, you wish to remove yourself from the queue. Our first comes from Simeon Gutman with Morgan Stanley. Your line is open.

Simeon Gutman: Good morning, everyone. Hey, team. Hi, Alexander. My first question is if you can step back and assess how this move, I do not know if it is upmarket, you would call that a fair phrase, how that move is working relative to your expectations. You have gotten good ticket growth. Transactions have been under pressure, and you cited a few reasons why. So how can you distinguish this trade off that this, that, A sign that the strategy needs adjusting, and what would you need to see to feel confident it is driving sustainable growth?

Alexander N. Wilkes: Good morning, Simeon. Thanks so much for the question. Yeah. I mean, 1 of the dynamics that we saw in Q3 is actually traffic acceleration above the average transaction value. So those more valuable customers, we actually did see positive traffic with them. it is really an indication to us that the more premium products we are introducing are certainly resonating with them. And, again, it is certainly a component of our profitability expansion as well. So that being said, we still have the entry level bundle, and we still have a really broad selection of entry level price points and entry level frames, you know, for the consumer that we are serving, you know, below that average transaction value. So, you know, I think we are we are leaning into the customers and patients that are showing the highest degree of activity in the category. And we certainly won with them in Q3.

Simeon Gutman: Okay. And then my follow-up, I do not know if you have mentioned this in prepared remarks, but what how should we think about CapEx in 2027 And can you help us weigh the decision to accelerate the openings with the business or, I guess, more so comps like, performing. And I do not know what the target level of comp per se is, but it seems like it is performing a little bit below, yet you are accelerating store openings. So how to think about that?

Alexander N. Wilkes: Yeah. Let me talk a little bit about our strategy relating to accelerating store openings and then turn it to Christopher Laden for CapEx. You know, what we have seen in 2026 as we have opened new stores, even with our old store format, we have seen an acceleration from the historical norm of ticket We have seen our more agile operating model related to labor kind of yield better results as well. So all of those components, even on our old store design, gave us confidence that we now have a better recipe to accelerate our store opening. Couple that with the investments that we are making in ecommerce and CRM, all of that fuels the flywheel for an in store experience. So that is part of it. Then add some of some of the details that we are seeing from the recent weeks of. We opened new flagship store here in Alpharetta. We have opened a handful of other stores with the new store format, and we are seeing really strong early positive reception from consumers beyond our expectations. So you kinda put those pieces together along with the strong cash generation of the business you know, to us, that is the recipe for adding more stores more quickly than we originally anticipated.

Christopher Laden: Yeah. And from a capital allocation perspective, we will have this more when we issue formal guidance for next year, but we are really excited about the opportunity to open up and accelerate our new store openings for next year. You know, in terms of our long term algorithm, we shared it Investor Day of investing about 4% to 5% of revenue into CapEx each year. I would still point towards that as kind of our overall target on average for any given year, over the 5-year period. But just to echo a sentiment that Alexander said, right, as we have seen performance preview on the top line of our more recent openings and things like average ticket and capture of higher value customers increase, We wanna make sure that we are continuing to grow and we have got a strong rate to win. Yeah. The what we believe to be the temporary extension of the purchase cycle for low value customers, we wanna make sure we have got the right footprint there to capture them when they come back to the market.

Simeon Gutman: Thanks. Good luck. Thanks, David.

Operator: 1 moment for our next question. Our next question comes from Jack Slevin with Jefferies. Your line is open.

Jack Slevin: I want to go a little deeper on the implied 4Q guidance. I think 3Q looked strong candidly and maybe not the best number, but a lot of other KPIs sort of tracking the right way. And 4Q sort of seems to imply a step down. I am looking at something like down 150 bps at the low end on comps. And revenues down year over year. I guess I just want to unpack a little bit of what is happening there and if you see sort of the implication for Q4 as something that has temporary elements to it beyond that tariff investment that you talked about or the tariff reinvestment, excuse me. We would just love to understand sort of is that reflective of currently how the business is tracking? Or are there more onetime items we should be thinking about.

