Thank you, and good morning, everyone. Welcome to National Vision's Second Quarter 2023 Earnings Call.

Joining me on the call today are Reade Fahs, CEO; and Melissa Rasmussen, CFO. Patrick Moore, COO, is also with us and will be available during the Q&A portion of the call.

Our earnings release issued this morning and the presentation accompanying our call are both available in the Investors section of our website, nationalvision.com. A replay of the audio webcast will be archived in the Investors section after the call.

Before we begin, let me remind you that our earnings material and today's presentation includes 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 include certain non-GAAP measures.

Reconciliation of these measures is included in our release and the supplemental presentation. We also would like to draw your attention to Slide #2 in today's presentation for additional information about forward-looking statements and non-GAAP measures.

As a reminder, National Vision provides investor presentation and supplemental materials for investor reference in the Investors section of our website. I will now turn the call over to Reade.

Thank you, Angie. Good morning, everyone.

Thank you all for joining us today. As you likely saw on July 26, we announced our preliminary second quarter financial results in conjunction with the news that our partnership with Walmart will be ending in 2024.

This morning, I'll provide some highlights from the second quarter, update you on the progress we're making on our key strategic initiatives with particular emphasis on how we're expanding exam capacity and provide some color on the Walmart transition. Then, Melissa will review our second quarter financial results and 2023 outlook in more detail.

As we communicated 2 weeks ago, our second quarter 2023 results were largely in line with our expectations and reflected trends similar to what we experienced in the first quarter. Compared with the second quarter of 2022, we delivered net revenue growth of 3.1% and delivered adjusted comparable store sales growth of 1%.

We continue to see strength in our managed care business as well as a further shift in the number of higher income customers who traded into our more value-priced offerings. During the second quarter, we opened 24 new stores and remain on track to open approximately 65 to 70 new stores this year.

As I'll discuss later in my remarks, we continue to see tangible results from the execution of our key strategic initiatives. These factors, among others, that Melissa will discuss resulted in adjusted diluted EPS of $0.17 for the second quarter.

Importantly, we believe the adjusted operating income and adjusted diluted EPS will be at or above the midpoint of our fiscal 2023 guidance ranges. Regarding our Walmart relationship,, as we detailed it in our July 26 press release, as of February 23, 2024, we will no longer be managing the 229 vision centers in select Walmart locations, nor will we be providing our related optometric services for Walmart in California.

Consequently, we made the decision to end the wholesale distribution and e-commerce contact lens services that we provide to Walmart and Sam's Club to our AC Lens business when our contract ends on June 30, 2024. While we did not expect this decision from Walmart, for well over a decade, we've been focusing on growing our 2 larger, more strategic brands, America's Best and Eyeglass World, driving the revenue from Walmart stores down to about 8% of our net revenue in fiscal 2022.

We've created a dedicated transition team and over the coming months, it will be focused on executing a successful transition of the vision centers we operate to Walmart. In addition, we are focused on ensuring we align our cost structure with our go-forward business model and expect to provide more details on this when appropriate.

As we look ahead, as a less complex and more streamlined organization, we will be able to have even greater focus on the core strategic initiatives that will grow our 2 large growth brands and return to a mid-single-digit adjusted operating margin milestone while solidifying our leadership position in the marketplace. We continue to make progress on our strategic initiatives, which underscores our confidence in our ability to adapt our business to thrive in this new and evolving environment.

Our primary strategic focus has been on expanding exam capacity. In Q2, as in Q1, the stores that achieved our capacity goals produced positive comparable sales growth above our reported consolidated comp.

We are laser-focused on improving coverage and are making progress on this front. One example is in dark stores where there is no in-store optometrist coverage or remote exam enablement.

In America's Best, dark stores were at their highest level in the second quarter of 2022, and are now at less than half that even while we have increased our store base. We are also focused on improving coverage in our dim stores, which are generally stores with some coverage, but well below our desired levels.

The number of dim stores can fluctuate throughout the year. We've been attacking coverage and continue to attack it through recruiting and retention efforts and deployment of our remote technology.

