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

Good day, and thank you for standing by. Welcome to the Q2 2026 National Vision Holdings Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Tamara Gonzalez, Head of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to National Vision's Second Quarter 2026 Earnings Call. Joining me on the call today are Alex Wilkes, CEO; and Chris 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 Investors 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 the supplemental presentation. We 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 presentations and supplemental materials for investor reference in the Investors section of our website. I will now turn the call over to Alex. Alex?

Thanks, Tamara, and good morning, everyone. Thank you for joining us today for our second quarter earnings call. The second quarter marked an important step forward for National Vision. We completed a significant technology milestone following the implementation of our e-commerce replatform. And most importantly, we delivered underlying results in line with our strategic framework, driving growth through underdeveloped customers, underpenetrated products and an enhanced customer experience, all while delivering meaningful improvement in profitability. This is the flywheel we are building: a stronger customer mix, better product attachment and a more connected experience and a store base that supports sustainable growth, margin expansion and increased profitability. For the quarter, net revenue grew 2.5% to $499 million and adjusted comp store sales increased 2.2%, in line with our expectations discussed on our last quarter call, with accelerated ticket growth helping to offset the temporary replatform impact and broader pressure on lower value transactions. Our trend analysis suggests the replatform impacted total adjusted comp store sales by approximately 150 basis points. Excluding this impact, we estimate America's Best would have delivered slightly over 4% adjusted comp store sales growth, a result we are really proud of. Especially in light of the current environment and represents another proof point that our strategy to build a more profitable and durable business is taking hold. We sustained momentum with higher-value customers, a key segment that we have deliberately focused our customer acquisition efforts against. This is reflected in our positive comp growth with managed care driven by strength in both ticket and traffic. And in product categories that we have prioritized, antireflective coatings, transitions lenses, polycarbonate lenses and premium progressive lenses, each grew meaningfully this quarter. Importantly, our average ticket expansion is coming from the quality of sale and consumers raising their hands to opt into premium offerings versus simply passing price through to drive growth. The bottom line benefits of our strategy are evident in our profitability. Adjusted operating margin expanded 140 basis points to 6.3% in the quarter, and adjusted EPS increased to $0.25 per share from $0.18 in the prior year quarter. Perhaps the clearest evidence that our strategy to become a more profitable company is working is reflected in our updated outlook. Our strategic initiatives continue to perform as expected, and we're seeing the benefits in customer mix, premium product attachment and consequently in profitability. Given this, we are meaningfully increasing our adjusted operating income outlook. As the replatform disruption faded and we gained greater insight into underlying demand patterns, it became clear that the lower-value customer continues to somewhat defer their purchases, leading us to take a more measured view of the top end of our comparable store sales range. And this was particularly evident at the introductory bundled offer price point. While we are never satisfied with losing transactions, those transactions are among the least profitable in our portfolio. We remain fully committed to serving these customers through our compelling entry-level offer and are confident they will continue to find great value offerings at our banners when the environment improves. At the same time, we're seeing our strategic initiatives perform as expected as we continue to strengthen higher-value customer transactions, premium attachment and ticket growth. We believe this growth in higher-value customers insulates us from the macro challenges so many other retailers are experiencing with their most budget-focused customers. This combination gives us increasing confidence in the quality of our growth and the earnings power of the business. Just as importantly, we're increasing our investment in marketing in the back half of the year to drive awareness at America's Best and Eyeglass World and support customer acquisition. For example, this fall, America's Best will have a national presence through Fox College Football Saturdays as the sponsor of Fox Weather segments across Big Ten tailgate, pregame broadcast, all complemented by on-site activations and live broadcast integrations designed to increase awareness and engagement with the brand. This sort of high-profile media initiative is a first ever for National Vision. As I reflect on our performance, I think it is important to take a moment to explain why the e-commerce replatform was such a milestone achievement in the quarter. While it certainly created some short-term headwinds, it sets the organization up for growth and to capitalize on our long-term aspirations. We now have moved from a legacy digital experience to a modern commerce platform that gives us capabilities we have never had before. The new website platform significantly enhances the customer experience with faster, more intuitive shopping, a meaningful step-up in functionality from our previous platform. This is not simply a technology upgrade. It is a foundational growth platform that we believe will drive higher conversion, deeper engagement, stronger retention and more personalized customer relationships for years to come. This modernization is also foundational to a world where we expect AI to play a greater role in consumer buying habits. More modern approaches to our website and unified commerce is one of the most significant opportunities in front of National Vision and one that can reshape how customers engage with us across the full optical journey. Each year, tens of millions of users interact with our brands online, primarily starting their journey by booking an eye exam. What an opportunity we have in front of us is we can marry this level of interaction with a best-in-class commercial experience and access to incredible eye care. That is what we are creating a unified commerce