Alexander N. Wilkes: Hey, Jack. Good morning. I will take, some of the top line, components of that and then turn it to Christopher Laden for a little bit more flavor and color on the bottom line. So I think it is important to talk a little bit about the shape of Q3. We actually had a, I would say, a decent July, a good August, and then we saw some deceleration in September, which unfortunately continued into October. So into Q4. The last few weeks in November, we have seen, you know, a bit of reacceleration from October, and I do not think the October challenge was isolated to us. You know? Our perspective is that was really a category wide challenge given the macro. All that being said, right, we are taking a pragmatic outlook towards Q4 on the top line. While at the same time saying, look. there is a lot that we are doing to set the business up for fiscal 2027, so we are not taking our foot off the accelerator. The investments that we need to make to set us up for next year. So really think about this in terms of we are being pragmatic on the top line, and we are continuing to invest in the things we need to set us up for long term growth and for a good 2027.

Christopher Laden: Yeah. Just echoing Alexander's sentiment. Right? We are we are really focused on managing the business for the year and for the next 5 years. So we are not gonna make decisions to invest or disinvest in certain periods or certain quarters while we are still on track for our long term growth algorithm. We are actually accelerating certain investments we talk about both from a CapEx perspective for new stores as well as some additional technology investments really helping to thread our CRM, our ERP, and our new unified commerce capabilities together, will really help us set us up for long-term success.

Jack Slevin: Okay. Got it. that is helpful. And then maybe just on the Eyeglass World number and the Eyeglass World rebrand, I guess, any early takeaways on how that rebrand is affecting things? And I know the comp was a bit hard in 3Q, but just additional color on sort of what you are seeing across that Yes. Brandon, would be helpful.

Alexander N. Wilkes: You are right, Jack. I mean, on a multiyear stacked comp, Eyeglass World was a tougher comp to comp against. But that being said, I think a little bit of perspective vis a vis America's best You know, the America's. The work that we did on America's Best has been, call it, in the genre of fine tuning, an operating model. The eyeglass world actually required a bit of a harder reset. And, frankly, we are just living through some of that right now. You know, we needed to reset the brand. We needed to reset the lab operating model because it was not gonna be sustainable for our long term perspective and vision for the business. We needed to reset our approach to marketing given that Eyeglass World is a very regionally based chain versus America's Best And that same marketing playbook did not necessarily apply and was not gonna be sustainable for the long term. So think about Eyeglass World as more of a of a brand reset, and we are excited to share, and we have shared what we have done from a new store design, new store elements coming in, the ecommerce replatforming, And for those who are attending our analyst day, December, I think you are gonna see some more exciting things about Eyeglass World to come in the future. You know, certainly, I think it is fair to think of Eyeglass World as more of a harder reset, and we are living through some of that right now, but we are super excited about what is to come longer term.

Jack Slevin: Got it. Appreciate all the color, guys. Got it.

Operator: 1 moment for our next question. Our next question comes from Robert Ohmes with Bank of America. Your line is open.

Robert Ohmes: Hey, guys. Thanks for taking my question. I know it is early on the commentary on Meta, but I was hoping you could talk a little bit more about specifically in the fourth quarter, what incremental things you are doing in smart eyewear You obviously mentioned Meta and more to come on that, but I think you also implied other smart eyewear, things you might be doing. Can you give us some any more color beyond what you have said so far?

Alexander N. Wilkes: Yeah. You got it, Robert Ohmes. I mean, again, we are super excited about the co-marketing that we are doing with Meta in the fourth quarter. We are also really excited about some of the in store activations that we are putting in place. In coming quarters, we are actually gonna have live demos where you can not just see kind of the dummy product and storytelling around that product but actually the product and all of the use cases really in real lifetime applications. What that means is we are deploying, iPads and iPhones to store so we can actually demonstrate all the power of Meta Eyewear when we are when we are face to face with the with the consumer. So we are really excited about that, the ability to bring it to life in a way that frankly, we have not done yet. So we are really happy with the progress and rate of sale. We are happy with the partnership that we are starting to expand with Meta and joint marketing. We think this is just such an exciting category. To your question on, you know, other smart eyewear providers, you know, we believe that we will be the obvious destination for more smart eyewear companies to partner with. Our new store design is actually bringing in elements of flexible space dedicated to the smart eyewear category. So we are super happy that we are currently and today 1 of the leading. 1 of the leading distributors of smart eyewear in the world and we think that actually gives us the right to win and the right to be a partner to anyone else who comes into the category.