We also continued to drive increased exam capacity through retention of existing optometrists in our network, recruitment of new optometrists to our network and deployment of our remote medicine capabilities. We believe that the increase in flexible scheduling options that we now offer to new and existing optometrists is one of the key drivers of improved recruitment and retention levels.

We're pleased that we remain on track to deliver a second consecutive year of improved retention rates as we work towards returning to retention levels at or above where they were prior to the COVID-19 pandemic. Additionally, we're pleased this year's student recruitment efforts are shaping up to be another record year.

We believe the flexible scheduling options offered to graduating optometrists were a key driver of the increase in new graduates joining us. Now more than ever, new and experienced health care professionals want more control over their schedules, including how and when they decide to practice.

Scheduling flexibility, combined with other incentives is resulting in strong levels of interest by new graduates and experienced optometrists in joining the optometrist network since we launched changes to our recruitment approach and benefits earlier this year. Another driver of expanding exam capacity is the continued rollout of our remote medicine technology.

Year-to-date, through July 1, we deployed remote in nearly half of our 200 targeted locations, mainly in our America's Best locations. And remain on track with our rollout target this year.

Notably, more than 40% of our 926 America's Best locations are now enabled with both our remote and electronic health record platform. We're deploying remote in tandem with electronic health record technology as the 2 work together to drive expanded capacity, improve in-store efficiencies and importantly, improve the patient experience.

The combination of these 2 initiatives is resulting in added exam capacity in sales that we would not have had otherwise. And we remain on track for remote to be EBITDA profitable in 2023.

Many optometrists enjoy practicing via a remote setting, which helps support both recruitment and retention efforts. While still in the early innings of our remote program, we remain confident in its ability to continue to expand exam capacity over time, thereby allowing remote optometrists to serve even more patients.

As we look ahead, we are focused on carefully navigating the evolving and complex state regulatory landscape in future deployment phases. Before I conclude and turn the call over to Melissa, there are a couple of other recent highlights that I want to touch on.

First, and as we mentioned in our first quarter earnings call in May, we recently undertook a study of our pricing architecture to complement the internal pricing analysis we do on a regular basis. This study was recently completed.

And while still early in our evaluation of the findings, we're already implementing some modest non-headline adjustments. Second, we are currently in the midst of back-to-school season, which is our second largest selling season after the first quarter when health benefit plans reset and customers receive tax refunds.

During back-to-school season, children are getting eye exams and glasses in preparation for returning to school, and we can currently see a seasonal increase in adult customers. As has been our historical practice prior to the COVID-19 pandemic, over the past several weeks, we conducted robust in-person back-to-school meetings across the country with our store teams where we listen to our customer-facing associates to ensure we're providing them with everything they need to best serve our patients and customers.

We are reinforcing our focus on our field management to improve operations and thereby improve performance. As we look ahead, we remain encouraged by the progress we're making across the business with execution of our strategic initiatives.

While our model is evolving, we remain focused on our mission to help people by making quality eye care and eyewear more affordable and accessible. I'll now turn the call over to Melissa for a more detailed discussion of our second quarter financial results and our outlook for the remainder of 2023.

Melissa?

Thank you, Reade, and good morning, everyone. As you know, 2 weeks ago, along with the news that our partnership with Walmart will be ending in 2024, we announced preliminary second quarter results that were largely in line with our expectations and reaffirmed our fiscal 2023 outlook as we previously communicated on our first quarter earnings call in May.

For the second quarter, net revenue increased 3.1% compared with the prior year's quarter. The timing of unearned revenue negatively impacted revenue growth in the period by 90 basis points.

We opened 21 new America's Best and 3 Eyeglass World stores and closed 1 store in the second quarter. Unit growth in our America's Best and Eyeglass World brands increased 5.1% on a combined basis over the total store base last year, and we ended the quarter with 1,381 stores.

As Reade mentioned, we are still on track to open between 65 and 70 stores in 2023, consistent with our previous guidance. Adjusted comparable store sales grew 1% compared to second quarter of 2022, driven by an increase in average ticket and an increase in customer transactions supported by the continued strength in our managed care business.

As a percentage of net revenue, cost applicable to revenue increased 120 basis points compared with the prior year quarter. As we expected, we continue to see deleverage of optometrist-related costs.

