National Vision Holdings, Inc.
Q1 2021 Earnings Call Transcript

Published:

  • Operator:
    Good day, and thank you for standing by. Welcome to the National Vision's First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Mann, Vice President of Investor Relations. Please go ahead.
  • David Mann:
    Thank you and good morning, everyone. Welcome to National Vision's first quarter 2021 earnings call. Joining me on the call today are Reade Fahs, Chief Executive Officer; and Patrick Moore, Chief Financial Officer. Our earnings release issued this morning and the presentation, which will be referenced during the call are both available on the Investors section of our website, nationalvision.com and a replay of the audio webcast will be archived on the Investors page after the call.
  • Reade Fahs:
    Thank you, David. Good morning, everyone. I'd like to thank you all for joining us today. I hope you're all staying healthy and safe. Turning to Slide 4 and a summary of Q1 results. We've been saying since we reopened last June that COVID has hastened the industry trends that we've been benefiting from for many years. Our Q1 results are further evidence of this. This combined with the great execution of our store teams, who rose to the challenge of serving the increased demand for our low-cost eye exams, glasses and contact lenses made Q1 another outstanding quarter for us. Net revenue increased nearly 14%, adjustable comparable store sales growth increased 35.8% in the quarter with comps once again led by our two growth brands. Eyeglass World delivered a 48.3% increase and America's Best delivered a 35.3% increase. The Legacy segment had nearly 30% comp increase and we continue to generate positive results at the five additional Walmart Vision Centers that we added last year. We opened 25 new stores during the quarter and ended with 1,230 locations for a 4.9% increase in store count versus last year. Adjusted operating income increased 78% and adjusted EPS increased nearly 73% to $0.48, which established another record for our first quarter profit as a public company. Finally, we continue to progress on our ESG journey. Most recently we shared our ESG framework and launched a Corporate Responsibility section on our website. Q1 quite simply exceeded our expectations. While the pandemic is not over, our year-to-date momentum gives us confidence to raise our full year outlook. In a few minutes, Patrick will take you through our Q1 results and our updated 2021 outlook in more detail.
  • Patrick Moore:
    Thanks Reade, and good morning, everyone. We're excited to be starting fiscal 2021 on such a positive note as the business performed well ahead of our expectations. Before I share some further color on our strong first quarter results and the upward revisions to our 2021 outlook, let me begin with one item to help frame today's discussion. The comparability of our reported sales results this year, especially in the first half, will be affected by the temporary store closures last year and the one week shift forward in our fiscal reporting calendar this year caused by the 53rd fiscal week in 2020. Thus we believe that this more indicative to look at a two-year compound annual growth rate compared to 2019 for sales and comps. Now let's turn to Slide 8. We opened 23 new America's Best stores and two Eyeglass World stores in the quarter with 1,230 stores or a 4.9% increase in store count in the past year. For our America's Best and Eyeglass World, both brands combined, unit growth increased 6.1% over the last 12 months. Our store growth rate was impacted by the temporary pause in new store openings during the second quarter last year. The chart of adjusted comparable store sales growth presents our comps calculated on a cash basis. Same-store sales increased 35.8% during the quarter and our growth brands comps at Eyeglass World increased 48.3% and America's Best was up 35.3%. Looking at comps on a two-year basis, our Q1 adjusted comparable store sales growth represented a high-single digit compound annual growth rate over 2019.