Robert Ohmes: That sounds great. And just a quick follow-up. The higher exam revenue in the third quarter, remind me, was that an improvement? And what is exam revenue look like for the fourth quarter? And you know, how. I think he leveraged exam revenue know, what. what is. How is exam revenue doing versus your expectations?

Alexander N. Wilkes: Yeah. it is a great question. So an interesting dynamic is as we see this consumer shift towards higher value transactions, with less of our kind of customer mix participating in entry level bundle you know, those transactions effectively give the exam away for free. So we are still. We are seeing growth in exam revenue as we shift towards more managed care consumers and higher value consumers that are that are not opting in for an entry-level pricing. So, you know, it is part of the long term strategy of the business as we try and reproportion our customer mix towards higher value transactions and more managed care. that is certainly something we think over, you know, a multiyear period is sustainable.

Robert Ohmes: Great. Thank you. Thanks, Robert Ohmes.

Operator: 1 moment for our next question. Next question comes from Katharine McShane with Goldman Sachs. Your line is open.

Katharine McShane: Hi. Good morning. Thanks for taking our question. I know it is an ongoing question and it really is not as big of a portion of your business as what it was. But why do you think this cash pay consumer is not really returning to the category? Alexander, I know you flagged some macro in October, that may have slowed comp store sales at that time. But could you maybe talk through that dynamic a little bit more also, do you think there was any kind of change in that higher value consumer from what you saw in October?

Alexander N. Wilkes: Yeah. Kate, it is a great question. On the on the lower value consumer, and, again, I will I will unpack the purchase cycle dynamic a little bit more. Right? In Q2, we said that we saw the purchase cycle among repeat customers around kind of extend by around 2 weeks. We saw that deteriorate to around 3 weeks. In the third quarter, and it is particularly apparent concentrated with the value seeking cash pay consumer where, again, you know, very vast majority of our traffic lost was concentrated. So it is not that we are losing share with that consumer. Again, it is that they are they are just a little bit slower in the purchase cycle. And you can almost see that you know, kind of correlate almost perfectly to where kinda energy prices and inflationary pressures pointed to. So it is no real great leap to understand that consumer, you know, is more impacted by some of the macro conditions. So that is also why we expect when conditions get better, we will see that purchase cycle kind of recontract and normalize. Again, we do not think that consumer is engaging anywhere else. We think they are just currently delaying the purchase. That being said, we are so pleased that the higher end consumer is growing. and it certainly grew in Q3. We have no reason to believe that in Q4, we are seeing any difference in trend. I think that is such a wonderful proof point of the strategy. That we are leaning into, you know, better product mix, better assortment that is certainly resonating with that consumer. it is also. You know, Kate, I recall, you know, when you and I first met, we talked about the shift to managed care consumer, why that is so important for this business. Because it creates that resiliency in times like this where there is a macro pressure. Know, that managed care consumer is just more predictable because they have a benefit they wanna they wanna deploy. So again, I am just very, very pleased with how that is playing out. Okay. 1 last point. I think that we did not touch on in our prepared comments. You know, we are leaning into that consumer a bit more. Just in the beginning of November, we rolled out a new commercial offer that is going side by side with our $95 bundle offer, which is a $195 complete pair designer frame offer. that is a really easy offer for that consumer to engage in. They have a selection of designer frames, and we are including a premium poly lens with that with that frame choice. So we have been winning with that higher value consumer Because we are winning, we are leaning in further, and we have created a new commercial offer targeted specifically at that consumer that is in market today. And, again, you know, I have been pleased that, you know, November has seen some acceleration from what was a tougher October.

Katharine McShane: Thank you. My follow-up question is the longer term algo is for mid-single-digit comps. And it looks like this year might under punch that a little bit. So what is the assumption you know, again, with regards maybe to what you need to see from the managed care customer and what needs to change with that cash pay customer to support that more mid-single-digit comp versus what we are seeing this year.

