Melissa Rasmussen: Simeon, with the incentive compensation, year-over-year, we did take down the accrual in 2023 with the year being better than we had originally expected, we did pay out a bit above target. Our plan this year contemplated that we would accrue incentive compensation at target. So there was a little bit of a benefit baked into the plan anyway. Now what we did see as we went into the first quarter was with the soft start, there was more of a benefit than what was originally baked into the plan. I would expect that you’ll continue to see some benefit in each quarter as the year progresses, but not to expect it to be as large as it was in the first quarter.
Simeon Gutman: Thanks. Good luck.
Operator: Thank you. One moment for our next question. Our next question comes from Adrienne Yih from Barclays. Please go ahead.
Adrienne Yih: Great. Thank you very much. So Reade, I guess, I get two kind of more broad questions. So it sounds like you have even more confidence on sort of the remote uptake and believe in it very, very strongly over the long term. Just trying to figure out how you think about sort of Walmart’s virtual health exit. I know they’re still running the 3,000 Vision Care centers. But they talked about sort of the increasing costs and perhaps not seeing as much uptake. Hardly any stores out there, but just kind of thoughts on that, how you marry it to the Vision Care? And then with your broad – your increase in the kind of white space opportunity. Can you talk about the competitive backdrop in the white space? Are you entering markets where there really isn’t anybody? Are you filling in space that others can’t go. So any color on that would be great.
Reade Fahs: Thank you, Adrienne. And yes, of course, we’ve all read how Walmart has exited their major healthcare initiative, which – of which tells Health was actually, I think, just one of the offerings that they had, it was a much more elaborate offering, as you know, on that. For us, I think tele optometry in the way we do it, is very different from traditional telehealth. Traditional telehealth is about a consumer sitting at home and interacting with their optical provider. This is the same customer journey, our patient journey that has always been the case for our source and for the category with a patient walking into an exam environment that is filled with expensive equipment that is used to assess their eye health and determine their prescription.
The patient experience is the same with the exception that the doctor is on a screen, a few feet from them, live and synchronous but they are still sitting in the store. So I don’t think that there’s – I don’t think it’s a real analogy to what Walmart’s telehealth experience was overall. But all I know is this, this is working well for us. It is solving our challenges of the fact that there are optometric shortages throughout the country. We are able to hire doctors pretty easily for this mode of practice. Patients are good with it. Our stores have figured out how to work with it. So we are just real proud and real optimistic, and we’re not trying to predict where this will go. We’re going to let sort of the marketplace, predict what percentage it achieved, but the fact that it’s in low double digits already and we’re so relatively new to it.
I think it all says that when we started out on this road, we said, we want this to be a soul for our doctor capacity challenges, and we are ever more believers in that.
Patrick Moore: And then I’ll take the white space question. Good morning. Adrienne, it’s Patrick. We recently updated our white space. The last time we updated and shared it was 2020 and across the pandemic era, we looked at it once more, but there was just so much volatility across that era. We waited until now to kind of update it and reshared those stats with you repeat on. And what I’ll say is, I think – we think the white space is kind of the theoretical potential target. And then as we think about actual entries, we take up a variety of things into consideration. You’re absolutely right. Is it a new market? Is it an existing market? Is it a highly competitively intensive market. What are our doctor capacity challenges, do we have remote in that market?
What are rents etc. So all of that factors in as we create our kind of updated annual plan where actually where we’re taking stores. And that would also include brands, which brands we’ll be opening in, in which markets. A couple of things I’ll add that it really changed over time. We have improved exam capacity. And while there are still pockets of that, that we’ve got to improve. Remote as a backup has actually become a very powerful tool. This is true of the existing stores as well as new stores. So our remote enabled stores give us more confidence heading into and realizing and converting that white space into profit-generating stores for us.
Adrienne Yih: Fantastic. Very great color. Thank you so much.
Operator: Thank you. One moment for our next caller. Our next question comes from Brian Tanquilut from Jefferies. Please go ahead.
Brian Tanquilut: Hi, good morning, guys. Maybe, Reade, just thinking about how you were highlighting how managed care penetration helps or has been helping drive the right? So as we think about initiatives that you’re rolling out or what are you doing – maybe a better question to drive increased managed care penetration, number one, and also parsing that out between the America’s Best and Eyeglass World in terms of strategies to push managed share penetration in those two different brands?
Reade Fahs: So what is nice about the managed care piece is you generally have the same – I mean you have the same insurance as all your coworkers. So there is a very nice word-of-mouth element to that. You see someone in new glasses, you comment and you both know you have the same insurance and so that is helpful. So there is a strong word of mouth component. We do have various marketing initiatives that we put in place to try to try to boost that part of the business. And again, it’s been a consistent grower for us for years now and with very healthy comps there, and we expect that to continue going forward. And in terms of – it’s been strong for both Eyeglass World and for America’s best in terms of growth. But we do believe we’re growing share in the managed care area. And I think it is the discovery that your money goes further with us, your managed care funds go further with us than they do in most places.
Brian Tanquilut: That makes sense. And then maybe going back to the Toku question. So as we think about longer term, I mean, your vision for how Toku or AI factors into the strategy, right? So is this something that will eventually evolve to where you’re hoping or looking for managed care reimbursement for the screening? Or is this always going to be a consumer out-of-pocket type of service offering?
Reade Fahs: So this is a longer-term innovation you pointed that out. We have what we believe is the largest employee network of optometrists in America, and they’re tied together on a common EHR platform. And we think that, that is a significant asset, especially in an era of – it’s not just optimistic shortages out there, their healthcare provider shortages throughout out American Medicine. We find that the back of the eye is the treasure trove of medical information, and we have retinal cameras in all of our stores. And we think this combination of large network of employee doctors, common EHR amongst them, the advancements in AI and the shortages of healthcare professionals throughout the land, we think that those things should come together to allow us to perhaps play a broader role in the healthcare of our patient’s lives and perhaps participate in ways that that insurance companies and pharmaceutical companies might find beneficial.
And so we don’t really think this will be as much cash pay oriented. We do think that we’d like to, over time, find partnerships with insurers and other healthcare providers where we can be playing a role in helping them save money while keeping their patients healthier, value-based healthcare is a thing and a growing trend in America. We think that keeping people healthier is a key piece of that value-based care. So again, it’s long range in nature. You’ve heard me list sort of all the elements that we think should be able to combine together to create value for patients and create value for insurers. And we’re still in the early stages of figuring out and talking to lots of different groups to see how we could add value to what they’re trying to do relative to their patient care.
Brian Tanquilut: Awesome. Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from Zachary Fadem from Wells Fargo. Please go ahead.
Zachary Fadem: Hi. Good morning. Reade, starting with your core lower-income consumer and if there’s any extra color you could describe on the incremental behaviors you’re seeing in terms of trade down versus deferral of purchase? And then do you think there was any impact at all in light of some of the recent pricing actions you’ve taken?
