• Total Net Sales: Increased 4.5% to $370 million.
• Constant Currency Net Sales Growth: 7.1%.
• Comparable Store Sales Growth: 2.8%.
• U.S. Net Sales: Increased 9.4% to $211 million.
• U.S. Comparable Store Sales Growth: 4.2%.
• Canadian Net Sales: Declined 4.1%; constant currency increase of 2.2% to $137 million.
• Canadian Comparable Store Sales Growth: 0.6%.
• Adjusted EBITDA: $43 million, 11.6% of sales.
• GAAP Net Loss: $4.7 million or $0.03 per diluted share.
• Adjusted Net Income: $3.6 million or $0.02 per diluted share.
• Cash and Cash Equivalents: $73 million.
• Net Leverage Ratio: 2.4x.
• New Store Openings: 2 new stores in the first quarter; plan to open 25 to 30 new stores in 2025.
• Loyalty Program Members: Nearly 6 million active members.
• Cost of Merchandise Sold: Increased 80 basis points to 45.5% of net sales.
• Salaries, Wages, and Benefits: $85 million; increased 190 basis points to 20.5% of net sales.
• Selling, General and Administrative Expenses: Increased 160 basis points to 23.6% of net sales.
• Depreciation and Amortization: Increased 6% to $19 million.
• Net Interest Expense: Decreased 8% to $15 million.
• Share Repurchase: Approximately 1.4 million shares at $8.43 per share.

• Warning! GuruFocus has detected 3 Warning Sign with SVV.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Savers Value Village Inc (NYSE:SVV) reported nearly double-digit sales growth in the U.S., driven by increases in both transactions and average basket size.
• The Canadian business saw a return to positive comparable store sales for the first time since Q4 2023, indicating improvement in that market.
• The company's loyalty program experienced strong growth, reaching nearly 6 million active members by the end of the first quarter.
• SVV opened two new stores in the first quarter and remains on track to meet its 2025 new store targets, with new stores performing in line with expectations.
• The company generated nearly $43 million of adjusted EBITDA in the quarter, representing approximately 11.6% of sales, highlighting strong financial performance.

Negative Points

• Net sales in Canada declined by 4.1% due to a weaker Canadian dollar, impacting overall financial performance.
• Salaries, wages, and benefits expenses increased by 190 basis points to 20.5% of net sales, driven by new store growth and increased incentive compensation expenses.
• Selling, general, and administrative expenses rose by 160 basis points to 23.6% of net sales, primarily due to growth in the store base and increased rent and utilities costs.
• The company reported a GAAP net loss of $4.7 million for the quarter, including a $2.7 million pretax loss on debt extinguishment.
• New stores are currently a headwind to adjusted EBITDA, with profitability expected to be achieved by their second year of operations, impacting short-term financial results.

Q & A Highlights

Q: Can you provide more details on the U.S. strength and the situation in Canada? Are you seeing new customer trends or changes in transaction counts? A: Mark Walsh, CEO, explained that in Canada, the team has executed well with strong selection and price value, leading to positive comps. However, they are cautious about declaring victory due to ongoing economic pressures. In the U.S., they have seen solid transaction growth and average unit retail (AUR) improvements, with no degradation in trends as they enter the second quarter.

Q: How is Savers Value Village approaching potential price increases in the retail sector due to tariffs? A: Mark Walsh, CEO, stated that Savers is not directly exposed to tariff pressures, which is a competitive advantage. They are confident in their value proposition and see potential opportunities for market share gains if price gaps widen due to tariffs. They do not plan to raise prices but aim to leverage any widening price gaps to grow their customer base.

Q: What impact could a tougher macro environment have on sourcing and margins? A: Jubran Tanious, COO, noted that on-site donations have shown robust growth, and they have not seen changes in donation volumes. They focus on providing a fast, friendly, and convenient donation experience to maintain strong supply. Regarding labor, they have not faced availability issues, and turnover has declined, with competitive wage assessments helping to manage costs.

Q: Can you discuss the variability in performance of new stores and the long-term EBITDA margin potential? A: Jubran Tanious, COO, mentioned that while there is some variability, their model accurately predicts transactions and sales. Michael Maher, CFO, added that they still see high teens EBITDA margins as achievable long-term, despite near-term pressures from accelerated growth and new store openings.

Q: How is the real estate market affecting your expansion plans, and how is the 2 Peaches integration progressing? A: Jubran Tanious, COO, stated that they are actively prospecting in North America and have secured locations from recent retail bankruptcies. The 2 Peaches integration in Atlanta is on track, with plans to elevate the customer experience to Savers' standards. This acquisition supports their expansion in the U.S. Southeast, where they see significant opportunities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.