Alexander N. Wilkes: Yeah. Our algo was really based on the belief and the notion of having a stable macro, which is, unfortunately, not what we experienced through fiscal 2026. And again, I think from a managed care and higher value customer perspective, we really are hitting the mark on our. On all of our strategic initiatives. And where we are seeing the traffic deceleration and where we are seeing the pressure to comp is with those lower-value transactions below the average transaction value. And for that, it we really need to see that the macro conditions change. We need to see that purchase cycle increase. We need to see that cash pay lower value seeking consumer have the confidence to kind of reengage with the category. So, again, I do not think there is a. Anything off with our algorithm. When we shared our algorithm, it was in context of a stable macro. And from our perspective, you know, the macro headwind is essentially exactly the gap between our performance and where we are, where we are heading.

Katharine McShane: Thank you.

Operator: 1 moment for our next question. Next question comes from Adrienne Yih-Tennant with Barclays. Your line is open.

Adrienne Yih-Tennant: Great. 3 questions here. Alexander, I guess, can we start with, I guess, earlier in the year, we had attributed some of the customer acquisition weakness to the digital and CRM transition, and that kind of the loss of that historical marketing information. So where are we today in rebuilding that customer data and that target. Capability? Is that fully behind us? And how much would you, if any of it, attribute to the traffic deterioration from, sort of, that, you know, negative 4.9 in Q2 to where we are today? Number 2, just a quick question, sort of more detailed. Is traffic. Should we assume that is also on parity with an indication of transactions? And is there anything you can do within store to drive conversion while traffic is weak? And then my third question for Christopher Laden, On the inventory ending the quarter, I know you have much higher value inventory, and we have been seeing that QTD or year to date through this past 3 quarters. How should we think about that, framed against sort of the decelerating sales And should we worry at all about potential margin pressure, anything like that? Thank you.

Alexander N. Wilkes: Hey, Adrienne Yih-Tennant. Thanks, as always, for the thoughtful questions. You know, on the first, the impact and the replatform to our website. Yeah. We do believe that is in the rearview-- we put that in the rearview mirror at the end of Q2. All of our kind of marketing signals between website and our capabilities have been have been reestablished. We are seeing our cost per acquisition kind of normalize, you know, in Q3. So we do not have any, you know, outstanding concerns in our. Again, I think I have shared this in the past. I am just so happy with how the team fought through know, what was that unfortunate self inflicted wound in Q2. But we have that behind us now. Our acquisition engine is doing what we expect it to do.

Christopher Laden: You know, the traffic and conversion point, you know, it is a really interesting 1. What I can tell you from an industry perspective and, you know, having had the seats that I have had in the past, we actually convert our foot steps into purchases at the higher range of anyone currently in the category. So there is really not a-- we can always provide a greater experience. We can always convert a little bit better, but, again, to set expectations, we are already really best in class in terms of our traffic and exam to purchase conversion. there is probably not that much opportunity to go there. Again, always trying to create a better experience, but, you know, it is not the most significant opportunity that we are we are seeking. So. Then therefore, for the third question.

Alexander N. Wilkes: Yeah. To answer your question on traffic and transaction we think of those in very similar terms.

Christopher Laden: On inventory, put that in context as a broader working capital strategy that we have launched over the last 2 years. So yeah, we have we have effectively made space in our working capital budget by improving our AR, AR balances, our accounts payable, renegotiating with vendors, part of our procurement project that we launched last year. You know, having a higher sustained inventory balance than we saw, let's say, in 2024 is going to be part of the go forward model. As you think about the traffic plan, what I am actually really excited about our store segmentation strategy is as we shift product between the segments, rather than something, a piece of inventory being binary where it is either part of the assortment or not, we can push inventory towards other segments and continue to sell through it over time. Versus having to write it off and destroy it. So there is a higher overall balance, it actually does create some efficiencies in our, ability to kind of sustain and sell through product before we introduce new product. So as we look through the rest of the year, I think we would see, you know, moderate changes in our inventory balance that we will see any significant changes either positive or negative. I think over time, as we continue to turn the knobs on our Right? This year was our first launch of that. I do expect that we will get more efficient, but nothing to a degree of high materiality.

Adrienne Yih-Tennant: Okay. Fantastic. Thank you very much. Very helpful. Okay, Christopher Laden. Thanks.

Operator: 1 moment for our next question. Our next question comes from Zachary Fadem with Wells Fargo. Your line is open.

