Executive Summary

Business overview

The primary business of Visionary Holdings is retail sales of eyeglasses and contact lenses through its Meganesuper chain of retail stores. Using eye care services, to provide solutions to prolong the healthy lifespan of eye health (ie, products, services, advice) to differentiate itself from competitors, Visionary Holdings is the fourth largest company in the domestic eyewear industry in terms of sales (as of FY2020). In FY04/21, 36.1% of sales came from eyeglasses, 40.4% from contact lenses, and 23.4% from hearing aids. The sales weighting of contact lenses is relatively high compared to other major eyewear chains. The average price for eyeglasses was JPY39,419 in Q4 FY04/21 (JPY36,854 in Q4 FY04/20), which is higher than its peers. The average price is increasing because the company charges separately for comprehensive eye exams, high function premium lenses, and eyeglass frames. While 38% of its stores are located in shopping districts, 40% are standalone roadside stores, and 22% are located in shopping malls. The company has an especially large presence in the Kanto and Chubu regions.

In the past, the company tried unsuccessfully to compete against low-price sellers without making any changes to its high-cost structure but found itself slipping into the red in FY04/08. After persistent losses in the following years eroded its capital base, Advantage Partners stepped in to acquire a 74.9% stake in January 2012 (subsequently reduced to 68.4% at the end of FY04/15) and set about restructuring and reviving the business. In FY04/14, Visionary Holdings recorded operating loss of JPY2.1bn and net loss of JPY2.6bn, but after that the company got back on the road to recovery and finally moved out of the red and into the black in FY04/16, reporting operating profit of JPY523mn and net income of JPY261mn.

In June 2014, Visionary Holdings made a decisive switch in its business strategy, forswearing price competition and instead redefining itself as an eyecare provider with a lineup of products and services aimed at helping customers prolong the healthy lifespan of their eyes. Along with this switch, the company also broke from the industry practice of bundling frames and lenses, choosing instead to price all frames, lenses, and eye exams separately. Aided by the expansion of its eye exam services, it also expanded sales of premium lenses (i.e., lenses other than mono-focal) and was able to further differentiate itself from competitors by setting prices commensurate with the quality of products and services offered. As a result of these changes, Visionary Holdings was able to successfully go after the market segment comprised of people aged 45 and above (the age at which people’s vision tends to change) and turn around sales and earnings.

The company’s priority since FY04/17 has been restarting growth and, toward this end, it has been rolling out true eyewear specialty stores (where the emphasis is on eye care). It has focused on improving its operating efficiency, building a foundation that can support sustained growth, and strengthening its business infrastructure. Advantage Partners and related parties reduced their stake in Visionary Holdings by selling shares through a secondary offering in August 2018, and are no longer the leading shareholders. Also, Advantage Partners appointed board members retired in July 2019 so it no longer has representatives on the board, a sign that Visionary Holdings moved out of the business rehabilitation stage from a capital perspective as well.

In December 2019, the company announced that it had formed a capital and business alliance with M3 Inc. (TSE1: 2413), which operates a medical information website. In addition to marketing products and services based on M3’s healthcare network and content at Visionary Holdings stores, the company is also strengthening ties with nearby ophthalmologists by leveraging M3’s network of healthcare professionals.

Trends and outlook

◤ FY04/21 results: For FY04/21, the company reported full-year consolidated sales of JPY26.1bn (-4.7% YoY), operating profit of JPY353mn (versus a loss of JPY212mn in FY04/20), net income attributable to owners of the parent of JPY67mn (versus a loss of JPY1.2bn in FY04/20), and EBITDA* of JPY1.3bn (+46.8% YoY) (*EBITDA = operating profit + amortization of long-term prepaid expenses + amortization of asset retirement obligations + depreciation and goodwill amortization + share-based compensation expenses). The decline in sales was attributable to a combination of (1) temporary store closures, shortened operating hours, and other disruptions that weighed on sales at existing stores in the wake of the pandemic, and (2) a decline in the number of stores in operation following the acceleration of closures, relocations, and consolidations of unprofitable stores. The decline in sales notwithstanding, the company still managed to move into the black, reporting operating profit of JPY353mn versus a year-earlier loss of JPY212mn thanks to concerted cost control at the SG&A expense level, including negotiating with landlords to secure lower rents, curbing non-essential/non-urgent spending, and making sustained reductions in store operating hours so as to reduce employee overtime hours and raise store profitability. At the recurring profit level, the company reported a full-year profit of JPY926mn versus a year-earlier loss of JP332mn, mainly reflecting JPY603mn in employment adjustment subsidies received from the government during the year. Net income attributable to owners of the parent was JPY67mn (versus a loss of JPY1.2bn in FY04/20) as the company booked losses in connection with planned store relocations/closures (in FY04/21 and FY04/22) and upgrades to its core IT systems, including JPY645mn in impairment losses, JPY32mn in losses on store closures, and JPY192mn in inventory valuation losses.

