EYE 10-K & 10-Q changes, risk factors and insider trading

You should carefully consider the risks described below and the other information contained in this report and other filings that we make from time to time with the SEC, including our consolidated financial statements and accompanying notes. Any of the following risks could materially and adversely affect our business, financial condition, results of operations or liquidity. These risks are not the only risks we face. Our business, financial condition, results of operations or liquidity could also be adversely affected by additional factors that apply to all companies generally or by risks not currently known to us or that we currently view to be immaterial. We can provide no assurance and make no representation that our risk mitigation efforts, although we believe they are reasonable, will be successful.

Our business depends on consumer demand for our products and, consequently, is sensitive to a number of factors that influence consumer behavior, confidence and spending, including whether consumers make purchases, their choice of price point, their appetite for upgrades or add-on services, or the frequency with which they have an eye exam or replace their eyeglasses. Conditions that have affected, or may in the future affect, consumer sentimentbehavior include general economic conditions, consumer disposable income, energy and fuel prices, recession and fears of recession, unemployment, minimum wages, availability of consumer credit, consumer debt levels, conditions in the housing market, interest rates, tax rates and policies, inflation, tariffs and trade wars, consumer confidence in future economic conditions, the risk of future government shutdowns, developments related to the U.S. federal debt ceiling and political conditions. In recent years, global markets and economic conditions have been challenging, particularly in light of elevated interest rates and historic inflation, which has created continued economic uncertainty. Additionally, uncertainty and market volatility have been magnified as a result of potential shifts in U.S. and foreign trade, economic, and other policies following the election of a new U.S. president for a term that commenced in 2025,policies, coupled with a consolidation of party control of both chambers of Congress,Congress in 2025, which has led to new legislative and regulatory initiatives and the roll-back of certain initiatives of the previous presidential administration, which may impact our business and our clients’ businesses in unpredictable ways, including as a result of the potential implementation of more restrictive trade policies, higher tariffs or the renegotiation of existing trade agreements. These conditions have impacted customer demand and may continue to have similar impacts in the future. Reduced customer confidence and spending cutbacks may result in reduced demand for our merchandise and may force us to mark down inventory, increase selling and promotional expenses or, if part of a prolonged or pervasive economic downturn, may slow the pace of new store openings or cause current stores to close.

Additionally, our business is seasonal in nature, with the first and second quarters typically representing a higher portion of net sales to us than other quarters, due in part to theannual issuancehealth ofinsurance taxprogram refundsstart/reset that many consumers have historically utilized for eyewear and eye care spendingperiods in the first half of the year. As such, a significant downward trend in the first half of the year could have a substantial negative impact on our annual financial results.

Furthermore, certain of the customers we serve may be disproportionately sensitive to a number of these and other factors outside of our control. A continuation of these or other similar circumstances could have a material negative impact on our financial performance.

Global political, socio-economic, cultural, and geopolitical issues can also impact macroeconomic conditions and consumer sentiment and could have a material adverse impact on our financial results. These issues include, but are not limited to, ongoing conflicts across the globe such as in Russia-Ukraine and the Middle East, and relations between Taiwan and China, as well as disruptions caused by terrorist activities or otherwise. Further escalation of these geopolitical conflicts, including by the imposition of increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and financial condition. In addition, the effects of the ongoing conflicts could also heighten many of the other risk factors described herein.

We may not be successful in implementing our transformationstrategic initiatives, or in anticipating the impact of important strategic initiatives, and our plans for implementing such initiatives may be altered or delayed due to various factors, which may have ana material adverse impact on our business and financial results.

We may not be able to implement our transformationstrategic initiatives in accordance with our expectations or in a way that generates expected returns, which may result in an adverse impact on our business and financial results. These strategic initiatives,initiatives whichare includeintended ato focusallow onus implementingto newbetter pricingserve architecture,our enhancingexisting the customercustomers and patient experience, and optimizing cost structure, are designed to strengthenexpand our coretarget business,consumer improve our results of operations,demographics and drive long-termthe shareholderoutcome value.of a stronger core business and improved operating results.

The implementation, timing and results of these complex strategic initiatives are subject to various risks and uncertainties, which may require that we make significant estimates and assumptions in our planning. These initiatives place significant demands on our accounting, financial, information technology, and other systems, and on our business overall. We are dependent on our management’s ability to oversee these initiatives effectively and implement them successfully. If our estimates and assumptions about our initiatives are incorrect, or if we miscalculate the resources or time, we need to complete them or fail to execute on them effectively, our pursuit of these initiatives may increase our costs and reduce our margins and profitability.profitability, or we may not realize the anticipated improvements.

To be effective, our transformation initiatives have required, and will continue to require, significant investment in cross-functional operations and management focus, along with supporting investments. If we are unable to attract and retain employees or contract with third parties having the specialized skills needed to support our efforts, or implement improvements to systems in a timely manner, our ability to compete and our results of operations could be adversely affected. In addition, if initiatives related to our new storestore, marketing or merchandising concepts and improved customer experience do not appeal to our customers or if we are unable to consistently meet our brand execution promises in a cost-effective manner, we may experience a loss of customer confidence or lost sales, which could adversely affect our reputation and results of operations.

The optical retail industry is highly competitive, and if we do not compete successfully, our business may be materially adversely impacted.

Some of our competitors are larger or vertically integrated and engaged in the manufacture and distribution of eyewear as well as managed care. Larger competitors who have greater financial and operational resources, greater brand recognition or broader geographic presence than we do,do may have large marketing and advertising spends and may be able to offer more competitive prices. Vertically integrated competitors may advantageously leverage their structure, making it more difficult for others in the industry, including us, to compete. We purchase many of our products from suppliers who are affiliates of our competitors. We also compete for managed vision care contracts with certain of our competitors who are affiliates of managed care payors. The termination of one or more relationships we have with these largerlarger, vertically integrated competitors could have a material adverse effect on our business, financial condition and results of operations. In addition, if any of our competitors were to consolidate operations, such consolidation would exacerbate the aforementioned risks. While we strive to evolve in line with changing consumer shopping habits and new technologies, our business and results of operations may be adversely affected if we are not able to effectively respond to changes in the retail markets at the same rate as our competitors.