David Lance: Hey, good morning, guys. This is David Lance on for Zachary Fadem. Thanks for taking our questions. I guess, first 1 for me, you called out that the purchase cycle extended 2 weeks in Q2 and then the 3 weeks in So I am curious what is embedded in terms of the purchase cycle for the Q4 outlook? And then how did your 5.6% transaction decline Q3 compared to the broader industry?

Alexander N. Wilkes: Yeah. So in terms of our Q4 outlook, we are assuming that there is a further small extension particularly on the lower value transactions, which are which are largely self pay. You know, if you look at the overall category metrics, you know, the data points we have to go off of are through Q2 The vision council data that we look at would certainly indicate that we are taking share. Even in Q3, when you look at those 2 published comp right, our positive comp in America's Best is amongst the best of anything we have seen reported. So, again, still feel good about our relative positioning in the category. You know, we have done industry checks with partners both on the wholesale and retail side. And, you know, from what the what indications we have there, the traffic deceleration we saw is know, while painful, inconsistent, and if anything, a little bit better than those from what we have heard from others.

David Lance: Got it. that is helpful. And then you are reinvesting a portion of the tariff refunds in Q4. But curious if you can give us a few more details around the puts and takes and how you are thinking about gross margin and SG&A for the quarter?

Christopher Laden: Yeah. From a gross margin perspective, I think we will with the with the benefit of the tariff refunds being out of the p and l, we will see a, call it, cleaner view of gross margin overall, which, again, we do expect to dilute a bit given the premiumization strategy on frames and lenses. We will invest approximately 2.5 to $3 million more in Q4 than their original guide, and that is really just in the reinvestment of about half of the tariff refunds with the first half being invested in Q3. And then just from overall puts and takes perspective, we are we are continuing to invest in let's say, longer term growth strategies. You heard us talk a bit earlier. In the call about some of our, labor optimization opportunity and some of the technology enhanced we are making there, our investments in unified commerce, and really some investments about threading our CRM, our ERP, and our unified commerce platforms together. To be clear, those investments are not 1 quarter investments. Those are investments that are multiple years in the making, but we are. We wanna make sure we are investing those at the right time. and the performance of the business year to date and kind of where we are guiding in q in 2026 in total, we feel good about getting those investments in Q4.

David Lance: Thank you.

Operator: 1 moment for our next question. Our next question comes from Anthony Chukumba with Loop Capital Markets. Your line is open.

Anthony Chukumba: Good morning. Thank you so much for taking my question. So you know, I want to kind of take things back a little bit, you know, kind of higher level. Right? I think about your business, right, you are making this shift. You have brought in this premium. Frames, these premium lenses. You are, you know, doing a better job in maximizing their managed vision care benefits, and you are making a lot more money. Right? Now I guess know, to some extent, we can, you know, have a debate in terms of whether the you know, increase in ticket is sustainable. First, I think it is, but we can have that debate. But at the end of the day, I mean, you know, it is price to earnings, not priced to traffic. I mean, I guess my question to some extent is, like, you know, how can you, you know, sort of change the narrative? Like, what are you doing in terms of changing the narrative? Because it would seem to me that, you know, the most important thing. Once again, assuming it is sustainable is how much you are earning. Yeah. So how can you get investors to focus you know, more on that and less on, once again, traffic?

Alexander N. Wilkes: Anthony, thanks for that, and I really appreciate the question and the thought and frankly outlined our hypothesis and our thesis for the company almost to a tee. Give you a couple data points and a little bit more context on some of the things we even shared today. Know, historically, we have not necessarily talked about revenue and profit contribution at a quartile or decile level. Right? Today, we shared that our traffic loss is concentrated amongst the least valuable transactions, the least valuable transactions that make up a high single digit percentage of our gross profit and an even lower amount sorry. A high single digit contribution of our gross revenue and an even lower portion of our gross profit. Hopefully, that provides some color and context to why we are running the playbook that we are, are seeking more valuable customers because, frankly, some of the lower value transactions just are not as accretive to this business, especially given the context of the business today. So I think you can expect more of those types of insights from us to give confidence in our strategy and a little bit more transparency behind the curtain of why we are doing the things we are ultimately to use your words, put more money in the bank. So I think that is part of the narrative. And then I think doing what this team has done so well over the last year and a half, which is execute. Again, our execution from the corporate office level to the field to what the team is doing in the stores has just been exceptional. So you know, our perspective is continue to execute at a very, very high level. Share more than we have historically with the market in terms of why we are doing the things we are and the profit contribution of different customers and different cohorts. And then at the end of the day, when more money drops to the. Into the bank, you know, that folks get hip to our story.