FY04/22 outlook: At the time of its FY04/21 results announcement, the company did not offer any guidance with respect to its outlook for FY04/22. By way of explanation, the company said it was still too early to put together reliable estimates as to when the COVID-19 pandemic might come to an end and how much sales and earnings might be affected, noting that even as vaccinations in Japan were just starting to be phased in there were still concerns about the possibility of another round of infections. The company said, however, that it would be quick to make an announcement and provide guidance for FY04/22 as soon as it is in a position to do so.

Under its medium-term plan (covering FY04/20–FY04/23, announced in June 2019), the company is targeting FY03/23 consolidated sales of JPY37.3bn (representing a CAGR of 8.9%), operating profit of JPY1.7bn (22.9%), and EBITDA of JPY2.9bn (16.3%). Its basic strategy calls for 1) transitioning to its new, next-generation store format; 2) the ongoing rollout of new stores designed to meet the needs of local markets; 3) ongoing hiring and training of new staff to support growth in the business; 4) using its Me no Kenkou (eye health) platform to facilitate additional acquisitions; and 5) moving into new markets by growing its wearable device business.

Strengths and weaknesses

Strengths: lessons learned from past mistakes, database of over 9mn customers, and the targeting of (and ability to reach) customers aged 45+. Weaknesses: financing constraints that make it difficult to acquire new customers, a limited customer base, and limited store locations. (See the “Strengths and weaknesses” section for details.)

Key financial data

Trends and outlook

Quarterly trends and results

Trends by segment

Retail segment

Wholesale segment

E-commerce segment

Q1 FY04/22 results (out September 14, 2021)

Results summary

Q1 FY04/22 results

• Sales: JPY6.6bn (+2.6% YoY)
• Operating loss: JPY434mn (versus a profit of JPY161mn in Q1 FY04/21)
  
• Recurring loss: JPY301mn (versus a profit of JPY301mn in Q1 FY04/21)
• Net loss attributable to owners of the parent: JPY450mn (versus a profit of JPY128mn in FY04/21)
• EBITDA*: -JPY142mn (JPY389mn in Q1 FY04/21) 

The company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), but this had minimal impact on earnings.

Sales increased YoY at all businesses (Retail, Wholesale, and E-commerce). 

The company recorded an operating loss in Q1. Not only did gross profit decrease due to competitive pricing, but also SG&A expenses rose as the company stepped up advertising activity. 

Gross profits: The company reported gross profits of JPY3.9bn (-4.2% YoY) and GPM of 59.6% (-4.2pp YoY). The main factors were a first-time discount for the contact lens delivery service and a discount campaign for lenses, as well as an increased sales weighting for relatively low margin contact lenses and luxury brand frames and decreased weighting for high-margin private label eyeglasses.

SG&A expenses: The company reported SG&A expenses of JPY4.3bn (+10.8% YoY). It stepped up advertising activity in anticipation of an increase in customers once the spread of COVID-19 is contained, utilizing a broad range of media (including TV commercials in the Greater Tokyo area, direct mail and newspaper insert ads, as well as SNS and video ads) to promote greater recognition of high-value added services such as eye care examinations and the warranty system, as well as the contact lens delivery service. Transportation and other SG&A expenses also increased as the company gradually eased the restrictions it had imposed on movement of employees between regions as a means of containing the spread of COVID-19.  

Performance versus full-year forecast

Again, the company did not offer any forecast for FY04/22. In Q1 FY04/22, it seems that eyeglass sales fell short of the company's expectations, but sales of contact lenses were in line. The operating loss apparently was greater than the company projected, as sluggish sales of eyeglasses caused gross profits to come in lower than anticipated, although SG&A expenses were in line with expectations. 

Over the full year, the company expects to report an operating profit, providing there is no return to a state of emergency. It assumes that customer footfall will recover in early autumn as the vaccine rollout winds down and effects from COVID-19 ease. The company plans to further bolster advertising activity in order to secure new customers as the external environment improves. In addition, it will continue to prioritize store profitability in operations, such as shortening opening hours and recommending and strengthening customer reservations to optimize staff deployment.   