  • Reade Fahs:
    Thank you, Patrick. Turning to Slide 13 and our Moment of Mission. Since our last call, we've made significant progress on our ESG initiatives and developed a far more structured corporate responsibility approach. We now have a formal framework to further focus our ESG efforts. This framework, which we call, SEE + G, that's spelled SEE as you might expect from an optical retailer, represents three key pillars of social employees environment. The foundation supporting these pillars is the G for governments. Our social focus starts with our mission. We can improve lives by providing access to affordable eye care and eyewear and this is our everyday work and our business. But we extend our impact to provide sight to those who would not otherwise be able to afford it in communities where we operate and throughout the world through our many philanthropic partnerships. We work with a variety of other groups to try to address what the New York Times referred to as the largest public health crisis you've never heard off, which is the lack of access to affordable eyeglasses for the roughly 1.1 billion people on the planet, who have vision problems that could be corrected by a simple pair of glasses. Our efforts involve extensive partnerships both in America and around the world. For instance, in America, we recently announced a new collaboration with Americares and our longstanding partner Restoring Vision through which we intend to provide free classes to hopefully half million low-income Americans via Americares free clinics throughout the country. Our most recent initiative internationally has been through a new partnership with a group called Grace for Impact which we mentioned last quarter. We've been collecting new frames from a variety of industry connections for a while now, and just recently gave hundreds of thousands of frames to Grace for Impact for them to use in clinics serving the poor in Nigeria, Ghana, Madagascar, Tanzania and outside of Africa in Mexico. This year, we hope to play a role in getting glasses to over 1 million low-income people around the world. The second section of our three-part framework involves employees. Internally, we always use the word associates, but employees make the optical acronym work and so much more fun for us. The way we think about this is that we want our associates and doctors to live better lives because they are associated with National Vision. This effort takes a variety of forms from training and development to financial literacy to an emergency crisis relief fund that since its founding two years ago has distributed just shy of $1 billion to associates in need. For a while now, we focused effort in this pillar on DEI initiatives. Interestingly, over 50% of our associates and 45% of optometrists in our network identify as BIPOC. Just last week I signed the CEO action for diversity and inclusion pledge fully committing up to a set of recognized protocols, most of which we already had in place. Our efforts in this area were recently independently recognized by Forbes Magazine who included us in their listing of Best Employers for Diversity in 2021. The third of the three pillars is environment. In this area, we're conducting an initial greenhouse gas inventory to provide us with a baseline measurement to assess the impact of future initiatives, a surprise accolade came our way recently in this regard when Office Depot chose us as an elite leadership in green purchasing award based on the fact that our purchases were more eco-conscious in 99% of their largest customers last year. Governance is a foundation focus area in our new framework. This involves identifying and implementing best practices and standards to promote quality, safety and compliance. For example, our 2021 proxy statement includes proposals to de-classify the Board and remove certain supermajority charter provisions. These proposals follow through on the Board's commitment to sunset these issues following the transition from private equity ownership. To help stakeholders to better understand and track our many ESG initiatives, we're further formalizing our communications of these efforts. We recently launched a dedicated area of the National Vision website titled corporate responsibility, where you can find more information about our ESG strategy and the SEE + G framework. So with that, I'll just summarize. We had a heck of a quarter. Industry trends continue to favor our value offerings. Our store teams and optometrists are executing well and keeping our stores safe for us and our patients and customers. Our growth brands continue to overperform and win market share. We think there is whitespace to potentially still double our store count. We're starting to modestly increase the number of Eyeglass World stores we'll build reflecting their tremendous success over the past 10 months since reopening. Our ESG efforts are really kicking into gear and being recognized, and we feel well poised for future success on a variety of fronts. With that, I'd like to turn the call back to the operator to start the question-and-answer portion of the call.
  • Operator:
    Thank you. Our first question comes from the line of Steph Wissink with Jefferies. Your line is open.
  • Steph Wissink:
    Thank you. Good morning, everyone. I have a housekeeping question and then my real question. The first one, I think, Patrick probably best for you when - in your script, I think you mentioned that your comp was driven by transactions which was a bit of a surprise, I was expecting a little bit more from the average transaction value just given the stimulus. Can you maybe break that apart for us a bit and just talk about how that compared to your internal expectations, which suggests that you're picking up quite a bit of market share and new customers, just wanted to understand a little bit better? And then Reade the question for you was on Eyeglass World, and this is I think the first quarter and quite a number of quarters where it sounds like the tinkering on that model is coming to a point where you feel really confident in accelerating the growth. So can you just remind us what within the operating model you have changed, what are the KPI's that are being measured that give you that conviction to start rolling out those stores in a more aggressive way? Thank you.