We use marketing and promotional programs to attract customers to our stores and to encourage purchases by our customers. If we fail to successfully or efficiently develop and implement marketing, advertising and promotional strategies or to incorporate innovative approaches in such endeavors, we may be unable to achieve and maintain brand awareness, and customer traffic to our stores and/or websites may be reduced. We may not be able to advertise cost-effectively in new or smaller markets in which we have lower store density, which could slow growth at such stores. Changes in the amount and degree of promotional intensity or merchandising strategy by our competitors could cause us to have difficulties in retaining existing customers and attracting new customers. We have invested in a new CRM system that we believe will enhance our engagement with customers, in particular underdeveloped customer segments. We have also shifted to a consultative selling model, where we have trained our store associates to provide a more personalized selling experience. If these expectations on enhancing the customer experience are not realized, our business may be adversely affected. If the efficacy of our marketing or promotional activities declines or if such activities of our competitors are more effective than ours, or if for any other reason we lose the loyalty of our customers, we may experience a material adverse effect on our business, financial condition and results of operations.

If we fail to open and operate new stores in a timely and cost-effective manner or fail to successfully enter new markets, our financial performance could be materially and adversely affected.

Achieving our growth strategy depends, in large part, on growing our store base and expanding our operations, both in new and existing markets, and operating our new stores successfully.

Accordingly, we cannot assure you that we will achieve our planned growth or that our new stores will perform as expected or achieve net sales or profitability levels comparable to those of our existing stores in the time periods estimated by us or at all. Additionally,Further, inwe began temporarily moderating new store openings during fiscal year 2025,2025 weand planwill tocontinue temporarilythis moderatemoderation newinto storefiscal openings,year 2026, after which time we expect to return to our more recent store opening cadence as strategic initiatives begin to take hold. Our failure to implement our growth strategy and to successfully open and operate new stores in the time frames and at the costs estimated by us, or failure to return to our more recent store opening cadence in the expected time period or at all, could have a material adverse effect on our business, financial condition and results of operations.

Existing store sales growth is critical to strong operating results and is dependent on a variety of factors, including merchandise quality, relevance and availability, doctor availability, store operations and customer satisfaction. In addition, increased competition could adversely affect our sales. We have begun several strategic initiatives to increase our sales and profitability, some of which remain in the early stages. For example, during fiscal 2025 we recentlybegan concludedto a comprehensive review ofenhance our storeproduct offering in areas where we are underdeveloped relative to the optical retail category, including by adding frames at higher price points, enhancing our portfolio andoffering announcedwith planspremium products to takemeet actionconsumer ondemand 43while stores, including closing 39 stores byremaining the enddestination offor value, and introducing innovative products such as Ray-Ban Meta smart glasses. As we continue to moderate new store openings through fiscal 20262026, and converting four Eyeglass World stores to America’s Best by the end of fiscal 2024. Wewe intend to allocatereallocate capital in fiscal 2025 to increase investments in enhancing the overall patient and customer experience in our existing stores. If such store closures fail to deliver the expected Adjusted EBITDA improvement in the timeframe expected, or at all, or if we are unable to successfully reallocate capital to enhance existing stores, it could have a material adverse effect on our business, financial condition and results of operations. For more information, see Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II. Item 8. Note 1 “Business and Significant Accounting Policies.”

If we are unable to successfully implement our pricing strategies, it could have ana material adverse impact on our business.

Our continued success depends in part on our ability to adjust our pricing strategies to respond quickly and effectively to shifting economic and competitive conditions as well as evolving customer preferences. We have historically employed a simple, low price/high value strategy, seeking to balance our pricing and growth in a way that consistently delivers savings to our customers. We are continuing this commitment to value, while at the same modernizing our pricing strategy to maximize that value across a broader range of consumers. From time to time, and increasingly in connection with our new transformationstrategic initiatives, we have taken and may continue to take pricing actions and introduce limited-time promotions or new offers designed to increase demand traffic, awareness and drive sales. For example, effectivein January 26,fiscal 2025, we implemented a $10 price increaseincreases to each of our America’s Best signature offer and our Eyeglass World opening offer.offer and continued to evolve our product mix to include a greater percentage of frames at price points over $99. There can be no assurance that future cost increases will be fully absorbed by our customers without any resulting change to their demand for our products and services. Additionally, many factors, including operating costs, constraints, or changes, and our current and future competitors’ pricing and marketing strategies, could significantly affect our pricing strategies, which may prevent us from competing effectively. If our pricing strategies are not successful, or are not as successful as those of our competitors, our sales and market share could decrease and could have an adverse effect on our sales and financial condition.

We are a low-costvalue-based provider and our business model relies on the low cost ofvalue-based inputs. Factors such as wage rate increases, inflation, cost increases, increases in the price of raw materials and energy prices could have a material adverse effect on our business, financial condition and results of operations.

Increases in compensation, wage pressure and other expenses for vision care professionals, as well as our other associates, have adversely affected, and may continue to adversely affect, our profitability. Increases in minimum wages and other wage and hour regulations and labor shortages can exacerbate this risk. In recent years, we have experienced an increasingly competitive labor market for vision care professionals and increased preferences for adjusted work schedules, resulting in the demand for optometrists exceeding supply in certain areas during fiscal year 20242025 and causing constraints in exam capacity. Due to these factors, we experiencedcontinued to experience some degree of wage pressure for our vision care professionals and associates in 2024,2025, which we expect tomay continue in 20252026 and may continuepossibly thereafter. Targeted wage investments, including increases in compensation and other expenses for our optometrists and associates, along with other initiatives, were implemented in response to these factors that have and will continue to impact our costs applicable to revenue and selling, general and administrative expenses.SG&A. The costs associated with employment or retention of vision care professionals may increase further, potentially materially. See “Failure to recruit and retain vision care professionals could adversely affect our business, financial condition and results of operations” above. Additional tariffs or other future cost increases, such as increases in the cost of merchandise, shipping rates, raw material prices, freight costs and store occupancy costs, may also reduce our profitability. These cost increases may be the result of inflationary pressures which could further reduce our sales or profitability. Increases in other operating costs, including changes in energy prices and lease and utility costs, may increase our cost of products sold or selling, general and administrative expenses.SG&A. Our low-pricevalue-based model and competitive pressures in the optical retail industry may inhibit our ability to reflect these increased costs in the price of our products, in which case such increased costs could have a material adverse effect on our business, financial condition and results of operations.