Retail segment

• Sales: JPY6.1bn (+0.8% YoY)
• Operating profit: JPY18mn (-94.9% YoY)
  

Retail segment sales surpassed the prior-year level. 

Number of stores: While eight new stores were opened (including five that were relocated), six were closed (two were consolidated with nearby stores and four were relocated) so the total number of stores as of end-Q1 FY04/22 was 324 (down by eight YoY). Next-generation stores numbered 126 (up nine), accounting for 38.9% of the total. The company is stepping up remodeling of older stores and the transition to next-generation stores, in a bid to ensure stores are fit to offer high-value added total eye care exams and sell high-end eyeglasses.

All-store sales: All-store sales declined 9.8% YoY in Q1 FY04/22, with customer footfall dropping 15.5% YoY and the average customer spend rising 6.7% (the average price for a pair of eyeglasses was JPY39,507). Against the backdrop of a prolonged state of emergency and spread of COVID-19 infections, there was a steep decline in customer footfall at stores in suburbs and regional areas where numbers previously had been brisk. On the other hand, because of the decline in customer footfall, interaction times with each customer lengthened, and since the company also was able to improve employees' customer service and testing proficiency through enhanced training, customers exhibited greater satisfaction with service and the recommendations made, and sales of high-end products increased. As a result, the average customer spend increased.

By product: Sales from eyeglasses were JPY2.4bn (-7.5% YoY). The main contributing factors were a decrease in customer footfall as consumers refrained from going out in response to government measures to prevent the spread of COVID-19 infections, and a YoY fall in store numbers. Contact lens sales were JPY2.8bn (+6.0% YoY), buoyed by a 15.9% YoY increase in subscribers to the company's contact lens delivery service delivering lenses on a regular basis, and accompanying 13.3% YoY increase in sales from the service. Demand for contact lenses had slumped because consumers refrained from going out amid the pandemic, but in 2021 demand began to pick up as opportunities to go out increased and as consumers used up lenses already procured. Against this backdrop, the company bolstered advertising campaigns aimed at attracting new service subscribers, and sales increased accordingly. 

Distinguishing features of company's contact lens sales

While Visionary Holdings' mainstay product remains eyeglasses, over the past five to six years, it has placed more emphasis on contact lens sales to the extent that contact lens sales value has exceeded that for eyeglasses since FY04/20 (in FY04/21, the respective sales weightings for eyeglasses and contact lenses were 36.1% and 40.4%). The company is endeavoring to build a steady income stream by encouraging new contact lens buyers at bricks-and-mortar stores to subscribe to the contact lens delivery service, with the incentive of a first-time discount. Aside from the initial subscription, all aspects of the contact lens delivery service are overseen by headquarters; relieving store staff of these cumbersome tasks results in more time to spend serving customers looking to buy eyeglasses. On the other hand, recurring revenue from the contact lens delivery service is booked as sales for the store at which the customer made the first contact lens purchase, thereby providing each store with motivation to recommend subscription to the service. As stores are able to secure a steady income stream from contact lenses from their very first year in operation, they tend to turn profitable at a relatively early juncture, and maintain stable earnings thereafter. In Q1 FY04/22, sales from the contact lens delivery service accounted for 83.8% of overall contact lens sales, up 5.4pp YoY.   

Visionary Holdings primarily opens stores on streets with heavy pedestrian traffic, in order to capture demand from customers needing to make a purchase immediately to replenish a depleted supply of lenses. Stores draw customers in with posters declaring that consumers can buy contact lenses straight away without a prescription, and keep inventory at high levels to ensure that such customers can buy the products they need at the time they want them. Many specialist eyewear retailers selling contact lenses via bricks-and-mortar stores require customers to show an ophthalmologist's prescription at the time of purchase, but for customers who have bought and used contact lenses in the past (including from other companies' stores), Visionary Holdings will sell lenses without a prescription being presented. Among online-only contact lens retailers, there are many that similarly do not require evidence of a prescription, but in the case of Visionary Holdings the bricks-and-mortar stores act as an advertising medium and moreover the company already is well known as an eyeglass retailer, both of which aid in securing new customers.      

Generally speaking, customers utilizing the contact lens delivery service are busy people who are unable to take delivery of the product during the day. The company seeks to make the service as convenient as possible by packaging the lenses in specially designed thin boxes that will fit inside a mailbox, which as a result is leading to high customer retention. 