  • Reade Fahs:
    Steph just to make it easier for Patrick. I'm going to take both those questions, all right. So both traffic and check-in of course traffic was of course a factor versus closings of last year. So I mean you're going to get to the guess traffic, but still both were encouraging. We are getting nice growth from new customers and returning customers and we are seeing average ticket benefits relating to the fact that our consumer has more money in their pockets. So it is both the pieces and also, I think as we've said in the past, contact lenses as set of people seem to be - optometrist seem to be prescribing and people seem to be preferring sort of more premium contact lenses and again that helps with that transaction value. On the Eyeglass World front, yes, so we have really been feeling great about Eyeglass World since reopening 10 months ago, I just came right out of the shoot very strong. I think our operations team has been sort of again we've been sort of getting the right people in the right place and I think that all really came together for us just on concurrent with the timing of reopening. We think also the resonance of same day shopping had a little extra resonance in COVID and It's a bigger store, so nice feeling of safety within the stores. We've been focusing our marketing efforts ever more on the benefits associated with same day service so that's been a plus as well. And generally sort of refine their moments where just everything comes together and you get to a higher plane and that happened with Eyeglass World coming out of the shoot in June has been consistent ever since. It's nice to have two growth engines. It's nice - as we mentioned, we're going to be building a few more of those Eyeglass World stores. We've gotten into ROI sort of right in that range of America's Best, so we're just really encouraged and again further confident that we'll be able to double our store counts versus what we have now and keep building tons of stores for 15, 16 years, I think is our latest projection.
  • Patrick Moore:
    Hey Steph, I would like to add and say I like that we're tinkering, it's a nice summary of way to think about it. But in general, we've seen over the last couple of years, you all have seen the robust growth in EGW. What you don't explicitly see is the margin expansion that's incurred and has occurred in that brand. So on top of the comp growth, it's been even in quarters superior to AV, we've seen nice margin expansion, that's put us in a very different place in terms of returns on invested capital. And now we have two brands that are essentially in the same zone of ROIC making it a little easier for us to consider them as you grow brands.
  • Reade Fahs:
    Hats off to the operations team. Hats off to the strategy team and the marketing team there. It's been great to them on in that way.
  • Steph Wissink:
    Thank you. Very helpful.
  • Operator:
    Thank you. Our next question is from Adrienne Yih with Barclays. Your line is open.
  • Adrienne Yih:
    Thank you very much. Good morning, Reade, Patrick and David and congratulations on another stellar quarter. So Reade, my first question is, 35 adjusted and 18 reported comp. It would seem that the capacity utilization of maybe the exam aspect, the optometrist time, it seems like they might be being booked pretty close to all the time. So I guess my question is how far is it structuring the system, are you staffing these longer out - longer hours to service demand and kind of keep going? And then for Patrick, my question for you is third consecutive quarter of solid double-digit margin. Pre-pandemic, we were looking at kind of mid- to high-single digit margin - op margin. How much of that is structural and should we be thinking about a different long-term margin and I know you haven't given an LRP. So just early days of thinking about that? Thank you.
  • Reade Fahs:
    Good. So thank you, Adrienne. Again I just want to point out to sort of achieve these numbers takes really strong execution on a great many fronts, I mean, to just have the labs keeping up the distribution center historically. As far as you mentioned sort of your patients, we're choosing are eye exams in far greater numbers. We do think that there is still capacity there for ongoing growth and we have - we're always working on different ways to make sure the flow through the store is as efficient as possible so that our doctors can do what they do best, which is sort of at the do the good eye exams and we have a lot of people sort of helping to get them the data they need to be great optometrists along the way. But we do think - we aren't feeling that there is tremendous capacity constraints for us. We do think the industry is seeing some capacity constraints, met many independents especially have reduced their store hours, we have not reduced our store hours, many are seeing a lot less exams per hour and we have been focusing very much on a safety-first mindset with cleaning and cleaning and cleaning and social distancing and masks and all of those pieces, but we think we're benefiting from the reduced industry capacity. We think that's been one of the helps but we think we're still well poised to continue at strong high levels, continued growth.