platform supported by our employee doctor model that will connect the exam, prescription, product selection and purchase experience in a way that is more seamless, more personalized and more relevant to each consumer. Unified commerce gives us the opportunity to turn millions of annual consumer interactions into more connected, higher-value relationships. We believe we are the first optical retailer able to combine online purchasing with in-store eye care at this scale, and we see that combination as a winning one and a key differentiator for our model going forward. Now let me turn to more near-term plans as we look to the second half of the year. First, we continue to see growth driven by durable ticket expansion attracting premium frame brands that now view National Vision as a strong fit, reflecting the evolution of our customer base toward higher income cohorts and the momentum we're seeing in higher-value categories. Premium product attachment continued to improve in the second quarter, supported by stronger branded frame performance, growing adoption of premium branded lenses and superior materials, all key categories where we continue to close the gap against the overall market. Earlier this year, we outlined a path to grow premium materials and antireflective attachment, and we are already demonstrating meaningful progress against those ambitions. Our expanded assortment of premium and performance frame brands include Versace, Burberry, Persona and Costa, and it's helping us attract a higher-value customer to support continued premiumization. Ray Ban continued to be a strong contributor, supported by dedicated branded presentations and new frame launches. We're also advancing product innovation through initiatives such as the launch of Nikon Eyes, Stellest lenses and continued store segmentation. Nikon Eyes, our newest branded premium lens is exceeding expectations with strong customer adoption, validating demand for higher value lens solutions. Early results show significant mix shift in frames to more premium products, generating significant average ticket lift. Building on that momentum, our store segmentation initiative is helping us put the right brands, products and price points in the right stores. Store segmentation was rolled out in America's Best at the end of Q2, with plans on track for Eyeglass World by Q4. These efforts allow us to better tailor assortments by customer need, local demand, lifestyle and price point while supporting stronger premium attachment and more personalized engagement across our store base. We're also seeing strong momentum in newer categories that align with where consumer demand is headed. Smart eyewear is one of the clearest examples. Our smart eyewear category continues to do very well, demonstrating our ability to be a clear leader in smart glasses with the strong customer adoption we are seeing with Ray-Ban Meta. At the beginning of the quarter, we expanded Ray-Ban Meta and added Oakley Meta smart glasses to each of our over 1,200 locations, and they are continuing to perform above expectations. Although the number of frames still represent a small portion of our SKUs, smart eyewear is our fastest-turning branded category. A differentiator for National Vision is that we are at scale with this distribution of this rapidly emerging category. We can fit these devices with prescription lenses through our 2,000-plus license optometrist and then how customers apply their managed care benefits to make them more affordable. That combination of distribution and scale and clinical expertise puts us in a structurally advantaged position as the category continues to scale. For Q2, adjusted comp store sales at Eyeglass World increased to 0.4% as we continue to lay the foundation for the brand's next phase. The biggest opportunity at Eyeglass World is still ahead of us. And this quarter, we took 3 important steps towards that. First, brand repositioning. We've developed a new brand identity, and we're thrilled with where it's landed. We'll be live online in just a couple of weeks, and our store teams are excited about what's ahead. This new identity gives us the opportunity to refresh our advertising and marketing message for the first time in several years in a way that's fully aligned with our lab, lens and frame strategy. Second, our lab operating model. During the quarter, we moved lens surfacing from stores into a larger centralized lab. Historically, doing this work in stores limited our ability to offer premium progressive lenses. This change gives us the capacity to expand that offering and better supports future growth. Third, segmentation and ticket growth store segmentation is on track to roll out at Eyeglass World by the fourth quarter, and we expect that together with the new brand and lab strategy to be a meaningful driver of ticket growth in the back half of the year. Similar to what we did with America's Best, we are applying a bold but disciplined approach unique to Eyeglass World that is focused on clear brand differentiation, stronger customer engagement and profitable growth. We're really excited about what's [indiscernible] to eyeglass world and look forward to sharing more in the coming weeks as we bring this evolution to market including a refreshed brand identity and updated marketing and messaging designed to better reflect the brand's differentiated position and growth opportunity. For a preview of where we're headed, I encourage you to look at our earnings presentation which highlights elements of the brand evolution currently underway. The key takeaway is that Eyeglass World is another example of how we're leveraging a repeatable transformation playbook to unlock value across our portfolio and drive durable long-term growth. To close, the second quarter was an important step forward and provided further evidence that our strategy is working. We're delivering against the priorities we outlined with measurable progress across our key protectors and meaningful runway still ahead. The progress is visible in the business: stronger managed care momentum, higher premium attachment, continued ticket growth, a more modern e-commerce platform and meaningful operating margin expansion. As we enter the third quarter, while traffic trends with our lower-value transactions, continue to be deferred. Our America's Best comp is performing in line with our Q2 performance ex replatform. We are building a stronger national vision: One with better customer engagement, more durable ticket growth, a healthier mix and a more modern platform for long-term growth. With that, I'll turn the call over to Chris to walk through our second quarter financial results and updated outlook in more detail. Chris?