To support our expanding business and execute our growth strategy,strategy and strategic initiatives, we need significant amounts of capital, including funds to pay our lease obligations, build out new store spaces, laboratories and distribution centers, implement and operate remote medicine technology and EHR platforms, purchase inventory, pay personnel and further invest in our infrastructure and facilities, including investments in transitioning and updating our ERPERP, retail operating platforms and other technological systems and capabilities. In 2025,2026, we intend to continue to progress bothour ourCRM, ERP initiatives and to expand the installation of the EHR platform to the remaining America’s Best locations and our CRMother initiatives. We cannot guarantee that these projects will be completed on time or within established budgets. Any delay or increased costs could have a material adverse effect on our business, financial condition and results of operations. Further, our plans to grow our store base may create cash flow pressure if new locations do not perform as projected. We have primarily depended, and expect to continue to primarily depend, on cash flow from operations to fund our business and growth plans. If we do not generate sufficient cash flow from operations, we may need to obtain additional equity or debt financing or utilize our revolving credit facility. Tightening in the credit markets, low liquidity, volatility in the capital markets or a downturn in the economy could result in diminished availability of credit, higher cost of borrowing or lack of confidence in the equity markets, any of which may make it more difficult to obtain additional financing on terms that are favorable to us. If such financing is not available to us, or is not available on satisfactory terms, our ability to operate and expand our business could be curtailed and we may need to delay, limit or eliminate planned store openings or operations or other elements of our growth strategy.strategy, which may have a material adverse impact on our business, financial condition and results of operations.

Our growth strategystrategies could strain our existing resources and cause the performance of our existing stores to suffer.

Our growth strategies, including our planned expansionexpansion, hashave placed, and continuescontinue to place, increased demands on our existing operational, managerial, supply-chain and administrative resources. These increased demands could strain our resources and cause us to operate our business less effectively, which in turn could cause the performance of our new and existing stores to suffer.

We need to continually evaluate the adequacy of, and opportunity to upgrade, our laboratory, distribution and information technology capabilities, including those related to remote medicine. Our laboratories and distribution center have a finite capacity and, to the extent we grow beyond this capacity, we will need to expand our current laboratories and/or distribution center or add new laboratories and/or distribution capabilities, the cost of which could be material. Should we open additional laboratories or distribution centers, any related construction or expansion projects entail risks which could cause delays and cost overruns, such as unavailability of suitable space, shortages of or delays in obtaining materials, shortages of skilled labor or work stoppages, unforeseen construction, scheduling, engineering, environmental or geological problems, weather interference, fires or other casualty losses, and unanticipated cost increases. We cannot guarantee that any project will be completed on time or within established budgets. Any delay or increased costs associated with any project could adversely affect the financial and overall performance of our existing and planned new stores.

In addition, opening new stores in our established markets may result in inadvertent oversaturation, temporarily or permanently divert customers and sales from our existing stores to new stores and reduce comparable store sales, thus adversely affecting our overall financial performance. Furthermore, we have opened and expect to continue to open America’s Best and Eyeglass World stores in close proximity to one another. However, we may not be able to effectively manage stores of both brands in the same market, and this close proximity may cause the performance of such America’s Best and/or Eyeglass World stores to suffer. In addition, oversaturation, or the risk of oversaturation, may reduce or adversely affect the number or location of stores we plan to open, and could thereby materially and adversely affect our growth plans overall or in particular markets. From time to time, we update the whitespace analysis prepared for us through an established partnership with a third-party real estate data analytics firm. There are many variables that impact this analysis and there can be no guarantee that updates will lead to the same or greater whitespace opportunity, which could impact our ability to execute our growth strategy.

We lease our America’s Best and Eyeglass World store locations, our corporate office,office the FirstSight corporate office,space, our laboratories in Georgia, Texas and Utah, and our distribution center. Additionally, we are still obligated under the lease for a distribution center in Ohio that was previously used in our AC Lens business; this lease expires in March 2028. We also lease our Vista Optical locations inside Fred Meyer stores. As a result, we are susceptible to changes in the property rental market and increases in our occupancy costs.

As we expand our store base, particularly in certain markets that are more expensive, such as California and the Northeast, our lease expense and our cash outlays for rent under lease agreements may increase. Our inability to enter into new leases or renew existing leases on terms acceptable to us, or be released from our obligations under leases for stores that we close, could materially and adversely affect our business, financial condition and results of operations.

Our online sales also expose us to broader applicability of regulations, as well as additional regulations, such as the prescription verification and other requirements under the FCLCA, rules relating to registration of internet sellers, certain requirements under the Treasury Department’s OFAC,Office of Foreign Assets Control (“OFAC”), FCPA, anti-money laundering and trade sanction laws, and similar anti-corruption, anti-bribery and international trade laws. Problems in any of these areas could result in a reduction in sales, increased costs, sanctions or penalties, or damage to our reputation and brands.

In addition, we must keep up to date with competitive technology trends, including the use of artificial intelligence to automate business processes and improve the customer experience, the use of new or improved technology, creative user interfaces and other e-commerce marketing tools such as paid search and mobile applications, among others, which may increase our costs and which may not increase sales or attract customers. Our competitors, some of whom have greater resources than we do, may also be able to benefit from changes in e-commerce technologies, which could harm our competitive position. If we are unable to allow real-time and accurate visibility to product availability when customers are ready to purchase, quickly and efficiently fulfill our customers’ orders using the fulfillment and payment methods they demand, provide a convenient and consistent experience for our customers regardless of the ultimate sales channel or effectively manage our online sales, our ability to compete and our results of operations could be adversely affected.

