Why did National Vision's operating profit plummet in Q4 2024 despite revenue growth?

National Vision's operating profit declined by $30.2 million in Q4 2024 while revenue increased to $437.28 million compared to the previous quarter. The company's net loss from continuing operations was reported at $(29.4) million, with a diluted EPS from continuing operations of $(0.37).

1. **Explain the revenue growth**: National Vision's revenue growth was driven by new selling methods, targeted pricing actions, and continued acceleration in managed vision care sales. The company's net revenue from continuing operations increased by 3.9% as compared to Q4 2023, with comparable store sales growing by 2.6% and adjusted comparable store sales growth of 1.5%.

|code|Ticker|Name|Date|Operating Income|Total Revenue|market_code|
|---|---|---|---|---|---|---|
|EYE|EYE.O|National Vision|2023 Q4|-1.6332E7|4.20953E8|185|
|EYE|EYE.O|National Vision|2024 Q1|2.0154E7|5.42523E8|185|
|EYE|EYE.O|National Vision|2024 Q2|-2605000|4.51733E8|185|
|EYE|EYE.O|National Vision|2024 Q3|-1.2929E7|4.51515E8|185|

2. **Analyze the operating profit decline**: The operating profit decline can be attributed to several factors:
- National Vision's gross profit margin expanded by 110 basis points to 26.1%, despite a 3.3% increase in the cost of revenues. This indicates that the company's cost management efforts may not have kept up with the revenue growth.
- The company's SG&A expenses fell by 1.6% year-over-year to $224 million. This suggests that the decline in operating profit may be related to increased expenses despite cost-saving measures.
- National Vision's cash and cash equivalents decreased to $81.2 million by the end of Q3 2024, down from $179.5 million at the end of Q2 2024. This decline in cash reserves could have impacted the company's ability to invest in growth opportunities and may have contributed to the operating profit decline.
3. **Consider external factors**: National Vision has faced macro-economic challenges, including inflation, geopolitical instability, and risks of recession. These factors could have impacted the company's profitability by increasing costs and reducing consumer spending.
4. **Evaluate transformation efforts**: National Vision is undergoing a transformation and has made significant changes to its store fleet and executive team. These changes may have disrupted operations in the short term, leading to a decline in operating profit.

In conclusion, National Vision's operating profit decline in Q4 2024 despite revenue growth can be attributed to a combination of factors, including cost management challenges, increased expenses, and external economic pressures. The company's transformation efforts may also have had a temporary impact on profitability.