Earnings call transcript: Savers Value Village Q1 2025 misses EPS forecast

Savers Value Village reported a net loss for Q1 2025, with earnings per share (EPS) of -$0.03, falling short of the forecasted $0.10 EPS. Despite this, the company’s stock rose 5.15% in after-hours trading, closing at $10. The revenue for the quarter reached $370 million, reflecting a 4.5% year-over-year increase. The company’s future guidance remains optimistic, with a full-year net sales target of $1.61 to $1.65 billion. According to InvestingPro data, the company maintains a healthy gross profit margin of 56.4% and is expected to return to profitability this year.

Key Takeaways

• Savers Value Village’s Q1 2025 EPS missed expectations by $0.13.
• Revenue increased by 4.5% year-over-year to $370 million.
• Stock price rose 5.15% in after-hours trading despite the earnings miss.
• The company opened two new stores and completed an acquisition.
• Full-year net sales guidance set between $1.61 and $1.65 billion.

Company Performance

Savers Value Village demonstrated resilience in Q1 2025, achieving a 4.5% increase in total net sales. The U.S. market showed strong growth with a 9.4% rise in net sales, counterbalancing a 4.1% decline in Canada. The company continues to benefit from the growing popularity of thrifting, with comparable store sales up by 2.8%. Trading at a P/E ratio of 53.4x, the stock currently appears fairly valued according to InvestingPro’s Fair Value analysis, which considers multiple valuation metrics and growth prospects.

Financial Highlights

• Revenue: $370 million, up 4.5% year-over-year
• EPS: -$0.03, compared to a forecast of $0.10
• Adjusted EBITDA: $43 million, representing 11.6% of sales
• GAAP net loss: $4.7 million
• Adjusted net income: $3.6 million

Earnings vs. Forecast

Savers Value Village reported an EPS of -$0.03, missing the forecasted $0.10 by $0.13. This represents a significant deviation from expectations, reflecting challenges in meeting profitability targets. Revenue, however, aligned with expectations at $370 million.

Market Reaction

Despite the EPS miss, Savers Value Village’s stock rose 5.15% in after-hours trading, closing at $10. This positive market reaction could be attributed to the company’s strong revenue growth and optimistic future guidance. The stock’s current price remains within its 52-week range of $6.48 to $17.3.

Outlook & Guidance

The company maintained its full-year net sales guidance of $1.61 to $1.65 billion, with comparable store sales growth projected between 0.5% and 2.5%. Savers Value Village plans to open 25 to 30 new stores in 2025, anticipating a profitability inflection in 2026. With an overall Financial Health Score of 2.12 (FAIR) from InvestingPro, the company shows particular strength in profit metrics. Subscribers can access 6 additional ProTips and a comprehensive Pro Research Report, which provides deeper insights into the company’s expansion strategy and financial outlook.

Executive Commentary

CEO Mark Walsh stated, "We’ve gotten 2025 off to a solid start," highlighting the company’s strategic expansion and resilience in the U.S. market. President and COO Gerbrand Tannius emphasized the precision of their business model in predicting sales and donations.

Risks and Challenges

• Canadian market decline: A 4.1% drop in Canadian sales poses a risk to overall growth.
• Economic conditions: Potential macroeconomic impacts could affect consumer spending.
• New store openings: Initial costs may act as an EBITDA headwind of approximately $10 million in 2025.
• Market competition: Increasing competition in the thrifting space could impact market share.

Q&A

During the earnings call, analysts inquired about the company’s on-site donation growth and the performance variability of new stores. Executives addressed these concerns, highlighting the robust growth in donations and explaining the potential macroeconomic impacts on consumer behavior.

Full transcript - Savers Value Village Inc (SVV) Q1 2025:

Conference Call Operator: Good afternoon, and welcome to Savers Value Villages Conference Call to discuss Financial Results for the First Quarter Ending 03/29/2025. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. Please note that this call is being recorded and a replay of this call and related materials will be available on the company’s Investor Relations website. The comments made during this call and the Q and A that follows are copyrighted by the company and cannot be reproduced without written authorization from the company.

Certain comments made during this call may constitute forward looking statements, which are subject to significant risks and uncertainties that could cause the company’s actual results to differ materially from expectations or historical performance. Please review the disclosure on forward looking statements included in the company’s earnings release and filings with the SEC for a discussion of these risks and uncertainties. Please be advised that statements are current only as of the date of this call. And while the company may choose to update these statements in the future, it is under no obligation to do so unless required by applicable law or regulation. The company may also discuss certain non GAAP financial measures.

A reconciliation of each of these non GAAP measures to the most directly comparable GAAP financial measure can be found in today’s earnings release and SEC filings. Joining from management on today’s call are Mark Walsh, Chief Executive Officer Gerbrand Tannius, President and Chief Operating Officer Michael Mayer, Chief Financial Officer and Ed Iruma, Vice President of Investor Relations and Treasury. Mr. Walsh, you may go ahead, sir.