If we fail to retain our existing senior management team orteam, attract qualified new personnel,personnel or successfully implement our succession plans, such failure could have a material adverse effect on our business, financial condition and results of operations.

Our businessbusiness, including the implementation of our strategic transformation, requires disciplined execution at all levels of our organization. This execution requires an experienced and talented management team. If we were to lose the benefit of the experience, efforts and abilities of key executive personnel, it could have a material adverse effect on our business, financial condition and results of operations. Competition for skilled and experienced management is intense, and we may not be successful in attracting and retaining new qualified personnel required to grow and operate our business profitably. While prepare and regularly review management succession plans, a failure to ensure effective transfers of knowledge and smooth transitions involving senior management could hinder our strategic planning and business operations.

Our business is subject to seasonal fluctuation. We typically realize a higher portion of net sales during the first half of the fiscal year, due to, among other things, the timing of tax refunds and the impact of healthcare plan resets after the close of the prior year. Adverse events, such as higher unemployment, lapses in or the lack of insurance coverage, delays in the issuance of tax refunds, deteriorating economic conditions, public transportation disruptions, or unanticipated adverse weather or travel conditions, can deter consumers from shopping. Any significant decrease in net sales during the first half of the fiscal year could have a material adverse effect on us and could negatively impact our annual results. In addition, in order to prepare for our peak shopping quarters, we must increase the staffing at our stores and order and keep in stock more merchandise than we carry during other parts of the year. This staffing increase and inventory build-up may require us to expend cash faster than it is generated by our operations during this period. Any unanticipated decrease in demand for our products during such period could require us to sell excess inventory at a substantial markdown, which could have a material adverse effect on our business, financial condition and results of operations.

Certain technological advances, greater availability of, or increased consumer preferences for, vision correction alternatives to prescription eyeglasses or contact lenses, or future drug development for the correction of vision-related problems may reduce the demand for our products and materially adversely impact our business and profitability.

Our profitability and cash flows may be negativelymaterially adversely affected if we are not successful in managing our inventory balances and inventory shrinkage.

We depend on our distribution centers and optical laboratories. The loss of, or disruption in the operations of, one or more of these facilities may adversely affect our ability to process and fulfill customer orders and deliver our products in a timely manner, or at all, and may result in quality issues, which would materially adversely affect our reputation, our business and our profitability.

Substantially all of our inventory is shipped directly from suppliers to our distribution center in Lawrenceville, Georgia. Inventory is then processed, sorted and shipped using third-party carriers to our stores, to our laboratories for further processing or to our online customers. We operate laboratory facilities in Lawrenceville, Georgia; St. Cloud, Minnesota; Plano, Texas; and Salt Lake City, Utah. We also have outsourcing relationships with third-party laboratories in Mexico. These laboratories process most of the lenses ordered by customers in our stores, as well as on our websites. Once processed at the laboratories, the finished products are returned to our distribution centers for shipment to stores and customers. Additionally, in 2024, we transitionedrely theon a third-party vendor for contact lens fulfillment and distribution services previously conducted by AC Lens to a third-party vendor.services.

We depend in large part on the orderly operation of this receiving and distribution process, which depends, in turn, on adherence to shipping schedules and effective management of our distribution centers. Increases in transportation costs (including increases in fuel costs), increased shipping costs, issues with overseas shipments, supplier-side delays, reductions in the transportation capacity of carriers, labor strikes or shortages in the transportation industry, disruptions to the national and international transportation infrastructure, and unexpected delivery interruptions or delays also have the potential to derail our distribution process. We face additional risks related to our international outsourcing laboratory relationships, including port of entry risks such as longshoremen strikes, import restrictions, foreign government regulations, trade restrictions, customs and duties.

We derive revenues and operating cash flows from our relationships with our Host partners through our operation of, as of DecemberJanuary 28,3, 2024,2026, 2918 Vista Optical locations within select Fred Meyer stores and 53 Vista Optical locations on select military bases. Termination or expiration of our Host agreements would result in a reduction of our revenues and operating cash flows, which could be material and which could adversely affect our business, financial condition and results of operations including an impairment of the intangible assets.

At DecemberJanuary 28,3, 2024,2026, the carrying value of intangible assets at our Host brands was $8.2$7.6 million. We review the carrying value of our goodwill and intangibles for impairment annually, or more frequently when impairment indicators exist. The impairment test requires us to analyze a number of factors, including evaluating the useful life of intangible assets, and make estimates that require judgment. Future changes in the business profitability, expected cash flows, our business strategy and external market conditions, among other factors, could require us to record impairment charges for goodwill or intangible assets, which could lead to decreased assets and reduced net income. If a significant write down were required, the charge could have a material adverse effect on our operating results and stockholders’ equity, and could impact the trading price of our common stock. During fiscal year 2024, we recorded a $10.5 millionan impairment of our Fred Meyer contracts and relationships intangible asset due to the decision to close certain Fred Meyer stores as part of our store fleet review.

We conduct substantially all of our activities through our indirect wholly-owned subsidiary, NVI, and its subsidiaries. We operate on a retail fiscal calendar that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to December 31. In a 52-week fiscal year, each quarter contains 13 weeks of operations; in a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations. References herein to “fiscal year 2025” relate to the 53 weeks ended January 3, 2026, references herein to “fiscal year 2024” relate to the 52 weeks ended December 28, 2024,2024 and references herein to “fiscal year 2023” relate to the 52 weeks ended December 30, 2023 and references herein to “fiscal year 2022” relate to the 52 weeks ended December 31, 2022.2023.

We are one of the largest optical retailers in the United States (the “U.S.”) and a leader in the attractive value segment of the U.S. optical retail industry. We believe that vision is central to quality of life and that people deserve to see their best to live their best,best. regardlessOur ofmission theiris budget.to help people by making quality eye care and eyewear more affordable and accessible. We achieve this by providing eye exams, eyeglasses and contact lenses to value-seekingconsumers across the nation. Our range of quality product offerings at multiple price points makes us an attractive destination for consumers withof anall openingincome pricelevels. pointAs thatof strivesJanuary to3, be2026, amongour the2025 lowestfiscal inyear theend, industry. Wewe reach our customers through a diverse portfolio of 1,2401,250 retail stores across four brandsbrands, our associated omni-channel consumer websites, and multipleour dedicated e-commerce consumer websites as of fiscal year end 2024.website.