Retail segment initiatives

Progress in implementing investment plans: Under its medium-term business plan (FY04/20–FY04/23), the company intends to invest JPY6.0bn. Specific investment goals are 1) JPY400mn for personnel and system investment, 2) JPY2.0bn for eye exam and other equipment, 3) JPY1.9bn for renovations, and 4) JPY1.7bn for new store openings. As of end-Q1 FY04/22, the company had invested a total of JPY3.2bn (53.5% of the amount earmarked). It resumed remodeling and opening new stores during the quarter after a lull due to the spread of COVID-19. 

In FY04/21, the company suspended "Caravan" activity as a contribution to preventing the spread of COVID-19. Now, though, it is again recruiting volunteers from among employees and has resumed this activity, which sees 40–50 volunteers head out on the weekend to visit four to five stores, where their actions include talking with staff, checking on implementation of companywide policies, identifying problems at each store, providing support for layout changes that would improve store operations, helping to clean signage, exteriors and interiors, and putting flyers into mailboxes to attract customers. By participating in cleaning and remodeling, these volunteers save the company money that otherwise would be spent on outsourcing. 

Cross-industry collaboration: Visionary Holdings has joined forces with menswear retailer Aoki Holdings (TSE1:8214), reopening two stores as shops inside Aoki outlets. The idea is to mutually attract and refer customers, with plans to open more such stores in the future. The company also has teamed up with Minamisoma City in Fukushima Prefecture, where it opened a mobile store on the site of a public commercial facility as a special event. Going forward, the company plans to collaborate with more local governments around the country, to provide mobile store services to regions that lack eyeglass and hearing aid retailers.    

Appointment reservations: The company has been promoting its reservation system for in-store services for the past three years, and it has been well received amid the COVID-19 pandemic. In Q1 FY04/22, the number of reservations rose 43.8% YoY. The system enables the company to efficiently distribute staff based on reservation status and boost store productivity. 

On-site sales: The company's on-site service for eyeglasses and hearing aids, where staff visit aged care facilities and private homes to sell products, has proven especially popular with elderly customers who are hesitant to leave their homes. Demand for the service has remained solid after the outbreak of COVID-19.

Thorough eye exams: The company provides its Total Eye Exam, a 40–70 minute comprehensive exam, for a separate charge. The exam is not limited to evaluating visual acuity, but also looks at factors such as the customer’s living environment and the ability of the eye to focus. Visionary Holdings has 95 Essilor VISION-R800 phoropters, the world’s most advanced refraction inspection instrument, installed at 83 stores (as of end-July 2021), enabling high precision measurement of lens power in 0.01 D increments, which is 25 times that of conventional instruments. Improved training has raised the level of eye exam proficiency and customer service, and the aforementioned state-of-the-art instruments have boosted customer satisfaction and contributed to higher average customer spend.

Collaboration with ophthalmologists: The company has been working to foster trust with ophthalmologists practicing near their stores resulting in rising referrals from ophthalmologists. To increase prospective partners, staff visit nearby ophthalmology clinics to promote the ability to prescribe optimal lenses via the Total Eye Exam and the company’s warranty and aftercare programs. Visionary Holdings is also strengthening collaboration by utilizing online medical information provider M3’s (TSE1: 2413) network of healthcare professionals.

Clinical trial subject recruiting: In August 2021, Visionary Holdings started offering a clinical trial subject recruiting service at some 200 Meganesuper stores, in collaboration with M3 group company Qlife. The company gets customers to register as clinical trial subjects, and is paid a finder's fee if the customers go on to participate in a trial.  

Wholesale segment

• Sales: JPY306mn (+39.5% YoY)
• Operating profit: JPY50mn (+126.0% YoY)
  

In the Wholesale segment, consolidated subsidiary Visionize sells luxury brand eyewear to eyeglass stores including leading eyewear chains, as the exclusive distributor in Japan for Marcolin S.p.A., an Italian designer and manufacturer. Orders increased and sales rose, as client stores adjusted inventories and brought in new products. 

Operating profit increased, as the company amended the terms of contracts with some client stores, and also received a rebate from Marcolin. 

E-commerce segment

• Sales: JPY204mn (+16.3% YoY)
• Operating profit: JPY50mn (+25.7% YoY)

Both sales and profit increased. The segment's best-selling products are contact lens care items and eyeglass accessories. The group’s official e-commerce website expanded its customer base by pursuing a coupon strategy and through redirections from the company's corporate site. The segment also includes sales through online shopping malls operated by third-parties such as Amazon, Rakuten, Yahoo, and Lohaco, and sales via Amazon were especially brisk in Q1 FY04/22.