Mark Walsh, Chief Executive Officer, Savers Value Village: Thank you, and good afternoon, everyone. We appreciate you joining us today. Let me start by giving you a few highlights of our first quarter performance and then talk about the things we are doing to drive the business forward. We are pleased with the overall trends we saw in the first quarter. Our U.

S. Business remained strong with nearly double digit sales growth and healthy comps, driven by increases in both transactions and average basket. Our Canadian business saw continued sequential improvement, and we are pleased to report positive Canadian comp for the first time since the fourth quarter of twenty twenty three. We will continue to focus our execution to provide a compelling selection at great value to our Canadian customers as they work to stretch their dollars in the current economic climate. We opened two new stores in the quarter and remain on track to deliver our twenty twenty five new store targets.

As a class, our new stores continue to perform in line with our expectations, delivering strong unit economics. Our loyalty program also had strong growth reaching nearly 6,000,000 total active members at the end of the first quarter. Finally, we generated nearly $43,000,000 of adjusted EBITDA in the quarter or approximately 11.6% of sales. The first quarter was highlighted by strong U. S.

Trends and the return to positive comp in Canada. U. S. Is our key growth market with significant white space opportunities. Beginning in 2025, accelerating into 2026, the new store portfolio will be much more U.

S.-centric to address this opportunity. In Canada, we still have work to do and macroeconomic conditions, while stable in the first quarter, remain challenging. Our strong execution is helping drive a fresh assortment and an exceptional value that resonates well with the Canadian consumer. Let me take a moment to talk about tariffs, which we know are subject of significant concern to the broader retail ecosystem. As a reminder, our model is hyper local.

The bulk of our supply, which consists of donations collected on behalf of our charitable partners, comes directly sourced from a 10 to 12 mile radius around our store. This means we virtually have no direct exposure to tariffs, giving us a unique position in the retail apparel sector, which we believe is a key competitive advantage. With an AUR around $5 and almost no direct exposure to tariffs, we continue to offer a strong value to our customers. As part of our ongoing work on competitive pricing, we monitor our value proposition to ensure that we remain priced at a significant discount to traditional retailers even before the effects of tariffs. On balance, macroeconomic conditions were generally stable in both The US and Canada during the first quarter.

Although we are mindful of volatility and consumer confidence in both countries, we are staying focused on what we can control, planning conservatively, and making our business stronger for the long term through continuous improvement and innovation. Given the nature of our operations, we are not required to order inventory from abroad. We can plan our business and production levels in much tighter windows than competitors in the retail industry. Looking ahead, we remain very excited about our accelerating square footage growth. We opened two new stores in the first quarter and are on track to open 25 to 30 new stores this year.

New stores have been performing in line with our expectations and remain our first and best use of capital to drive growth and compelling returns. Moving on to centralized processing centers or CPCs. We recently opened our sixth CPC in Southern California slightly earlier than our previously communicated plans. The CPC will help power our growth in that market. As a reminder, some form of off-site processing will supply more than half of our new stores going forward.

And as previously communicated, our off-site processing is a critical enabler of our accelerated unit growth. We are leveraging best practices across North America, enabling newer CPCs to scale more efficiently as we continue to make progress in converging on-site and off-site cost per unit. Furthermore, we continue to embrace innovation and are exploring new technologies and processes to optimize our business performance. We continue to roll out automated book processing after seeing strong financial returns. We’ve now expanded ABP support to 170 stores.

In closing, we have been faced with a challenging and ever changing environment, and I want to thank our more than 22,000 team members for their commitment, exceptional performance, and dedication to our customers. We’ve gotten twenty twenty five off to a solid start. And while macroeconomic pressure is persist in Canada, I believe that our strong execution, fresh assortment, and exceptional value positions us well for the current environment. I am more confident than ever in our long term growth prospects and our mission to make second hand second nature. I’ll turn the call over to Michael to discuss our first quarter financial performance and the outlook for the remainder of 2025.

Michael Mayer, Chief Financial Officer, Savers Value Village: Thank you, Mark, and good afternoon, everyone. As Mark indicated, we are pleased with our results for the first quarter. Total net sales increased 4.5% to $370,000,000 On a constant currency basis, net sales increased 7.1% and comparable store sales increased 2.8%. We are especially pleased with near double digit sales growth in The U. S.

Despite consumer sentiment materially weakening year to date. We’re also encouraged by our three ten basis point sequential comparable store sales improvement in Canada, resulting in positive comparable store sales for the quarter even as the macroeconomic environment remained challenging. In The US, net sales increased 9.4% to $211,000,000 and comparable store sales increased 4.2%, driven by growth in both transactions and average basket. In Canada, net sales declined 4.1%, reflecting a weaker Canadian dollar. On a constant currency basis, Canadian net sales increased 2.2% to $137,000,000 and comparable store sales increased 0.6%, primarily driven by an increase in average basket.