•Owned & Host – As of fiscal year end 2024,2025, our owned brands consisted of 1,0361,057 America’s Best Contacts and Eyeglasses (“America’s Best”) retail stores and 122 Eyeglass World retail stores. In America’s Best stores, vision care services are provided by optometrists employed by us or by independent professional corporations or similar entities. America’s Best stores are primarily located in high-traffic strip centers next to value-focused retailers. Eyeglass World locations offer eye exams, provided primarily by independent optometrists and optometrists employed either by us or independent professional corporations or similar entities, and have on-site optical laboratories that enable stores to quickly fulfill many customer orders and make repairs on site. Eyeglass World stores are primarily located in freestanding or in-line locations near high-foot-traffic shopping centers. Our Host brands consisted of 53 Vista Optical locations on select military bases and 2918 Vista Optical locations within select Fred Meyer stores as of fiscal year end 2024.2025. We have strong, long-standing relationships with our Host partners and have maintained each partnership for over 20 years. These brands provide eye exams primarily by independent optometrists. All brands utilize our centralized laboratories. This segment also includes sales from our America’s Best, Eyeglass World, and Military omni-channel websites.

•Corporate and other — Our corporate and other category representsincludes the results of our dedicated e-commerce website, which sells contact lenses and optical accessory products to retail customers, and recognizes revenue when products have been delivered to the customer and our managed care business conducted by FirstSight, our wholly-owned subsidiary that is licensed as a single-service health plan under California law, which issues individual vision plans in connection with our America’s Best operations in California. Our “corporate and other” category also includes unallocated corporate overhead expenses, which are a component of selling,Selling, general and administrative expenses (“SG&A”) and are comprised of various home office expenses such as payroll, occupancy costs and consulting and professional fees. Corporate overhead expenses also include field services for our four retail brands. Other expenses included in this category include certain non-cash charges, including asset impairment, stock-based compensation expense, and the impact of certain events, gains, or losses excluded from the assessment of segment performance.

•Effects of unearned and deferred revenue — Reportable segment information is presented on the same basis as our consolidated financial statements, except reportable segment salesrevenues and associated costs applicable to revenue which are presented on a cash basis, including point of sales for managed care payors and excludingexclude the effects of unearned and deferred revenue, consistent with what our chief operating decision maker (“CODM”) regularly reviews. We present the effects of unearned and deferred revenues separately from our reportable segment information. See Note 16.15. “Segment Reporting” in our consolidated financial statements. Deferred revenue represents the timing difference of when we collectbetween the cashpoint fromof the customersale and when services related to product protection plans and eye care club memberships are performed. Increases or decreases in deferred revenue during the reporting period represent cash collections in excess of, or below the recognition of, previous deferrals. Unearned revenue represents the timing difference of when we collect cash frombetween the customerpoint of sale transaction and delivery/customer acceptance, and includes sales of prescription eyewear during approximately the last seventwo to ten daysweeks of the reporting period.

The overall economic environment continues to be challenging and macroeconomic factors that may affect customer spending patterns, and thereby our results of operations, include inflation, employment rates, business conditions, changes in the housing market, the availability of credit, interest rates, tax rates and policies, fuel and energy costs and overall consumer confidence in future economic conditions, as well as global political, socio-economic, cultural, and geopolitical uncertainty. The effects of the current macroeconomic environment and geopolitical uncertainty, resulted in reduced customer demand in 2025 and have caused shifts in consumer behaviors and preferences, which impact the demand for our products. As a result, the predictability of recurring purchase behavior for the future remains uncertain, primarily for the cash pay consumer.

Our ability to continue to attract and retain qualified vision care professionals impacts exam capacity and our operations, like those of many of our competitors, depend on our ability to offer both eyewear and eye exams. We believe factors such as an increasingly challenging recruiting market (in particular for new graduates), preferences for adjusted work schedules, and the demand for optometrists exceeding supply in certain areas during fiscal year 2024 have caused constraints in vision care professional availability and therefore exam capacity in recent years, which aremay continuing.continue. As a result, recruiting and retaining optometrists has become more challenging and the costs to employee or retain optometrists have increased and may increase further, potentially materially. Targeted wage investments, including increases in compensation for our optometrists and associates, and flexibility initiatives have impacted our costs applicable to revenue and selling, general and administrativeSG&A expenses. We anticipate that wage pressures in certain markets willmay continue to some degree in 2025.2026. Wage investment pressure and increases to costs applicable to revenue from increases in raw materials prices may not be able to be fully offset by leverage from revenue growth, productivity efficiency and, as appropriate, various pricing actions. We are continuing to strategically invest in recruitment and retention initiatives, including flexible adjusted work schedules, along with continuing our implementation of remote medicine technologies, which has expanded our offerings while also increasing costs.

We expect that new stores will continue to be a key driver of growth in our net revenue and operating profit in the future. Our results of operations have been and will continue to be materially affected by the timing and number of new store openings. As stores mature, profitability typically increases significantly. The performance of new stores is dependent upon factors such as the availability of optometrists, implementation and operation of remote medicine technology, the time of year of a particular opening, the amount of store pre-opening costs, labor and occupancy costs in the specified market, level of participation in managed care plans, and location, including whether they are in new or existing markets. During fiscal 2024,2025, we announcedopened plans33 new stores, and we plan to temporarilyopen moderateapproximately 30 to 35 new store openingsstores in 20252026, toprimarily 30-35comprised newof America’s Best stores, after which time we expect to return to our more recent store opening cadence as strategic initiatives begin to take hold.