  • Patrick Moore:
    And I'll pick up from there, Adrienne. So yes, we are seeing a continuation of a rather exceptional margin expansion period that started essentially when we reopened our stores. We've benefited from robust demand, we've benefited from tickets that have elevated partially due to stimulus, we've benefited from eyeglass mix versus contact lens. There was a period of time where we weren't advertising as much that has moved much closer to normal now. So there have been meaning factors in terms of the margin expansion. What of that remains versus what has been more transitory nature is to be seen, we are - we have been highly focused on margin expansion and even from 2018 to 2019, I think we improved operating margins 30 or 40 basis points, so it remains a strategic focus. I would say, we are expecting comps to begin to normalize, we did comment that they were very strong first quarter and through April as part of our guide lift, obviously the flow-through of Q1 and the strength of Q2 that we're seeing through April. But we do expect to see some moderation in those comps over time, we don't think that ticket is going to remain as elevated. And in terms of our business model, we really don't want it to remain this elevated, we want folks to remember that they got a great deal and then come back in a year or two. The parts of our margin going forward that I think where we got some - where we have some additional opportunity is always looking for some incremental benefits of lab productivity, incremental benefits potentially of advertising and rent cost and then delevering corporate overhead. So I think I still see some opportunity to beyond some of the more exceptional transitory margin impacts that we felt and we're focused on getting that.
  • Operator:
    Thank you. Our next question comes from the line of Simeon Gutman with Morgan Stanley. Your line is open.
  • Simeon Gutman:
    Hey, good morning, everyone and nice quarter. My first question is on your assumption around mix shifts - product mix shifts throughout the rest of the year. Can you remind us what they were in 2020, the positive ones and why do you think they revert? I'm asking because looking across the cross-section of the retailers and all the sub-segments we cover, most are really not expecting a lot of sort of category or mix reversion and a lot of the margin trends to stay in place, so curious why your assumptions make it a little different there?
  • Patrick Moore:
    Hey, I'll start and add a few comments then Reade can certainly weigh in. As we think about what drove the shift during the period of time when our stores were closed, we were still open, we would just had lock doors, we were selling contact lens, there were some online eyeglasses so that really started the mix shift. We have seen a much higher air for a substantially higher degree of eyeglass mix. And our assumption as mix reverts closer to normal over time is just a function of managing the business for so long. We've seen periods of time where mixed bounced around a little, but in general, it does follow some fairly consistent norms. So we are expecting as we think about the second half to see that approaching closer back to where we were in terms of standard mix.
  • Reade Fahs:
    Yes. And just building on that, we just need you to buy contact lens even when our doors were shut, you can call the store you can go online and buy from us, so that wasn't as disruptive. And of course, people - some were a little insecure about supply chains and things like that and bought up into the future sort of happy. And I'd say also just in terms of mix, we're finding things like computer glasses, blue light glasses as we're all spending more time in front of screens and I think we ever wanted too. And so our sales of blue light lenses are going very strong and that's a factor also, people want to make sure they're protecting their eyes and seeing their best, and even frankly, looking their best on the screen, so that's been a smaller factor in all this as well.
  • Simeon Gutman:
    Okay, that's helpful. And then the follow-up is on, I guess the margin outlook for the rest of the year inclusive of the second quarter, it looks like you still have some - it looks like deferred revenue catch up like a good guy into the P&L to reverse what happened this quarter. But in the back half of the year, if you retain, like you said, flattish for the back half. If you retain most of the bump that you've got the prior year, the two-year stack would be similar to what this business has been doing historically? Why the reversal in margin, can you talk about - because your volumes overall will still be higher, I guess you mentioned some costs that are going to come back up, inflation in wages et cetera in the back half, but is there any reason why the flow-through shouldn't be a little bit better since there's just higher levels of volume overall in the business?