The company was ahead of peers in completing construction of its own database five years ago. Customers can view their purchase history at bricks-and-mortar stores via the company's official e-commerce website, as well as confirming results from eye exams, enabling them to purchase suitable eyewear online. While the company has the infrastructure in place to sell eyewear online, e-commerce sales of eyewear remain lackluster, as the habit of buying eyewear online is not entrenched among consumers. 

Company forecast for FY04/22 

The company did not offer any guidance with respect to its outlook for FY04/22. By way of explanation, the company said it was still too early to put together reliable estimates as to when the COVID-19 pandemic might come to an end and how much sales and earnings might be affected, noting that even as vaccinations in Japan were just starting to be phased in there were still concerns about the possibility of another round of infections. The company said, however, that it would be quick to make an announcement and provide guidance for FY04/22 as soon as it is in a position to do so.

Sales

The company targets sales above FY04/21 levels. Management assumes customers will be more comfortable visiting the store this winter as the vaccine rollout gains traction, but anticipates negative effects from COVID-19 will persist in 1H, with some fallout remaining in 2H depending on progress with vaccinations. This makes it difficult to reliably forecast comparable store sales. That said, comparable store sales had been steadily rising, increasing 13.7% YoY in FY04/18, up 15.7% in FY04/19, and up 3.7% in FY04/20, although sales declined YoY 0.5% in FY04/21. The transition to next-generation stores and strengthened training for store staff will likely positive while an increased sales weighting of premium lenses and higher utilization rates of Total Eye Exams could boost average customer spend and lead to an increase in comparable store sales. 

As for store openings and closures, the company is aiming for 12 new stores and six relocations over the 322 stores as of end-FY04/21. Management aims for a flexible strategy on new store openings and relocations based on comparable store sales trends and overall profits. The rising number of retail and other store closures could present opportunities to find good locations near stations that can be rented cheaply, which is why management plans on a flexible policy for new store openings. Visionary Holdings accelerated store closures in FY04/21, to the tune of 64 (including eight relocations), but as of June 2021, the company reports that there are almost no stores left that need to be shuttered. 

Profits

The company forecasts GPM will be roughly flat YoY. It may fluctuate due to changes in the product mix, but the company does not anticipate changes in GPM for individual products. GPM was trending down from 63.9% in FY04/18 to 62.4% in FY04/20, but then rose in FY04/21 to 62.6%.

SG&A expenses are projected to increase in Q1 FY04/22 (May–Jul 2021) as the company steps up advertising. The company looks to also expand advertising in Q2 (Aug–Oct 2021) in line with the Olympics and will weigh the cost-effectiveness of television commercials and flyers in addition to efficient advertising campaigns utilizing SNS. Management already aggressively cut SG&A expenses in FY04/21 and does not anticipate further reductions. 

Company estimates vs. results

Medium-term business plan (out June 2019)

In order to be able to respond flexibly in the face of change, Visionary Holdings usually creates a new business plan every year that will cover the next four years, but did not release a revised plan for FY04/22. The current medium-term plan was formulated prior to the COVID-19 pandemic and management looks to release a revised medium-term plan when it announces FY04/22 earnings forecasts since the business climate has changed so dramatically. While numerical targets may be revised at that time, the overall company strategy will likely remain unchanged.

Overview of medium-term business plan

The company’s current medium-term plan covers the period from FY04/20 through FY04/23. Under the new plan, the company is targeting FY04/23 consolidated sales of JPY37.3bn (representing a CAGR of 8.9%), EBITDA of JPY2.9bn (15.8%), and operating profit of JPY1.7bn (16.7%). Compared with the previous medium-term plan (announced June 2018), the current plan has 1) raised the forecast for sales to reflect the acquisition of Visionize, 2) raised the forecast for depreciation and amortization to reflect goodwill amortization related to the acquisition of Visionize as well as an increase in capital spending, and 3) increased the budget for expenses (other than depreciation) to support medium- to long-term growth.

Since finishing up a long period of restructuring in FY04/16, the company has been focusing its efforts since FY04/17 on restarting growth. Under the new medium-term plan, the company is looking to lay the groundwork that will make it possible to pay a stable and sustainable dividend, and resume dividend payments by the end of the period covered by new medium-term plan (i.e., FY04/23). As part of its effort to create conditions amenable to the resumption of dividend payments, the company conducted a buyback of outstanding preferred shares and a 1-for-10 reverse stock split in November 2019.