However, this was partially mitigated by an increase in exam revenue driven by managed care strength and pricing actions. The net impact from deleverage of optometrist-related costs and the increase in exam revenue was approximately 50 basis points and in line with our expectations.

In addition, we experienced a 50 basis point headwind due to reduction in other components of service revenue, including decreased warranty plan revenue. Lastly, the remaining 20 basis point increase was associated with an increase in contact lens product costs, which was partially offset by additional pricing actions as well as favorability with freight expense management.

As a reminder, for the year, we initially expected a gross margin headwind of approximately 100 basis points balance between higher product costs and investments in doctors. Given the mitigating actions we are taking across both product costs as well as overall service costs, we now believe it is best to look at this breakdown as a split between product cost and overall service costs.

which include investment in doctors. Given our year-to-date results and expectations for the remainder of this year, we now expect the 100 basis point gross margin headwind for the full year to be skewed to service cost versus product cost.

Adjusted SG&A expense as a percentage of revenue increased 140 basis points compared with the second quarter of 2022. The increase was primarily driven by higher payroll and performance-based incentive compensation as we expected and higher occupancy, partially offset by other expenses.

As a reminder, we expected adjusted SG&A to grow in the high single-digit range in the second quarter, but saw a slightly lower increase due to the timing of certain expenses that we now expect to incur in the third quarter. Depreciation and amortization expense decreased 1.3% to $24.9 million from the prior year period, primarily due to a shift in cloud-based software investments that are amortized in SG&A, partially offset by our ongoing investments in remote medicine technology and new store openings.

Adjusted operating income was $16.4 million compared to $27.8 million in the prior year period. Adjusted operating margin decreased 240 basis points to 3.1%, driven primarily by the factors discussed as well as the $3.5 million negative impact from the margin on unearned revenue in the period.

Net interest expense was $1.8 million, which includes mark-to-market gains and losses on derivative instruments and changes related to amortization of debt discount and deferred financing costs of $1.3 million. The year-over-year decline in net interest expense was primarily due to income on cash balances and higher derivative income, partially offset by higher term loan interest expense.

Our effective tax rate in the second quarter was 4.7%. As we move into the second half of 2023, we continue to expect our tax rate to be more in line with our full year guidance of 26% to 28%.

Adjusted diluted EPS was $0.17 per share compared to $0.21 per share in the prior year period. Turning to our financial results for the 6 months to date, as compared with the prior year period, net revenue increased approximately 5%, driven by new stores and adjusted comparable store sales growth of nearly 1%.

Adjusted operating margin declined 180 basis points compared to the prior year period, driven primarily by the aforementioned factors that impacted the second quarter. Our balance sheet and liquidity remained strong.

During the second quarter of 2023, we successfully refinanced our term loan and revolving credit facility, extending our access to $300 million in liquidity through the revolving credit facility for an additional 5 years through June 13, 2028. We ended the quarter with a cash balance of $254.6 million and total liquidity of $548.3 million, including available capacity from our revolving credit facility.

As of July 1, our total debt outstanding was $565.7 million and for the trailing 12 months through July 1, 2023, we ended the period with net debt to adjusted EBITDA of 1.9x. Year-to-date, we generated operating cash flow of $112.2 million.

In addition, for the first 6 months of fiscal 2023, we invested $54.1 million in capital expenditures, primarily driven by investments in new stores, our lab and distribution center, and our remote medicine technology. We remain on track for capital expenditures to be in the range of $115 million to $120 million in 2023 to support our key growth initiatives.

Moving now to a discussion of our 2023 outlook. Consistent with what we communicated on July 26, with the exception of our outlook for depreciation and amortization expense, we are reaffirming our previous guidance ranges for fiscal 2023.

Our revenue guidance continues to incorporate ongoing execution of our strategic initiatives focused on expanding exam capacity as well as a range of scenarios pertaining to consumer sentiment. We believe we are well within our provided range and well-positioned to deliver on the expected sales trend improvement in the back half supported by the timing of new doctors joining and the ongoing execution of our strategic initiatives.

