National Vision is an optical retailer that provides eye exams, eyeglasses, and contact lenses to value-seeking and lower-income consumers. One of the most important components of National Vision’s operations and prospects is National Vision’s ability to recruit and retain specialized staff and healthcare providers, in particular optometrists.
The Complaint in the class action lawsuit alleges, unbeknownst to investors, defendants throughout the Class Period failed to disclose that:
- National Vision was experiencing extraordinary wage and labor pressures as a result of intense competition and disruptions in the labor market due to the COVID-19 pandemic;
- National Vision had made a significant multi-million dollar investment in wage and compensation payments to its vision care professionals to prevent mass defections in the middle of 2021;
- the enhanced payouts were expected to negatively impact National Vision’s fourth quarter 2021 costs and profit margins to an extent materially greater than what had been disclosed to investors;
- as a result, National Vision’s profitability metrics were expected to deteriorate below not only favorable 2020 results, but also pre-pandemic levels; and
- consequently, there was a substantial undisclosed risk that National Vision would experience staff and optometrist shortages and capacity constraints.
The Complaint further alleges that defendants failed to disclose that:
- National Vision had suffered a severe optometrist shortage in the first quarter of 2022;
- the lack of sufficient optometrists to meet customer demand had created an acute exam capacity constraint;
- as a result, National Vision was suffering from a decline in net revenue and adjusted comparable store sales during the first quarter of 2022; and
- thus, National Vision’s 2022 financial outlook was materially false and misleading and lacked a reasonable factual basis.
The Complaint also alleges that when the true details of National Vision’s situation entered the market, investors suffered large losses.