Anthony Chukumba: Thank you so much.

Operator: 1 moment. 1 moment for our next question. Our next question comes from Matt Koranda with Roth Capital Partners. Your line is open.

Matt Koranda: Sorry to turn back to the traffic question, but I guess it is just important for the narrative of the stock seemingly But I guess with the sustained growth in managed care traffic that you guys are seeing, is there a point in the next several quarters where managed care traffic and maybe the higher value cash pay customer could just overwhelm that softness in the low-end cash customer that you are referring to. I guess, can you get back to positive traffic without recovery from that kind of low-end cash-pay customer? Do we need that still for next year?

Christopher Laden: Yeah. Look. I think the primary driver of our traffic decline is really just the pressure from the macro and the extension of the purchase cycle. So as Alexander said earlier, we still have a category leading value offering for those who are looking to spend, you know, an overall lower dollar amount for eye care and eyewear in the category. So as they step back into the category, that we are certainly gonna be here to serve them. So I think, you know, what must be true for traffic to turn positive and aggregate? I think we have got to see the purchase cycle for those lower value transactions, compress again, which, you know, we will we will see Hard to predict when that will happen. I think what is important, though, is that we are growing traffic in the areas that we are appointing our assets. So our managed care consumer cohort is growing in traffic. Our higher value transactions are growing in traffic. To your point, that is not growing in aggregate for the business in terms of the kind of weighted average being positive. But from a profit contribution perspective, that is okay. The other thing that will positively impact our kinda aggregate traffic number is just as we re-saw your store growth. So as we get the positive ramp from 50 to 55 new stores and that becomes our newer operating model. They will contribute more meaningfully to the overall aggregate traffic growth as we continue to take share. Think what you are hearing from us today is that as long as we are growing in the right traffic categories that we are appointing our resources at, and influencing things we control, then we feel great about the profitability outcome of the business.

Alexander N. Wilkes: And, Matt, I wanna double down on a comment Christopher Laden made earlier. If you triangulate around publicly available data points, both what is been reported at the category level and with those who report publicly our traffic count is in line or better from a comp perspective than what the category is experiencing, and we believe that to be true even in a challenge Q3. Okay.

Matt Koranda: Very fair. Maybe just on the store expansion that you are accelerating. To hear if you could maybe talk a little bit more about the way to think about new store maturity ramps and sort of how that 2027 cohort may contribute to sort of a comp tailwind over the coming years?

Christopher Laden: Yeah. Great question. So, yeah, just to restate for those who do not read all the super small fine print in our in our reporting, our stores comp in their 13th month, so we start to count them against our comp traffic as they enter their thirteenth month. We are really excited about the top line performance of our more recent store openings, not just because of new store design that is-- we have only had a couple of those stores open, but really focused on that a combination of our new merchandising strategy, and store layout design, you areas that we have been able to implement thus far. We think that we should be able to get up the ramp from a revenue perspective at least as well as we did previously, if not better, if a little bit too early to tell, but certainly what we are seeing is a higher average transaction value meaningfully higher, and new stores are opening with you know, the new operating model, new merchandising, and store associates who are trained from day 1 on how to sell in our new operating model. So I think those are all really great reasons to believe that we will see strong performance for new stores, strong contribution to our overall traffic and comp. As well as know, reasons to believe that our payback period should be as good if not better than what we have seen previously.

Matt Koranda: Thank you guys. I will leave it there.

Operator: 1 moment for our next question. Our next question comes from Michael Lasser with UBS. Your line is.

Michael Lasser: Good morning. Thank you so much for taking my question. If we look back over the last few quarters, in the first quarter, you had the replatforming of the website issue. Second quarter, you started to see the issue with the macro and the extension of the purchase cycle that continued and intensified in the third quarter. Yet this is all happening at a time you are making a strategic pivot to change the merchandising, the branding, and other tweaks to the formula. So should we simply assume that as a result of this pivot, National Vision's same store sales growth is gonna become a little bit more volatile than it might have been in the past when at times that the consumer was pressured it would have experienced a trade down benefit that would have created a bit of a shock absorber for some of the other elements of the business. Thank you.