We now expect depreciation and amortization to be in the range of $99 million to $101 million given lower depreciation in the first half of this year, the timing of capital expenditures and the anticipated impact of the intangible asset impairment related to the Walmart exit. In addition, we expect adjusted operating income and adjusted diluted EPS to be at or above the midpoint of our guidance ranges of $48 million to $66 million and $0.42 per share to $0.60 per share, respectively.

Our guidance for adjusted diluted EPS assumes approximately 79 million weighted average diluted shares outstanding. Finally, with respect to our relationship with Walmart, as Reade discussed, Walmart's contribution to our overall revenue and EBITDA has declined over time, in large part due to our efforts to grow America's Best and Eyeglass World.

Consistent with what we communicated 2 weeks ago, when we announced the ending of our relationship with Walmart, for fiscal 2023, we expect the EBITDA contribution from Walmart to be lower in fiscal 2023 than fiscal 2022. We also expect to record noncash goodwill and intangible asset impairment charges of approximately $60 million and $10 million, respectively, in the third quarter of fiscal 2023.

Given the termination of our Walmart relationship, we are taking a close look at our cost structure and remain committed to making the necessary changes to align it with our go-forward operating model. We believe through the elimination of the direct and indirect costs associated with these businesses, combined with our growth in America's Best and Eyeglass World brands, we will be able to mitigate the financial impact from exiting these agreements.

We expect to share more on these plans as appropriate at a later date. As we look ahead, our focus remains on operational execution, delivering further progress on our strategic initiatives and returning to mid-single-digit adjusted comparable store sales growth and mid-single-digit adjusted operating margin.

Thank you for your time today. I will now turn the call over to Reade for closing remarks before we open the call to your questions.

Reade?

In closing, let me summarize. Our second quarter performance was largely in line with our expectations, where we have achieved our exam capacity goals, we've delivered positive comparable store sales growth in excess of our overall consolidated growth.

Retention trends are encouraging, recruitment trends are encouraging and remote is expected to be EBITDA profitable this year and poised to be an ever more important part of our exam capacity. We are reiterating our full year 2023 outlook with adjusted operating income and adjusted diluted EPS to be at or above the midpoint of their respective full year guidance ranges.

And we look forward to being a far simpler, faster-growing company with an increased focus on our 2 strategic growth brands, America's Best and Eyeglass World. Thank you for your time today.

We will now open the call for your questions.

I just wondered if you could provide any more detail behind the same-store sales trend difference between America's Best and Eyeglass World and the performance there.

Thank you, Kate. I'm happy to do that.

Yes. So America's Best was a 1.8% comp and Eyeglass World was a negative 2.8% comp.

I've got to tell you, it's a little bit of the same story of managing doctor coverage and dim store. Here, we've really been focusing our efforts with remote, which has been a help so far on our AB stores, our America's Best stores.

That's where we've been rolling that out and have that going. And at some point, we will turn to Eyeglass World on that front, but it's really so much the story of capacity constraints there, but we do believe that we can continue to improve those over time.

And Kate, I just wanted to add, we did talk about dark stores in our prepared commentary this quarter. And as far as the dark stores go, this is something that we are really focused on working through with our remote enablement but the dark stores were at their worst at second quarter of 2022 at mid-single digits, and we're less than half that amount currently.

And so we'll continue to attack that through our recruiting and retention efforts as well as our remote. And I'm sorry, those numbers that I quoted were the percent of America's Best fleet.

Now that is something, like I said, that we are working to attack through recruiting remote and we'll move to the Eyeglass World brand once we have established our increases with America's Best.

And finally, Kate, I think the real story here is as we have been improving the capacity in America's Best. We're seeing the comps improve.

And as we said in our remarks, where we have the desired level of capacity, we are able to deliver the comps in line with our historical operating model. So it's just getting back to making sure we have the exams available for the patients who want to take advantage of them.

Thank you so much for taking our question. Reade, Patrick, Melissa, Angie, there are so many moving pieces in your model given what's happened over the last few years along with now the divestiture of the Walmart business.