Thank you, Alex, and good morning, everyone. Before I review our results, as a reminder, our most will include certain non-GAAP metrics, and I would refer you to today's press release for reconciliations of all non-GAAP financial measures to their most comparable GAAP measures. Our second quarter results represent another proof point that our strategic approach is working as we delivered adjusted operating margin expansion of 140 basis points in a period marked by traffic headwinds. Our deliberate shifts toward higher-value customer mix and enhanced product attachment resulted in strong average ticket and operating profit growth despite traffic headwinds, particularly among lower-value transactions related to our entry-level bundle offer. This is precisely the flywheel we impacted at our Investor Day last year. Stronger customer mix better product attachment and more durable profitability, and we're seeing the financial proof points clearly in our results. Now turning to our results in more detail. For the second quarter, net revenue increased 2.5% and with adjusted comparable store sales growth of 2.2% and a positive 0.8% impact from the timing of unearned revenue. We ended Q with a total of 1,281 stores reflecting 9 openings and 2 closures of America's Best stores during the period. Adjusted comparable store sales growth was driven by an increase in average ticket of 7.1%, offsetting a 4.9% decline in overall customer traffic. As Alex discussed, we had 2 clear dynamics impacting our traffic performance this quarter. First, the e-commerce replatform created temporary headwinds as we entered the quarter, impacting our total Q2 comp performance by approximately 150 basis points. As our search signals were reconnected and online bookings recovered to pre replatform rates, we saw the underlying momentum of our business become clearer. The replatform was a significant technology milestone. And while it created some near-term disruption, it sets up our organization for long-term growth and positions us to capitalize on our strategic aspirations in digital commerce. Second is the deliberate evolution in our customer mix to higher value, more profitable transactions, which was accelerated by current category trends that continue to see many lower-value transactions deferred. As a result, our growth in ticket has accelerated across our combined managed care, Progressive and outside RX customer cohort as well as with our cash pay customer cohort. Now turning to profitability. Costs applicable to revenue increased approximately 4% compared to the prior year, and gross profit increased 1.5% or $4.4 million, driven by the strength in our average ticket. In line with our strategy, this did result in gross margin rate dilution given the impact of a mix shift towards higher value product offerings. Adjusted SG&A was $236.2 million in the second quarter and as a percentage of revenue, leveraged 200 basis points. This performance reflects efficiencies in store labor, lower variable incentive compensation and a timing shift of marketing investments from Q2 into Q3 and in connection with the replatform that enabled about 50 basis points of leverage in the quarter. Adjusted operating income increased to $31.6 million compared to $23.8 million in the prior year period. Adjusted operating margin increased 140 basis points to 6.3% for the quarter. This expansion was driven by both our strong execution in our cost controls and improved profitability from our higher value customer mix. Net interest expense was $3.3 million compared to $4.2 million in the prior year. This year-over-year decrease was primarily driven by a reduction in debt with the maturity of our $85 million in convertible notes in May of 2025 and a year-over-year reduction in SOFA rates. Adjusted earnings per share was $0.25 per share in the second quarter, up from $0.18 per share last year. For the first half of fiscal 2026, we delivered adjusted comparable store sales growth of 3.4%, adjusted operating income margin expansion of 180 basis points, and nearly 37% growth in adjusted EPS compared to the prior year. Turning to our balance sheet. We ended the second quarter with a cash balance of $36 million and total liquidity of $329.3 million, including available capacity from our revolving credit facility. During Q2 2026, we repaid $3.3 million in long-term debt, bringing our total debt outstanding net of unamortized discounts to $237.7 million at the end of the quarter. For the trailing 12 months, our net debt to adjusted EBITDA ratio was approximately 0.9. Year-to-date, we generated operating cash flow of $69.8 million and invested $39.8 million in capital expenditures, primarily driven by investments in new and existing stores and information technology. During the second quarter, we repurchased approximately 1.2 million shares for $20 million, which was an opportunistic use of capital given the underlying performance of the business. As of July 2026, the share