•consumer confidence, preferences and buying trends and overall economic trends including inflation and the amount and timing of tax refunds;

Managed care has become increasingly important to the optical retail industry. An increasing percentage of our customers receive vision care insurance coverage through managed care payors. Our participation in these programs represent an increasingly significant portion of our overall revenues and represented approximately 40% and 37%42% of our overall revenues from continuing operations in fiscal years 2024 and 2023, respectively.2025. While we have relationships with almost all vision care insurers in the U.S. and with all of the major carriers, currently, a relatively small number of payors comprise the majority of our managed care revenues, subjecting us to concentration risk. As our participation in managed care programs continues to expand, we have incurred and expect to incur additional costs related to this area of our business. Our comparable store sales growth as noted above as well as overall future operational success could depend on our ability to negotiate, maintain and extend contracts with managed vision care companies, vision insurance providers and other third-party payors, several of whom have significant market share. Coverage and payment levels are determined at each third-party payor’s discretion, and we have limited control over a third-party payor’s decision-making with respect to coverage and payment levels. Coverage restrictions and reductions in reimbursement levels or payment methodologies may negatively impact our sales and profits. In addition, as our participation in managed care programs continues to approach overall industry penetration levels, we expect our associated managed care revenue growth rate to slow over time.

Historically, our business has realized a higher portion of net revenue, operating income, and cash flows from operations in the first half of the fiscal year, and a lower portion of net revenue, operating income, and cash flows from operations in the fourth fiscal quarter. The first half seasonality is attributable primarily to the timing of our customers’ income tax refunds and annual health insurance program start/reset periods.periods Weand believepredictable thatconsumer many customers in our target market of value-seeking consumers may rely on tax refundspropensity to payseek foreye eyewearcare and eye care. A delay in the issuance of tax refunds or changes in the amount of tax refunds can accordingly have a negative impact on our quarterly financial results in the first half of the year. Consumer behavior with respect to the utilization of tax refund proceeds is also subject to change.eyewear.

With respect to our fourth quarter results, compared to other retailers, our products and services are less likely to be included in consumers’ holiday spending budgets, therefore reducing spending on personal vision correction during the weeks preceding December 25th of each year. Additionally, although the period between December 25th and the end of our fiscal year is typically a high-volume period, the net revenue associated with substantiallya allsignificant portion of orders of prescription eyeglasses and contact lenses during that period is deferred until the following fiscal period due to our policy of recognizing revenue only after the product has been accepted by the customer, further contributing to higher revenue results in the first half of the year. Our quarterly results may also be affected by the timing of new store openings and store closings, the amount of sales contributed by new and existing stores, the timing of certain holidays, and the timing of weather-related store closures.

For both fiscal years 20242025 and 2023,2024, approximately 25% and 24% of our revenue was recorded in the respective fourth quarter,quarters, but approximately 26% and 25% of annual SG&A costs were recorded in the respective fourth quarters of these fiscal years.

The total number of new stores per year and the timing of store openings has, and will continue to have, an impact on our results. We opened 6933 stores during fiscal year 2024.2025, Duringand we plan to open approximately 30 to 35 new stores in fiscal 2024,2026, weprimarily announcedcomprised plansof toAmerica’s temporarily moderate new store openings in 2025 to 30-35 newBest stores, after which time we expect to return to our more recent store opening cadence as strategic initiatives begin to take hold. We will continue to monitor and determine our plans for future new store openings based on health, safety and economic conditions.

We measure Adjusted Comparable Store Sales Growth as the increase or decrease in sales recorded by the comparable store base in any fiscal reporting period, compared to sales recorded by the comparable store base in the prior fiscal reporting period, which we calculate as follows: (i) sales are recorded on a cash basis (i.e., whenat the order is placed and paid for or submitted to a managed care payor, compared to when the order is delivered), utilizing cash basis point of sale information(ii) fromsales storesare adjusted for managed care insurance collection estimates; (iiiii) stores are added to the calculation during the 13th full fiscal month following the store’s opening; (iiiiv) closed stores are removed from the calculation for time periods that are not comparable; (ivv) sales from partial months of operation are excluded when stores do not open or close on the first day of the month; and (vvi) when applicable, we adjust for the effect of the 53rd week. Quarterly, year-to-date and annual adjusted comparable store sales are aggregated using only sales from all whole months of operation included in both the current reporting period and the prior reporting period. When a partial month is excluded from the calculation, the corresponding month in the subsequent period is also excluded from the calculation. There may be variations in the way in which some of our competitors and other retailers calculate comparable store sales. As a result, our adjusted comparable store sales may not be comparable to similar data made available by other retailers.

We are one of the largest optical retailers in the U.S. and a leader in the value segment of the U.S. optical retail industry. We believe that vision is central to quality of life and that people deserve to see their best to live their best. Our mission is to make quality eye care and eyewear more affordable and accessible. We achieve this by providing eye exams, eyeglasses and contact lenses to consumers across the nation. Our range of quality product offerings at multiple price points makes us an attractive destination for consumers of all income levels. As of AprilJuly 4, 2026, we reach our customers through a diverse portfolio of 1,2741,281 retail stores across four brands, our associated omni-channel consumer websites and our dedicated e-commerce consumer website.

As of AprilJuly 4, 2026, our operations consisted of one reportable segment.

•Owned & Host - As of AprilJuly 4, 2026, our owned brands consisted of 1,0621,069 America’s Best Contacts and Eyeglasses (“America’s Best”) retail stores and 122 Eyeglass World retail stores. Our Host brands consisted of 72 Vista Optical locations on select military bases and 18 Vista Optical locations within select Fred Meyer stores as of AprilJuly 4, 2026. All brands utilize our centralized laboratories. This segment also includes sales from our America’s Best, Eyeglass World, and Military omni-channel websites.