So it would be extremely helpful if you could help unpack whether or not National Vision can get back to the average adjusted operating income margin that it regularly achieved prior to the pandemic which was in the 6.5% to 7% range. And if that is feasible, what are going to be the key factors and strategies that allow National Vision to get there?

Is it simply just going to be a function of generating consistent same-store sales growth, leveraging expenses, especially in light of the investments that you're having to make in order to attract and retain optometrists at this point?

Michael, I love your question, and there are a few moving pieces really brought on by the post-COVID marketplace. And those moving pieces are affecting the optical category in general.

Again, what I'd like to remind you is where we are able to execute our model, where we have capacity, we are driving the comps in line with our historical model. We do believe that mid-single-digit adjusted operating income margin is our next milestone, and we've been talking about how we will get back to that and hope to be back there certainly in 2025 and start seeing that in late 2024.

I'll say the elimination of the Walmart part of our business, that was pulling down our margins. So that alone is going to help with that.

And we see that expansions in capacity are a key driver in helping us to get there, but also the digitization of our stores, further digitization of our corporate office, more leveraging of omnichannel capabilities, as well as more stores as we take advantage of our white space opportunity. I'll add Michael that since you've been following us so long, at this time last year, I'd say we were sort of feeling more back-footed by a lot of changes that were affecting us and coming our way and sort of coming to understand to the full extent what was happening both to our consumer and the rising inflation environment and to the doctor capacity within the marketplace also.

We are feeling far more front-footed now with the programs we put in place, especially flexibility in terms of driving increased and improved retention. And frankly, we think our retention will be at maybe the best year post -- the best year post-COVID and record recruitment of students and the like.

And we're encouraged with the start of the third quarter. It's a back-to-school season and back-to-school season does evolve across the country.

So it starts more in the Southeast and then goes North and then across the country, but where it has started, we are encouraged by the initial trends we are seeing there.

Okay. My follow-up question is that it's clear the purchase cycle for new eyewear had been disrupted over the last couple of years given all that's going on.

And now, as you mentioned, you're on front-footing, more firmer footing. And is what you're seeing a sign that there is a return to normalization of the optical purchase cycle?

Or is it more of a sign that National Vision is gaining or retracing some of the share that it might have lost over the last years as it was contending with some of the constraints that we're dealing with?

I think it's a sign of our improved capacity allowing us to offer patients the exams they want to get from us. We have not yet seen a normalization in the purchase cycle.

It could start to happen in the second half, but we are not planning for that. It could start to happen in the second half.

It's been about 2 years since that big boom of optical purchases for us and others that came about when the government gave out so much money to our customers. So it's been about 2 years.

So there is a logic that, that could happen, but we are not planning for that in our guidance. We are planning that the improved capacity is going to be helping us in the second half.

We believe our market share is flat to up and maybe more up in the managed care segment.

Thanks for all the helpful information that you shared so far this morning. I guess my question was on dark stores and dim stores.

I just want to make sure I have this correct. So a dark store is not offering any eye exams and a dim store is offering some but not at sort of 100% capacity.

Is that the right way to think?

Yes. At dark, we do not have a doctor, and we do not have remote.

So yes, we can't get an eye exam there. And a dim store has maybe a day, maybe a couple of days, but not at our desired level.

Got it. And so I think it's pretty safe to say that your dark stores here and dim stores are doing comps that are significantly lower than company average.

Is that a fair assessment?

Yes, for sure. And especially those dark sales, they are quite a quite a drag.

And again, the fact that we've cut the dark stores in half as a percentage of our fleet since the low about this time last year. We're pretty proud of that.

We think that shows nice progress and also remote is helping to ever more exams in those -- in the remote-enabled stores. But yes, and the converse of what you said, Anthony, is where we're able to deliver our model, where we are able to offer the eye exams that comps are doing what they were doing historically prior to COVID.

And that's encouraging, too. What it says is, hey, deliver the model and the patients show up for you like they used to.

Got it. And just one last question.

I don't want to bogart the Q&A session here. But -- okay, when you say, mitigate the financial impact of losing the Walmart partnership, are you talking about -- are we mitigating that impact, like literally getting the recapture of the $19 million of EBITDA?

Is that the way to think about it? Or is it like sort of partially mitigating that?