repurchase authorization had a remaining capacity of $30 million. Throughout the quarter, we continued our strategic investments in inventory to support our store segmentation strategy. As of the end of the quarter, inventory increased approximately 37% compared to the prior year. As Alex mentioned, we are deploying our store segmentation approach across the portfolio, and we've built our assortment to support tailored offerings by location, customer profile and lifestyle. Additionally, we're positioned with the right inventory to capitalize on the strong performance we're seeing in premium materials, branded frames and advanced lens technologies like Nikon eyes. Looking forward, we expect the pace of inventory growth to moderate as we move through the rest of 2026 and reach optimal levels in support of our segmented store strategy. Before I turn to our outlook, I wanted to highlight 2 more actions taken in the quarter. As Alex discussed, we are laying the foundation for Eyeglass World next phase. During the quarter, we optimized our in-store lab capabilities at Eyeglass World by transitioning in-store lab servicing to our centralized operations. This enables us to better reflect customer expectations on turnaround time, while expanding our capacity to offer more premium products at scale. As a result, we incurred approximately $3 million in noncash charges during the quarter and may incur up to an additional $1 million in charges related to the completion of this initiative. Separately, we applied for approximately $5 million in tariff refunds, which is expected to benefit costs applicable to revenue in the third quarter. We have incorporated these refunds into our outlook for the year. Now moving to our outlook. Year-to-date progress on our strategic initiatives and the evolution of our customer mix is translating into a healthier and more profitable business. As such, we are raising our full year outlook for profitability while narrowing our top line expectations to reflect a more prudent view on traffic given the dynamics we've seen to date lower-value transactions. For the full year, we now expect net revenue between $2.03 billion and $2.08 billion, supported by adjusted comparable store sales growth of 3% to 5%. This outlook reflects our Q3 quarter-to-date trends as well as the expectation that ticket expansion remains a strong and consistent driver of growth. In the second half, we expect initiatives, including Nikon Eyes, store segment [indiscernible] and continued enhancements to our premium frame and lens assortments to contribute approximately 100 to 200 basis points to ticket growth, helping to further offset traffic headwinds. Turning to profitability for 2026. We now expect adjusted operating income between $119 million and $139 million, which includes a range for depreciation and amortization of $92 million to $93 million. At the midpoint, we expect adjusted operating margin expansion of approximately 120 basis points for fiscal 2026 relative to 2025, excluding the 53rd week, driven primarily by SG&A leverage. With respect to quarterly cadence, we now expect Q3 and Q4 to reflect flat-to-modest adjusted operating margin expansion as we plan to reinvest our tariff refunds into incremental marketing initiatives in the back half of the year to support growth. Our full year guidance takes into account our multiyear cost savings plan, and we remain on track to realize approximately $10 million in annualized savings per year. 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 EPS to be between $0.90 and $1.09 per share, which assumes approximately 80.9 million weighted average diluted shares outstanding. We expect CapEx to be between $72 million and $76 million for fiscal 2026, which includes investments to open approximately 30 to 35 new America's Best and Eyeglass World stores this year, and split the expansion of our military locations completed at the end of the first quarter. As a reminder, our openings are weighted towards America's Best branded stores and based on current timing of openings, we are currently tracking towards the lower end of that range. We also expect to close approximately 15 stores as part of our ongoing fleet optimization efforts, resulting in net new store growth of approximately 15 to 20 stores. We expect store openings to have a relatively balanced cadence throughout the remainder of the year, while the remaining store closures will be more skewed to the third quarter. In closing, I want to underscore the progress our entire organization is making to transform this business. We are executing a stronger, more disciplined and more profitable business model. At our expected midpoint, we will see adjusted operating income double from our 2024 AOI performance and we'll do so while continuing to provide customers and patients with best-in-class eye care and eyewear and a value offering that remains second to none. And with that, operator, we're now ready for questions.