The United States has made changes to U.S. trade policy, including increasing tariffs on imports, in some cases significantly, and potentially negotiating or terminating existing trade agreements. For example, on April 2, 2025, the United States announced a new universal baseline tariff of 10%, plus an additional country-specific tariff for select trading partners, on all U.S. imports pursuant to the International Emergency Economic Powers Act (“IEEPA”). Additionally, on September 24, 2025, the U.S. Department of Commerce Bureau of Industry and Security announced the initiation of an investigation into the effects on U.S. national security of imports of personal protective equipment, medical consumables, and medical equipment, including devices, which could result in the imposition of tariffs or other import restrictions. On February 20, 2026, the U.S. Supreme Court declared that tariffs imposed under the IEEPA on April 2, 2025 (and the subsequent modifications) were invalid as they exceeded the President’s authority. Subsequently, the Administration announced a 10% temporary tariff on U.S. imports pursuant to Section 122 of the Trade Act of 1974,1974 (the “Act”), effective February 24, 2026. SuchThe Section 122 tariffs willexpired remain for 150 days untilon July 24, 2026 (unlessunder extendedthe by Congress)statute and are being challenged in court. In March 2026, the Office of the United States Trade Representative (“USTR”) launched two sets of investigations,investigations under Section 301 of the Act, targeting forced labor compliance practices of 60 countries/regions and excess manufacturing capacity of 16 countries/regions. TheseOn ongoingJuly 23, 2026, USTR announced the imposition of 10% to 12.5% of Section 301 tariffs on numerous imports, with some carve outs, from the 60 economies subject to the forced labor related investigations, effective July 24, 2026. Multiple additional pending Section 301 and Section 232 investigations may result in additional tariffs being imposed on imports from thesevarious trading partners. Further,On July 1, 2026, USTR announced that the United States would not renew the United States-Mexico-Canada Agreement (“USMCA”),in its current form, triggering annual reviews of and ongoing negotiations of the freerelevant tradeterms agreementfor the next decade. On June 2, 2026, the U.S. government appealed the Court of International Trade’s (“CIT”) refund order to the U.S. Court of Appeals for the Federal Circuit, challenging, among other matters, the U.S.,scope Canadaof the IEEPA refund relief and Mexico,whether refunds may be required for importers that were not parties to the litigation or for certain finally liquidated entries. Subsequently, the CIT issued orders in various cases where importers filed for IEEPA refunds, directing U.S. Customs and Border Protection (“CBP”) to reliquidate the relevant entries and refund IEEPA tariffs. CBP has indicated that it is undergoingimplementing a jointprocess reviewto inissue 2026.refunds on finally liquidated entries to importers who have obtained such orders from the CIT. On June 16, 2026, the Company filed claims with CBP seeking refunds of approximately $4.8 million of tariffs previously paid under IEEPA that the Company did not believe were subject to the most recent appeal process. These actions, and retaliatory tariffs imposed by other countries on U.S. exports, have led to significant volatility and uncertainty in global markets, which is continuing. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Less than 10% of our costs applicable to revenue are directly subject to tariffs on products from China. In Mexico, where our exposure relates to our outsourcing relationship with our third-party laboratory, we have mitigation plans in place, and we estimate that less than 1% of our costs applicable to revenue are subject to tariffs in Mexico. We are continuing to evaluate these developments, including resulting impacts on our supply chain, commodity costs, and consumer spending, and our ability to offset a portion of these costs to mitigate the impact on our business, consolidated results of operations, and financial condition.

We anticipate continuing the investment in remote medicine, including hybrid remote, whereby optometrists in one store are able to see patients remotely in another store, adding select locations where feasible and advantageous and depending on the state-by-state regulatory environment. While the remote medicine and EHR platforms havehas increased exam capacity, revenue and profitability, we have experienced higher costs applicable to revenue as a percentage of revenue, when compared with in-store exams.

We measure Adjusted Comparable Store Sales Growth as the increase or decrease in sales recorded by the comparable store base in any reporting period, compared to sales recorded by the comparable store base in the prior reporting period, which we calculate as follows: (i) sales are recorded at the point of sale; (ii) sales are adjusted for managed care insurance collection estimates; (iii) stores are added to the calculation during the 13th full fiscal month following the store’s opening; (iv) closed stores are removed from the calculation for time periods that are not comparable; (v) sales from partial months of operation are excluded when stores do not open or close on the first day of the month; and (vi) when applicable, we adjust for the effect of the 53rd week; and (vii) in fiscal years following a 53-week fiscal year, there is a one week calendar shift to the comparable prior-year period. For the calculation of the adjusted comparable store sales growth infor the firstthree quartermonths ofended July 4, 2026, we compared weeks 14 through 26 in fiscal 2026 against weeks 15 through 27 in fiscal 2025 and for the six months ended July 4, 2026, we compared weeks 1 through 1326 in fiscal year 2026 against weeks 2 through 1427 in fiscal year 2025. Quarterly, year-to-date and annual adjusted comparable store sales are aggregated using only sales from all whole months of operation included in both the current reporting period and the prior reporting period. When a partial month is excluded from the calculation, the corresponding month in the subsequent period is also excluded from the calculation. There may be variations in the way in which some of our competitors and other retailers calculate comparable store sales. As a result, our adjusted comparable store sales may not be comparable to similar data made available by other retailers.

Three Months Ended AprilJuly 4, 2026 compared to Three Months Ended MarchJune 29,28, 2025

The following presents, by segment and by brand, comparable store sales growth, stores open at the end of the period and net revenue for the three months ended AprilJuly 4, 2026 compared to the three months ended MarchJune 29,28, 2025.

(1) We calculate total comparable store sales based on consolidated net revenue excluding the impact of (i) Corporate and other revenue, (ii) sales from stores opened less than 13 months, (iii) stores closed in the periods presented, (iv) sales from partial months of operation when stores do not open or close on the first day of the month and (v) if applicable, the impact of a 53rd week in a fiscal yearyear, and (vi) in fiscal years following a 53-week fiscal year, there is a one week calendar shift to the comparable prior-year period. For the calculation of the adjusted comparable store sales growth in the firstsecond quarter of 2026, we compared weeks 114 through 1326 in fiscal 2026 against weeks 215 through 1427 in fiscal 2025. Brand-level comparable store sales growth is calculated based on point-of-sale revenues consistent with what the CODM reviews, and consistent with reportable segment revenues presented in Note 8. “Segment Reporting” in our unaudited condensed consolidated financial statements included in Part I. Item 1. of this Form 10-Q.