  • Patrick Moore:
    Yes, Simeon, I would say it starts with our position on planning sales and comps and although the environment is certainly better, we have better visibility, it's still nothing like say we had pre-pandemic. So we continue to take a prudent posture towards planning. As you think about the second - the first half, we are growing over store closure periods from last year. The second half, we're growing over robust growth. So yes, in terms of the guidance raise for today, that was a result of Q1 that's in the books. And then what we're now expecting is a little lift on Q2 versus where we were back in February. Second half, we're still holding pretty close to where our plans were. Maybe we'll see some incremental stimulus benefit, maybe we'll exceed that, but those comps were double-digit in Q3 in Q4 and so we're being a little cautious as we approach that. In general, our plans assume that we see some normalization of comps, some normalization of ticket maybe not back to pre-pandemic levels, but certainly not at the highs that we've experienced. And then, Yes, thanks for the plug on our revenue, I always like to talk about that, we do expect that to reverse to a high degree for second quarter and become more of a positive than a negative this time and it always has a seven to ten-day timing thing, and I always like to look at the business kind of putting that aside. But in general, the margins for second half, we expect them to not fully revert but at least start reapproaching the margin profile with more normalized comps, more normalized mix.
  • Operator:
    Thank you. Our next question comes from the line of Paul Lejuez with Citigroup. Your line is open.
  • Paul Lejuez:
    Hey, guys. Thanks. Two questions. One on EGW, I'm curious if you're leaning more towards using independent doctors versus those employed by you and is there anything that changed on the doctor side that factored into your ability to accelerate the growth there as it's more driven by the sales traction that you're seeing? And then I guess along those lines, order disruption that you're seeing in the market, is the share up for grab a little bit more and that EGW demographic versus ABC? So that's first question. Second question, just kind of curious what the plan is from a marketing perspective. I think it was a point of leverage in 2020, just curious how you're planning marketing this year and how does that compare ABC versus EGW? Thanks guys.
  • Reade Fahs:
    Curious, okay. So simply no real change to the doctor modeling in EGW, that was not a factor and we have a mix, some stores have employed doctors, some stores have leased doctors that were pretty agnostic. You look at the laws of the state of course, but we're pretty agnostic as to how that works. And so really no new news on the doctors' side of Eyeglass World. Your question of market share up for grab with the EGW demographic, Yes, maybe that I would - if a factor of probably a smaller factor versus the larger factor, but Yes, wouldn't be surprised, I mean, overall both of our brands or all of our brands are benefiting from the hastening of the trends of the shift from independence to chains, from malls to non-malls, from traditional more expensive to more value-oriented. So I think that - those are bigger factors for all of our businesses, especially Eyeglass World and America's Best than others. In terms of marketing planning, we do believe marketing spend is going to normalize as sort of the world we live in normalizes. We're expecting that to get back to normal levels. Having said that, we're getting ever more digital in our marketing orientation for both our brands and we're pleased that we think we're really getting the hang of that and I think the biggest difference between America's Best and Eyeglass World is just America's Best benefits from the fact that we've been on Network TV now for a few years, that helps us when we open a store people know who we are and have heard of us and understand our benefits, so that's the plus. And I guess I'll point out just one other thing right now sort of our America's Best brand has some of that advertising that we mentioned in our call comments with exclusive Jamie Foxx for Prive Revaux frames, and that Paul, in particular, I think you would really enjoy the ad, so please do to watch that. But in general, more digital AB, America's Best network advertising and normalizing of spend through the balance of the year.
  • Operator:
    Thank you. Our next question comes from the line of Robbie Ohmes with Bank of America. Your line is open.