Priorities under new medium-term business plan

During the period covered by its new medium-term business plan, the company is looking to establish a firm foundation for further growth in the future. 

The company has earmarked a total of JPY6.0bn in investment over the next four years. According to the four-year plan, management aims to transition to a business structure that generates profits and looks to restore dividends by FY04/23. Specific investment goals are 1) JPY400mn for personnel and system investment: securing human resources to accommodate expansion of current businesses and expansion into new business areas and infrastructure development, including renewal of the core IT systems; 2) JPY2.0bn for eye exam and other equipment: replacement of old equipment with a view towards expanding services; 3) JPY1.9bn for renovations: transition to next-generation stores, renovating aging stores; and 4) JPY1.7bn for new store openings: build new concept stores that integrate eye care and fashion while taking advantage of opportunities to open stores in commercial areas. 

Progress of investment plan

By end-FY04/21, the second year of the four-year plan, 48.1% of planned investment had been made, so essentially investments were in line with plan.

Human resources and system investment (JPY400mn planned for FY04/21–23): By end-FY04/21, cumulative investment had reached JPY505mn, or 126.3% of the four-year budget. 

The company planned to adopt a new system within 1-1.5 years owing to the aging core IT system. Mid-career recruitment of required staffing is proceeding smoothly. The company is laying the foundation for further growth and system investment is running ahead of plan. 

Eye exam equipment (JPY2.0bn): JPY962mn, or 48.1% of planned investment for the four years. 

Replacement of eye exam equipment is in line with plan. Investment in equipment and stores had been curbed prior entering a renewed growth phase, when earnings prospects were difficult. Renovations to the next-generation stores have proceeded and signage has been changed where necessary, but equipment replacement was postponed as the older equipment could still be used even if it was 20–30 years old. Eye exam equipment will be replaced in accordance with the company objective of differentiation through eye care, including the adoption of cutting-edge equipment like VISION-R800. 

Renovations (JPY1.9bn): JPY770mn, or 40.5%.

In FY04/21, management scaled back nonessential and nonurgent spending, thus limiting progress. Investment in renovations has been accelerated since Q4 FYH04/21 and management aims to continue making investments while monitoring the situation. 

New store openings (JPY1.7bn): JPY648mn, or 38.1%.

New store openings depend on availability of good locations, thus making it difficult to manage progress. Many retail stores have been forced out of business since the COVID-19 outbreak, which increases the opportunities for Visionary Holdings to find properties in good locations. Management plans to take advantage of such opportunities. 

Basic strategy

The company’s basic strategy under the new medium-term plan is the same as the previous medium-term plan (announced June 2018), calling for 1) transitioning to its new, next-generation store format; 2) the ongoing rollout of new stores designed to meet the needs of local markets; 3) continued hiring and training of new staff to support growth in the business; 4) using its Me no Kenkou platform to facilitate additional acquisitions; and 5) moving into new markets by growing its wearable device business.

Since redefining itself as an “eye care company” in June 2014, the company has taken necessary steps as an eyeglass retailer to offer the products, service, and advice needed to help its customers increase the healthy lifespan of their eyes. The company has seen consumer recognition of these efforts increase in recent years. While most of its competitors (individual eyeglass retailers and chain stores) are offering free eye exams, Visionary Holdings is charging for eye exam services and is still able to grow sales at existing stores. Many of its customers are ordering premium lenses. More and more customers are starting to see the importance of the eye care approach that the company is advocating. After experiencing management mistakes in the past, the company has gone through years of restructuring and is starting to get back on the growth track. 

Transition to next-generation stores

The company is in the process of transitioning stores to its next-generation store format, defined as 1) stores that have an exam room where total eye exams can be performed, 2) stores that are large enough to carry a set lineup of private and name brand frames, 3) stores that offer eye care relaxation services, and 4) stores that have the high-quality interiors conducive to the high-quality services the company is offering. In Q4 FY04/21, the average purchase per customer at next-generation stores was JPY42,816, 8.6% higher than the average of JPY39,416 at all of its existing stores. The higher purchases per customer is attributable to the greater amount “total care” eye exam services performed, and posh interiors.

Since opening its first next-generation store in Takadanobaba (Tokyo) in November 2017, the company has increased the number of next-generation stores in operation to 117 stores (up 26 stores YoY) as of the end of FY04/21. The medium-term plan calls for 20–30 stores a year to undergo makeovers to become next-generation stores. In addition, the company also plans to remodel many older stores after the fashion of the next-generation store concept even though they do not meet the space requirements to become full-fledged next-generation stores under the company’s definition.