[Operator Instructions] And our first question comes from the line of Simeon Siegel of Guggenheim.

Great. So Alex, anything more you can share on the website replatforming just maybe address specifics of how it impacted the business negatively. And then maybe how and when you think we should be seeing the benefits from the initiative on the other side. Maybe just let us know how you calculated the related pressure that you had mentioned. And I think I caught it sounded like you suggested we may already be through the pressure with the quarter-to-date commentary. Maybe just flesh that out a little more. And then just clarifying Chris, just the slightly lower full year comp guidance, is that just reflecting the 2Q and for the year is held as you had previously expected? Or just anything else we should think about from a lingering impact?

Yes, you got it. So how we looked at kind of defining the 150 basis points of headwind that we got from the replatform is really related to our ingoing trend rate on new customer acquisition versus that of repeat customers and kind of doing a little bit of a test versus base versus control to see the delta and acquisition and then marry that with our kind of cost per acquisition increasing from a marketing perspective. So we saw that go on for about a 6-week time period. So it was kind of a trough in new customer acquisition around, call it, the beginning parts of April through mid-May. And then we started to see the sequential improvement both in new customer acquisition, and we saw our CPAs return to normal. So really, we -- that gives us a high degree of confidence that after the 6 weeks, we were through the replatform noise, our acquisition engine had turned back on to the degree that we wanted it to. And we started to see the consumer return sequentially as we step through the quarter. And then again, as we've moved into Q3. We're already starting to see some of the benefits come through the replatform that are more tactical in nature. Obviously, the intention with is, as I mentioned in my prepared statement, is that we become a more forceful e-commerce participant in the optical category. Ultimately, that required us to build a much more flexible [ bolder ] e-commerce platform that allow us to do that. But even in the near term, we're seeing key metrics such as completion rates. So, as an example, this is consumers who come to our website and then purchase and then schedule an exam. Both completion rates are already trending in a positive direction. So more consumers visiting us, those visits turning into exams booked because we're making the booking process more seamless through more joyful online experience. So, we're starting to see early traction from the replatform just in terms of our exam funnel. But again, the longer-term aspiration is that this sets us up for a more significant play in unified commerce. And I'll turn it to Chris for the commentary on balance of the year.

Yes. Thanks, Alex. Also thanks, Simeon. Yes, look, I think we're -- first of all, we're super excited to be raising our [indiscernible] for our AUA guide for the rest of the year despite some of the traffic headwinds we've seen year-to-date. On the narrowing of the top line and then bringing down the top end of the comp guide by about 1 point. Look, really 2 [indiscernible]. That's right. Number 1 is we feel really confident about the ticket driving initiatives that we have in place year-to-date and what we've got lined in the back half of the year with the launch of store segmentation and Nikon Eyes is growing as a percent of the platform. the open variable remains if and when the lower value transaction consumers choose to reengage. We've seen a deferral of the purchase cycle and so really just trying to be prudent on the top end of the portions of when they might come back and being shopping again.

Our next question comes from the line of Michael Lasser of UBS.

So if we add back the quantified impact from the platform transition, the e-commerce platform transition. Traffic did still take a noticeable step down from 1Q to 2Q, you mentioned several times about deferrals of purchases by the lower-income consumer. What evidence do you have that it's just simply a result of the deferral cycle rather than either some impact from the elasticity of the price changes that have been made and/or other factors that are contributing to this? And at what point do you think traffic can turn positive in order to drive the growth from here?

Michael, great question. So first and foremost, we're not actually seeing the deferral happen among low-income consumers. We're actually seeing the deferral occur across the psychographic of value-seeking consumers, which is an important nuance here. We're not actually seeing any meaningful deceleration at any income level across any of our income cohorts that we track. Specifically, what we're seeing is lower participation and lower traffic in the average transaction points below the median. So typically, these are consumers that engage in our bundle offer only. So we've seen those consumers decelerate, which, again, is actually a little bit of a benefit to us because it's the least profitable consumer in our portfolio. So that started to occur at a more accelerated basis kind of towards the middle of Q2 time frame. Our data point to support that this is a deferral challenge versus a share challenge or consumers kind of just in general, stepping out is that we've seen about a 2-week increase in the purchase cycle between retained customers that participate in our business. So again, 2 weeks doesn't sound like a lot, but it does provide about a 2-point headwind to traffic on a full year basis. So again, that's just when we're tracking months between purchase for consumers who are engaging with the lower value transactions. That being said, we have seen meaningful traffic increases for those customers who are purchasing above the median from a transaction value perspective. So we kind of triangulate around all of those data points which gives us, again, the confidence in the business, and it's part of the reason that we saw the nice profit accretion in the quarter.