  • Robbie Ohmes:
    Hey, good morning, guys. So congrats on another great quarter. Just maybe a follow-up Reade on just when you look forward, are you seeing threat of more significant wage pressures either for the optometrists and/or the store associates? And also maybe not seeing it a lot yet but are there potential inflation issues in the supply chain either around the lens side or frames side?
  • Reade Fahs:
    Yes. Okay, thank you, Robbie. Let me answer your questions backwards. Our lenses, we have nice long contracts with fixed cost to them. Our frames to-date, we're not seeing anything significant in terms of inflationary forces there. We operate in the same world everyone else does and labor is tighter than it was at this particular moment in time sort of both the stimulus checks to us. This COVID thing has been about different chapters and chapters change and we're in a chapter now of tight labor and we like to pay competitively and make sure that our folks are well compensated. So that's something we're watching and managing carefully.
  • Robbie Ohmes:
    Great. Thanks so much.
  • Operator:
    Thank you. Our next question comes from the line of Kate McShane with Goldman Sachs. Your line is open
  • Kate McShane:
    Hi, good morning. Thanks for taking our question. Just a quick one from us, with regards to new stores and rents, are you starting to see more favorable rents in 2021 or was that kind of already locked in and should we look towards 2022 when you can maybe see something more favorable? And then finally, are you looking to do any relocations to take advantage of maybe the potential with lower rents?
  • Patrick Moore:
    Hey, Kate. Good morning. So really what we've observed on the rent market is reset. We've had some chapters. We had a chapter in 2020 where we saw some benefits in terms of renewals and even new store rents. I'm seeing now renewals that are in the flat maybe a couple down a couple of ups. So I would say we kind of moderated it. I'm not expecting because of the types of places we like to be or high traffic value shopper, those rents on a per square foot basis have held up far better even to scale the size of the store right after these 3,000 to 4,000 square feet is in a sweet spot. So I think there are a lot of vacant former Big Box stores where rents have collapsed, we're really not seeing our markets and don't expect too. We have benefited from some construction cost declines over the last year or so, and we still feel good about where those costs are this year because so many of our store build projects are seven to nine months in duration. So a lot of those costs are already baked in. So that's kind of how we're viewing real estate market. In general, we expect to continue to put 75 new stores out there for a long period of time every year and have been pleased with what we're seeing in terms of the cost profiles.
  • Kate McShane:
    Thank you.
  • Operator:
    Thank you. Our next question comes from the line of Michael Lasser with UBS. Your line is open.
  • Michael Lasser:
    Good morning. Big applaud for taking my question. Recognizing that it's really hard to size the impact from the stimulus in your first quarter results, can you quantify how much the contribution was from the acceleration in the business starting in mid-March of the timing check here. How much was that, and to what extent, do you think that that has released pent-up demand in throughout the industry and you noted that trends have remained strong through April, is there a reason why you just mentioned through April and not in the middle of May where we stand today?
  • Reade Fahs:
    Let's see. A few pieces, it is hard to pick apart what exactly is stimulus driven. Yes, the average sale has gone up, but it started going up the last June. So again, I think all economic indicators out there are suggesting that consumers especially our target consumer is feeling pretty cash flush and has been for a while now. I think there's Wall Street Journal talking about this their credit card debt being all time lows, they are very, very low, historically. So it's hard to pick that piece apart. We do believe also that pent-up demand is still a factor, I'd be surprised if all of you for the past ten months have been going to the dentist this regularly as you used to, well, similarly people aren't going to get eye exams similarly, so we do feel there is still pent-up demand there. But I do think the bigger factor relates to the hastening of trends that we've been talking about for several years now, ever since we went public and before internally and that that has been hastened, I do think that sort of the independent sector is having less eye exams than they were before. And I think we are the beneficiary of that in Q1 and yes in April, and we just picked April because we're writing - we published, Yes, we start writing this up last week that it was a big deal for us to even give you like a month into a quarter it's giving parsing by week seems a little much and you mentioned March, so February we had that weather issue that we mentioned on our last call because we're in the midst of that bad weather then but then of course the business came back in March as it always does for us, we always reference the restaurant model a bit snowstorm means, that restaurant has lost that meal or you're never going to have last night's dinner again. With us the person stays and I get worse and they just come once the snow melts. And so that was the factor for us in March. I hope that answer your question. It is hard to pick all this apart and of course then there is another factor of tax season this year it's so weird tax season is always a big benefit for us and that one's just a hard one to sort out given all that's going on with the IRS and all of this year. So there's just a lot of, I think, lately we use the word interplay in our press release and the interplay of just a number of forces coming together, overall like strongly edificial to us, sensible number of good days.