Anthony, it's Melissa. When we're talking about mitigating the impact of Walmart, we do understand that there is a profit hole to fill.

And so we're going to mitigate that through 2 avenues. First being the continued increase store count as we expand our America's Best and EGW fleet and the other portion of that will be through cost reductions related to the Walmart exit.

There's both indirect costs associated with that indirect costs associated with that, that we'll be taking out of our business. In addition, we're committed to rightsizing the structure of our go-forward model to the new operating model that we have, which is a less complex operating model now that we'll be exiting the Walmart relationship.

This is Sam Reid pitching in for Zach here. Wanted to touch on your ongoing relationship with EssilorLuxottica.

How does the Walmart contract change -- or the change in the Walmart contract impacted us, if at all? And is there a risk of the reduction in your volumes post the Walmart exit could be a headwind to this relationship?

I think we have a very strong long-term relationship with EssilorLuxottica and we have long-term contracts in place on the lens side, and we talked about last year, how that's a fixed price through the length of the contract there. And we are still -- even without Walmart, we are one of the top couple largest optical chains in America.

And so we're still a big customer and a big partner, but that relationship goes back a long way and a lot of it is contractual, and we are not anticipating any significant change in that.

That's super helpful. And then one quick follow-up if I could.

Can you walk us through some of the non-headline price actions you've taken thus far in a bit more detail? It doesn't sound like they've really impacted transactions.

So are there any specific areas where you might have additional runway in 2H and beyond?

Sam, it's Melissa. So we have taken price actions where we have been able to increase that weren't originally contemplated in our guidance.

As we have seen continued cost increases, we evaluate the price increases to follow that. Now some of the things that we've been able to look at for this year specifically, our private label contact lenses, for example, and some ancillary exam add-ons.

Those are two of the major areas that we've been able to contemplate and increase additional price actions.

I guess just to follow up on some of the Walmart questions. In your prepared remarks, you alluded to maybe some cost adjustments that you're contemplating.

Just curious what those are and the timing and the magnitude of cost opportunities that you think you can realize over the next 12 to 24 months.

Brian, it's Melissa. With the Walmart information that we've put out, we're ending the Walmart relationship with the stores in February of '24 and with the distribution contract in June of '24.

We are assessing and evaluating our opportunities to exit those cost structures at the same time that we'll be exiting the revenue stream. So we're going to marry those up as closely as possible.

That's what our planning is working on. And the costs that will come out of the business are, of course, any direct costs related to supporting those relationships.

And in addition, with the corporate structure, you have back-office costs. You have overhead related to things, in the last discussion we said like insurance, things like that.

Those are types of indirect costs tied to Walmart relationship and the distribution relationships that would look different in the go-forward model than they do today.

Got it. Okay.

And then in your prepared remarks, you also alluded to the fact that you rolled out virtual to about half of the target stores. Anything you can share with us in terms of the performance that you're seeing or the ramp that you're seeing as some of these rollouts mature?

Or -- I think for some of them, you're probably not quite a year but close to a year out now. So just curious what you're seeing.

Sure. We're very encouraged by what remote is doing for us.

Reade mentioned earlier in the dark and dim conversation where it's been kind of a game changer even from a new store rollout perspective this year. We've even opened some new stores where we haven't found an inline doctor yet with a remote doctor.

So I look back on our decision to start pursuing remote 3 years ago, and really happy with that timing because it's playing a pretty big role. You're right.

We've rolled this out to other -- to about 40% of our AB brand. Now we're higher than that.

We're going to have 500 of ABs equipped by the end of the year this year. We're evaluating our 2024 plans now, but we expect to continue to be rolling this out to a vast majority of our ABs over time.

And I think more recently, we're going to start. We've started testing it in more surgically in EGW, where I think it can be a benefit there as well.

So we're on track with remote. And then finally, I would say our wording has been we expect it to be EBITDA profitable this year, and there's -- there couldn't be higher confidence around that.

This is Michael Vu on for Adrien. So I wanted to start off with a more broad question.

I know that you mentioned that you saw higher average ticket and an increase in customer transactions. Would you please share some additional color around why you're seeing consumers buying higher ticket?