Got you. Very helpful. My follow-up question is on the full year profitability outlook. The midpoint of the adjusted operating income was up by $9 million was 7.5%. I think Chris mentioned that about $5 million of that came from the tariff refund that's expected in the third quarter. What drove the remainder of the increase? And to what degree is the shift in marketing that I think you said the count for 50 basis points in 2Q. Is that fully going to be realized in 3Q? Or is there a net benefit from some of the changes in marketing spend.

Yes. Thanks, Michael. So look, actually, from a marketing perspective, between what we deferred in Q2 into Q3 and beyond and the reinvestment we're planning kind of making taking those tariff dollars and putting it towards customer acquisition. I'd say there's actually a net expectation that we're going to grow advertising spending. In the second half versus our original guide, original plan. So look, I think in terms of why the AOI is growing in aggregate, even with some of these reinvestments is, the team has done just a phenomenal job with cost execution and cost controls from the $10 million that we announced leading into the year. We've also just demonstrated better ability to [indiscernible] skewed, particularly on the store labor line. So as we saw demand soften a bit in Q2. The operating team and our stores did a great job pivoting our labor to make sure that we're bringing the supply to match the demand. And that's really the main driver of what we are seeing in AI.

Our next question comes from the line Jack Slevin from Jefferies.

To just take a step back. And I imagine there's going to be a lot of focus on traffic that I think you're giving a kind of helpful color on. But thinking a little more structurally. I know there's some specific items. There are some of the changes you have in what the consumer base is looking like in your stores. But if I think about on a couple of year basis and look at the gross margin performance and what you're doing on G&A, can you maybe speak to whether or not this current composition of slightly slower traffic but still getting ticket. I guess how long can this run paired with some of the G&A discipline to sort of sustainably grow gross profit and earnings in the business.

Yes, you got it. I mean this is one of the things we unpacked last November at our Investor Day that we have year of runway ahead in terms of ticket expansion through mix, right? I mean I think we've said that historically, we were a bit laggards in taking price. And we have certainly under-indexed the category on underdeveloped products, premium lenses, premium frames, et cetera. We are still at a significant discount related to the category measured in multiples, not percentage points in terms of average transaction value. And as we continue to skew more premium, in particular with the Managed Vision Care customer who has a heightened degree of spending power through their plan, we have continued runway to take advantage of that really for multiple years to come. And I've said this previously that this team has outlined really internally our playbook for the next several years of actions and activities that we're going to take to continue to lean into that. And that ranges from introduction of premium lenses to training the teams in the stores on the benefits of antireflective and transition to the thing we're most excited in the back half of the year, which is the introduction of store segmentation across our entire fleet where we're distorting our assortments based on local customer demand and the types of frames that folks want to buy in their specific stores. So we still think we're very much in early innings of executing on these strategies to continue to drive premiumization within the category. Which, by the way, once we have run these plays, we will still be the obvious destination for value in the category based on our kind of price architecture. So I mean, that's a bit of color on how we're thinking about average transaction growth over the next several years.

Our next question comes from the line of Simeon Gutman of Morgan Stanley.

Hello. This is [indiscernible] on for Simeon Gutman. So on the raise EBIT guide, can you just talk a bit more as to how much is left for the annualized SG&A cost savings? And how much more of a lever that is to pull into the back half?

Yes. We are super excited to say that we're really fully annualizing all of the cost savings initiatives so they're all in place. So we actually saw that through Q2, so you can kind of bank about $2.5 million. [indiscernible] quarter coming out of that initiative. Frankly, our performance on cost controls and performance management has given us the ability to reinvest some of the dollars in the back half. So, we spoke about reinvesting more in marketing and customer acquisitions, but we're also investing in things that will give us some tailwind going into '27 and beyond in terms of our long-term strategic plan.