Alexander N. Wilkes: Yeah, Michael. I will tell you, you know, to hear you kinda play that back and I think about what we have been able to do during this time period. We have made a lot of changes, strategic changes, strategic investments in the business. And we face macro headwinds. And we have comped positively, and we have thrown up you know, several hundred basis points of profit expansion in the third quarter, and we are at the higher end of our long term algorithm from a profitability perspective. I think that is where you are hearing from us. Just the complete bullishness in the business. You know, to the point on, you know, historically being a bit of a shock absorber when you know, when the macro might have been a headwind to the to the consumer. Again, we still think we are that. You know? See my earlier statement that even in a challenging third quarter, you know, our belief is from my perspective, we are performing at the higher end of the optical category. I would not necessarily expect volatility at. You know, in the comp as we go through this transformation. or as a-- or I should say, as a cause of the transformation. As a matter of fact, I think, you know, what we are doing from a ticket perspective and what we have been doing from over the last 2 years is providing a greater degree of stability and predictability because we can use the ticket lever as a more balancing force to deliver against our internal expectations. Christopher, do you have anything to add?

Christopher Laden: No, Michael. it is a great question. I think all else equal, if we had not implemented the strategy, you know, a year and a half to 2 years ago to be more focused on better serving managed care consumers and consumers who are just seeking higher value products. I actually think the business would be in a significantly worse position than we are today. You know, if our customer mix was more heavily concentrated in these lower value transactions, and these consumers are just opting out of the category with their purchase cycle extending for a period of time, I think you would end up seeing frankly, worse comp performance and significantly worse P&L flow-through.

Michael Lasser: Understood. Thank you very much for that. And my follow-up question is, can you help us calibrate our expectations and models for fiscal 2027. Understood you are not gonna provide formal guidance. But there will be moving pieces if we assume that the recent run rate of same store sales growth persists, into next year, that is going to be below the formula. Your formula calls for 50 to a 150 basis points of annual margin expansion We will have potentially a drag to your profitability from accelerating your store growth. But on the other hand, you will have some of the cost savings that you have outlined previously flow into the P&L. So if, again, we assume that the slower pace of same store sales growth persists into next year, would that. Would you still be able to achieve the low end of your 50 to a 150 basis points of annual operating margin expansion. Thank you.

Christopher Laden: I think you outlined that question beautifully. I mean, I think the key variables that we have disclosed, you have you have nailed on the head. Look. I think that this management team is committed to remaining within the constraints of our long term algorithm. Again, when we when we put that algorithm out at our Investor Day, it did assume stability in the macroeconomic environment. But I think what we have shown over the last couple years is we have outperformed on the profitability element of that of that algorithm, including this year where, you know, we are below our mid single digit comp long term expectation for any given year. And we have bent the cost curve successfully to drive, you know, 230 basis points as of-- or basis points of operating margin expansion year to date. And guiding for around a 110 basis points at the midpoint of operating margin expansion for the for the year. So we will we will certainly provide more color around fiscal 2027 as we get a little bit closer. But I think what you are hearing is management team that is committed to continue to drive positive profitability for the business. And the management team is going to invest for the long term and make sure we do that in a balanced way, set us up for long term growth.

Michael Lasser: Thank you very much. Good luck.

Operator: And I am not showing any further questions at this time. I would like to turn the call back over to Alexander for any further remarks.

Alexander N. Wilkes: Great. Thanks so much. Thanks, everyone, for joining us today. Thanks for your interest. Thanks for the great questions. I can always count on this group for asking really hard, really insightful questions. So appreciate that, guys. Most importantly, though, I wanna thank our team. I wanna thank our associates, our doctors, our home office, employees. Just having incredible focus and strong execution in the third quarter. You know, as I stated, we have made great progress on our transformation strategy. We have been able to drive positive comps increase profitability, and make substantial investments in the future of this company. So, again, we could not be more pleased with being able to do all those 3 in a year where there has been a bit of a challenging macro backdrop. Hopefully, we will see all of our analyst community at our December analyst meeting in our home office where we are gonna share a lot more about the exciting future of National Vision. So with that, thank you everyone and have a great day.

Operator: Ladies and gentlemen, this does conclude today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.