Is this maybe attributable to the new store openings and the additional capacity? Or are you also seeing any kind of trade-down effects?

Michael, it's Melissa. So there are a couple of factors tied to the higher ticket, but first and foremost being the managed care strength that we're seeing.

Managed care customers tend to have a higher ticket than the nonmanaged care customers just based on spending somebody else's money versus spending your own money. In addition to that, we have seen a continued trade down from the income levels of higher than $100,000.

And with both of those factors combined that's what's driving the higher ticket. We provide value to many customers.

And with the continued managed care strength, where we believe that they come to see our stores because they get more value for their benefits in our stores.

Perfect. And as a follow-up to that, I know that you just mentioned the higher household income.

And as we are like starting to shortly see the repayment of student loans, I was just wondering whether or not that's going to be positive or accretive related to the increase in customer transactions in the overall business. Or are you more seeing that as a headwind?

And what kind of assumptions are you making related to that if any at all since you were just mentioning the $100,000 to $125,000 range?

So related to the student loans, while there may be a broader consumer sentiment implication, we do expect that with the higher income bands, we'll likely see some additional trade down into our brands because of the value that these consumers can get at shopping at one of our stores. Now our target customer -- our data shows us that a smaller portion of our target consumer has student loan debt.

Just curious if you might be willing to express explicitly of the data you provided on the Walmart business, it's accretive from an EBIT net income standpoint. And is the idea here that through indirect cost reductions, ultimately you'll be able to mitigate kind of the margin implications of losing that business next year?

Dylan, it's Melissa. Yes, you are correct that Walmart is accretive at the EBIT level.

It will take some time to fill that profit hole. However, that has been a declining portion of our business over the past couple of decades as we've grown our America's Best and Eyeglass World brands.

And we continue to expand our fleet so that is a factor in the growth. In addition, the Walmart business has lower margins than what our growth brands have.

So through cost reductions in addition to new store openings, we'll continue to fill that profit hole. If we weren't in an intensive investment cycle on our growth brands, you wouldn't have seen as much of an accretive margin -- or I'm sorry, an accretive profit hole that we needed to fill because you would have seen more of the margin drop down to the bottom line based on our growth brands, but our investment cycle is a factor in that currently.

So if you were to dial it back to '18, '19 pre-pandemic, you would see the Walmart business be dilutive on the EBIT line? Is that what you're saying?

I'm not saying you would see it to be dilutive on the EBIT level. You would just see it as a lower portion of our overall profit.

Okay. And then with the doctors that are coming out of the Walmart stores, stores in stores.

Can you kind of speak to the capacity for you to retain those doctors, maybe deploy them across the fleet? Any comments there about what that might actually do from a capacity standpoint?

Yes. Our contract has a transition period where various groups are able to talk to the doctors there.

It's sort of a complex thing because it relates to sort of state-by-state, location-by-location, doctor-model-by-doctor-model, but doctors are going to be making a variety of choices based on the stake.

So it's not sort of an immediate windfall, I guess. We should back away from thinking that it might be from a capacity utilization.

I don't think we should think of it as an immediate windfall. You've got to have a new store nearby if a doctor wants to shift over a similar model piece.

So I wouldn't say an immediate windfall, but it will be -- yes, doctors will be making various decisions.

Great. And then last question on the pricing.

The reviews over you've kind of taken some action here on the periphery. Is that -- it sounds like there still might be some more that you can do kind of going into the back part of this year into next year.

Is that right? And how should we sort of think about -- I know that's just a big focus of a lot of investors here, your capacity to kind of close the gap if you would.

Please kind of speak to what you expect in the coming quarters on the pricing, particularly your approach.

And by the way, periphery makes it sound a little smaller. We're thinking nonheadline price.

The terms mean the same thing. But yes, we believe that more pricing actions will come into play in the second half of the year.

We're very vigilant about pricing. We mentioned the study that's causing us to ask a lot of other questions, too.

So we think there is more juice in the pricing lever going forward.

Thank you all for joining us today. We appreciate your interest and support, and we look forward to speaking to you next on our Q3 earnings call.

Thank you all very much.