Okay. Great. And then stepping back a bit, as you think about what is the right underlying algo for the business on some of your initiatives, like the store segmentation and the rollout of the premium brand and lens launches are fully ramped? And how much of that is take versus traffic getting to a healthier place

Yes. I mean our long-term outgo of mid-single-digit comps and 50 to 150 basis points of profit accretion per year is still in place, and we're still committed to delivering that over the long term. As we said, though, we would believe that in the near term, call it, through '27, we're seeing outsized impact from ticket versus from traffic. And as we've kind of shared previously, we anticipate that we're going to reaccelerate store growth from the last couple of years we're in the 30% to 35% range to something north of that when we step into '27 and '28. And then that's going to be a traffic generator as we move through more the latter phases of our long-range plan. So I think in the short to medium term, you're going to see continued growth from ticket a bit more outsized than traffic. But that being said, the things that we're putting in place, the fact that we're thinking differently about marketing, how we're making investments in college football Saturdays the investments that we've made in the CRM. Those are all traffic driving in nature, but it's getting that flywheel all kind of working in unison that we're currently focused on. So again, I'd see more ticket growth because we saw a considerable amount of headroom in the short to medium term and then see the traffic engine coming back on a little bit later.

Our next question comes from the line of Dylan Carden of William Blair.

Let's stay on ticket here. Alex, can you speak to the difference and as far as sort of what the ticket decline between like-for-like price -- sorry, ticket increase between like-for-like price increases versus mix shift? Both this quarter and kind of over the last 2 to 3 years. Let's start there.

Yes, you got it, Dylan. So actually, so far year-to-date, we're seeing more than half of our ticket lift come from mix shift. Which we're super pleased by, right? Because most -- in most cases, these are consumers that are raising their hands for more premium product. We still have over 40% of our assortment and frames priced at under $99. We still have every lens that we previously had available for sale in our lens catalog and available for consumers to opt into. So the ticket lift that we're seeing mix is really one of our teams in the stores becoming more accustomed to lifestyle [indiscernible] and the consumer is raising their hands for the better products that we're introducing. To the second part of your question, compared to prior year -- in prior years, our average ticket increase was predominantly more price driven. So as we've kind of implemented our merchandising architecture -- we brought new products to market. We're seeing our ticket increase come more from mix versus from price increases, which we obviously think is a much healthier approach.

And it's kind of interesting, it's I think a related topic that you're seeing kind of that traffic decline across income cohorts and that sort of value-seeking customer. Does the guy anticipate that, that could get worse that the consumer more broadly kind of walks away from price or sits at the market for a bit?

Yes. I think probably the primary variable in the range of our comp guide is exactly what you're putting your finger on, which is at what point does the lower -- the value-seeking consumer come back and do they accelerate back into the business into consideration? Or do they take a step back. So as I think about the 3% to 5% range, that's the single biggest variable in that equation.

Our next question comes from the line of Robert Ohmes from Bank of America.

Two questions. First, just on the increased marketing for the back half. Can you give more color on what the focus is going to be? Is it more exam focused? Is it more new frames focused? Is smart glasses being highlighted here. Can you give any more color on what you guys incrementally you're going to be doing in marketing?

Yes, you got it. So we are -- from a media perspective, we're going to invest a bit more into directed TV or digital TV. We're going to invest a bit more in social and we're going to invest a bit more in search. So our linear media plan is actually already before this incremental investment, comping positive to last year given the investment that we're making in our college football program. But we're going to see meaningful increases in digital spend, again, across search, across social and across connected TV. The content is going to be really based into kind of 3 buckets. When we introduced our Every Eye Deserves Better platform last year, we said that's kind of our anthemic marketing approach for the business, but we had an opportunity to create specific content more geared towards the managed care for the outsider can for the progressive consumer. So some of the assets we're creating are pointed more specifically at those segments that we've declared are the growth segments for us to pursue. The other thing that we're doing that we're super excited about is we're going to dip our toe into marketing directly to online purchase consumers. So for the first time, we're going to actually have some more broad-scale media, encouraging consumers to visit us at americasbest.com to engage in our virtual try-on tool and to make purchases online. Again, that is one of the reasons that we have made the strategic investment to replatform our e-commerce site. And now we're starting to rev up the engine to drive consumers there to do something other than book an exam, but to actually engage with us from a commerce perspective. So, those are the themes, the media and the types of things that you can expect to hear from us from a consumer communications perspective in the back half of the year.

That sounds great, Alex. And just a quick follow-up. Just on the store segmentation, can you just remind me like testing you've done and what you've seen so far? And do you think different segments will have similar lifts or -- a little more color there?