  • Michael Lasser:
    My follow-up question is what is your current capacity to open stores, you've hovered around 75 range for a while, you've mentioned that you're going to accelerate the growth of EGW, presumably this is not going to come at the expense of slowing the store growth for America's Best. What do you feel comfortable with and is it just that now that your overall store base is bigger, you need to have increased absolute number of openings to maintain the same level of growth or can you actually start to see an increase in the overall level of growth from the contribution from new stores?
  • Patrick Moore:
    Yes. So you're getting to a good point. We saw a little more impact this quarter on comp composition from our comping stores versus new stores and that was probably because we didn't open as many last year. We have guided to open 75 this year, so you can probably take that to the bank. We've not determined what we're going to do beyond 2021, and certainly understand your point, but we really do like our new store opening machine. We're very good at opening 75 on a very specific cadence with good success. It's about real estate, it's about getting store ready and it's about getting the doctor in place so that store can open strong. So it's 75 this year. Beyond this year, we'll certainly take all those factors into account as we think about 2022 and beyond.
  • Michael Lasser:
    Thank you very much.
  • Operator:
    Thank you. And our final question comes from the line of Dylan Carden with William Blair. Your line is open.
  • Dylan Carden:
    Great, appreciate it. Thank you. I just want to follow up on a couple of items there. Reade you mentioned kind of this reduction industry capacity. At present, I'm just curious how much of that you think is permanent and then on pricing and sort of inflation I'd like to come at it from a different angle, can you remind us of your pricing philosophy, I know the entry level is more or less sacred, but how much of your business could you take price if you wanted to or would you just sort of use that more to sort of strengthen the value proposition in the market? Thank you.
  • Reade Fahs:
    Great. So how much the industry capacity decline that we benefited from is permanent. Hard to tell I have a gut meter that it's probably of more or so than if there are plug outs at some long-lasting effect that have gotten either there, again it's hard to predict, because you're talking about the decisions made by large numbers of independents. But we do know or there is an industry stat out there that the independents have about 3% less doors than they did before the door closure. We also know there's been sort of other door closure out there, and I tend to suspect that a lot of independents sort of have grown used to a new pace for themselves, but who knows, I guess I can't predict that who knows, pricing philosophy, our pricing philosophy is we like our customers to know that they've saved a lot versus other places they might go, we'd like them to walk out the door saying well, that was - I spent less here, that was a great value. I pulled less money out of my pocket, we like that to be a noticeable difference we don't tend to take major pricing actions, we do - and our entry level price as you've mentioned is, I think is in place at America's Best for 15 maybe 20 years and there is not much to talk about. Now changing that sometimes you can peripherally sort of make a change to sort of lens package here and there; last time we did that was 2019 and we don't do that very frequently or talk about that very much. But in general, we like our customers to have saved money by choosing us.
  • Operator:
    Thank you. I would now like to turn the call back over to Reade for closing comments.
  • Reade Fahs:
    Thank you. Thank you, Amanda. We'd like to thank you all for joining us this morning for your continued interest in and support of National Vision. We're proud to tick-off Q1 and we're looking forward to speaking to you again when we report our second quarter results. Thank you all very much for your attention today. Bye-bye.
  • Operator:
    Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.