Total net revenue of $543.9$498.8 million for the three months ended AprilJuly 4, 2026 increased $33.6$12.4 million, or 6.6%,2.5%, from $510.3$486.4 million for the three months ended MarchJune 29,28, 2025. The increase was primarily driven by Adjustednew Comparablestore Store Sales Growth andsales, the timing of unearned revenue.revenue and Adjusted Comparable Store Sales Growth, partially offset by closed stores. Unearned and deferred revenue positively impacted net revenue by $10.4$5.7 million during the three months ended AprilJuly 4, 2026 compared to the three months ended MarchJune 29,28, 2025.

Net product sales increased $26.7$8.5 million, or 6.5%,2.2%, in the three months ended AprilJuly 4, 2026 compared to the three months ended MarchJune 29,28, 2025, primarily due to pricing and product mix initiatives in eyeglass sales of $20.4$7.0 million and contact lens sales of $7.0$1.9 million.

Net sales of services and plans for the three months ended AprilJuly 4, 2026 increased $6.8$3.8 million, or 7.0%,4.2%, compared to the three months ended MarchJune 29,28, 2025, driven primarily by higher eye exam revenues of $5.6$3.8 million, or 8.4%.million.

Costs applicable to revenue increased $13.9$8.0 million, or 6.8%,4.0% in the three months ended AprilJuly 4, 20262026, compared to the three months ended MarchJune 29,28, 2025. As a percentage of net revenue, costs applicable to revenue increased 1060 basis points and were primarily driven by lowera 50 basis-point decrease in eyeglass marginmargin, ofreflecting 60a basisstrategic pointsmix impactedshift bytoward higher-value product mix,offerings, partially offset by successful pricing initiatives, leveragingdeleverage of optometrist-related costs of 30 basis pointspoints, and other mix effects of 30 basis points, partially offset by higher exam revenuerevenues of 2050 basis points.

Costs of products as a percentage of net product sales increased 6030 basis points, primarily driven by lower eyeglass margin impactedreflecting bya strategic mix shift toward higher-value product mix, partially offset by successful pricing initiatives.offerings.

Costs of services and plans as a percentage of net sales of services and plans decreasedincreased 21060 basis points, primarily driven by leveragedeleverage of optometrist-related costscosts, andpartially offset by higher exam revenue.

SG&A increasedof $0.6$243.4 million,million orfor 0.2%, inthe three months ended AprilJuly 4, 2026 decreased $3.7 million, or 1.5%, compared to the three months ended MarchJune 29,28, 2025. SG&A asAs a percentage of net revenuerevenue, SG&A decreased 300200 basis points primarily impacteddriven by lower payrollassociate-related expenseexpenses, including variable incentive compensation, of 220180 basis pointspoints, and lower advertising expense of 7050 basis points.points, partially offset by higher occupancy expense of 40 basis points, primarily driven by new and acquired locations.

Depreciation and amortization expense of $23.4$23.2 million for the three months ended AprilJuly 4, 2026 increased $0.5$0.7 million, or 2.1%,3.0%, from $23.0$22.5 million for the three months ended MarchJune 29,28, 2025, primarily related to assets in our existing stores and retail support centers, partially offset by fewerlower newdepreciation storeassociated openings.with newer stores.

We recognized no impairment charges during the three months ended April 4, 2026. We recognized $0.5$2.5 million of impairment charges during the three months ended MarchJuly 29,4, 2025,2026. primarilyWe fordid tangiblenot long-livedrecognize any impairment charges during the three months ended June 28, 2025. The impairment charges recognized in the current period were related to the write-down of store lab assets andin ROU assets associatedconnection with our retailEyeglass stores.World lab optimization initiative, which is intended to improve operational efficiency by reducing in-store lab activity and utilizing alternative production capabilities. Asset impairment expenses were recognized in Corporate and other. SeeRefer to Note 11. “Restructuring” for information regarding this initiative, including expected future restructuring activities and related costs and Note 1. “Description of Business and Basis of Presentation” and Note 3. “Fair Value Measurement” for further details.

Interest expense, netnet, wasof $2.8$3.3 million for the three months ended AprilJuly 4, 2026,2026 compareddecreased with$0.9 $4.6million from $4.2 million for the three months ended MarchJune 29,28, 2025. The change was2025, primarily as a result of lower interest expense of $1.2 million resulting from lower outstanding debt andbalance, higherpartially offset by lower interest income of $0.4 million.

Our effective tax rates for the three months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025 were 26.4%30.9% and 34.2%,28.7%, respectively. The change in effective tax rates iswas primarily driven by the discretetax benefitimpacts of non-deductible compensation and other effects of permanent adjustments related to stock-based compensation, partially offset by non-deductible compensation.items.

(b)Reflects write-off related to non-cash impairment charges of long-lived assets, primarily impairment of property and equipment related to the EGW lab optimization initiative for the three and six months ended July 4, 2026 and impairment of property, equipment and lease-related assets on closed or underperforming stores.stores for the six months ended June 28, 2025. Refer to Note 11. “Restructuring” for more information on the EGW lab optimization initiative.

(de)Costs related to the Company’s ERP and CRM implementation.

(ef)Other adjustments include amounts that management believes are not representative of our operating performance (amounts in brackets represent reductions in Adjusted Operating Income, Adjusted Diluted EPS and Adjusted EBITDA), which are primarily related to shareholder activism costs of $2.1 million for the threesix months ended MarchJune 29,28, 2025, severance and associate-related costs associated with organizational restructuring of $2.1$2.2 million and $2.1 million for the threesix months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025, respectively, and restructuring costs related to EGW lab optimization initiative of $0.6 million for the three and six months ended July 4, 2026 (see Note 11. “Restructuring”, for additional information), and other expenses and adjustments.

(fg)Represents the income tax effect of the total adjustments at our combined statutory federal and state income tax rates, including tax expense (benefit) from stock-based compensation.

As of AprilJuly 4, 2026, we had $67.9$36.0 million in cash and cash equivalents, and $293.3 million of remaining availability under our Revolving Loans, net of $6.7 million in outstanding letters of credit.

As of AprilJuly 4, 2026, we had $234.3$231.0 million of Term Loan A outstanding under our credit agreement. We were in compliance with all covenants related to our debt as of AprilJuly 4, 2026.