Cost of merchandise sold as a percentage of net sales increased 80 basis points to 45.5%, with the increase reflecting the impact of new stores, partially offset by strong growth in on-site donations. OSDs plus GreenDrop accounted for 74% of supply versus 72% in the prior year period. This growth ensures that we have fresh and compelling product for our customers and helps drive strong margins. Salaries, wages, and benefits expense was $85,000,000 Excluding IPO related stock based compensation, salaries, wages, and benefits as a percentage of net sales increased 190 basis points to 20.5. The increase was driven primarily by new store growth and an increase in incentive compensation expenses.

Selling, general and administrative expenses as a percentage of net sales increased 160 basis points to 23.6%, primarily due to growth in our store base, rent and utilities, and routine maintenance costs. Depreciation and amortization increased 6% to $19,000,000 reflecting investments in new stores, off-site processing and information technology. Net interest expense decreased 8% to $15,000,000 primarily due to reduced debt and lower average interest rates. GAAP net loss for the quarter was $4,700,000 or $03 per diluted share. Our net loss included a $2,700,000 pretax loss on debt extinguishment.

Adjusted net income was $3,600,000 or $02 per diluted share. First quarter adjusted EBITDA was $43,000,000 and adjusted EBITDA margin was 11.6%. As we’ve previously mentioned, new stores are a headwind to adjusted EBITDA this year as we have a substantial number of new stores which have not yet reached profitability compared to the prior year period. Our new stores typically achieve profitability by their second year of operations. As these new stores continue to mature, we expect the headwind to profitability to subside.

U. S. Segment profit was $39,000,000 down $1,600,000 versus the prior year period, primarily due to new store growth and pre opening expenses, partially offset by an increase in profit from our comparable stores. Canada segment profit was $25,300,000 down $9,400,000 versus the prior year period due primarily to the aforementioned weaker Canadian dollar and deleverage of expenses as a percentage of sales. Our balance sheet remains strong with $73,000,000 in cash and cash equivalents.

As we previously disclosed, we redeemed $44,500,000 of our senior secured notes during the quarter or 10% of the outstanding balance, leaving us with a net leverage ratio of 2.4 times at the end of the quarter. We repurchased approximately 1,400,000.0 shares of our common stock during the quarter at a weighted average price of $8.43 per share. As of the end of the first quarter, we had approximately $6,300,000 remaining on our share repurchase authorization. Finally, I’d like to discuss our outlook for the remainder of fiscal twenty twenty five. We’re pleased with our results for the first quarter, although it’s our smallest quarter of the year.

Despite continued economic pressure and policy uncertainty, we remain confident in our ability to execute against our plans. We are therefore reaffirming our previous outlook for the year. As a reminder, let me reiterate some important context for our outlook. First, we’re at an inflection point in our long term growth strategy. Between our 2024 and 2025 openings, we will have approximately 50 stores in their first year of operation in 2025.

On average, new stores generate approximately $3,000,000 in sales in their first year and achieve profitability by their second year. We therefore expect new stores to be a meaningful driver of revenue growth this year, but a net headwind of approximately $10,000,000 to adjusted EBITDA in 2025. We expect an inflection in profitability by 2026 as these stores mature and drive both top and bottom line growth. Second, we continue to take a conservative approach to planning comparable store sales growth with continued steady growth in The U. S.

And a cautious approach in Canada. The Canadian economy had shown some signs of stabilization, but tariffs, while having almost no direct impact on our operations, have created additional uncertainty regarding consumer spending going forward. On a related note, our outlook for 2025 is based on an estimated exchange rate of $0.70 US per Canadian dollar, which negatively impacts our year over year comparisons for sales by approximately 1.7 percentage points and for adjusted EBITDA by approximately $6,500,000 Finally, 2025 is a fifty three week fiscal year. We estimate the fifty third week will add approximately 1.5% to total sales growth with no significant impact on net income, adjusted net income, or adjusted EBITDA. There’s also no impact on comparable store sales growth, which will be reported on a like for like fifty two week basis.

With that context in mind, our full year outlook for 2025 includes the following: 25 to 30 new store openings net sales of $1,610,000,000 to $1,650,000,000 comparable store sales growth of 0.5% to 2.5%, with The U. S. Continuing to outperform Canada net income of $36,000,000 to $52,000,000 or zero two one dollars to $0.31 per diluted share adjusted net income of $62,000,000 to $77,000,000 or $0.37 to $0.46 per diluted share adjusted EBITDA of $245,000,000 to $265,000,000 and capital expenditures of $125,000,000 to $150,000,000 Our outlook for net income assumes net interest expense of approximately $66,000,000 and an effective tax rate of approximately 35%. For adjusted net income, we’re assuming an effective tax rate of approximately 27%. I’d like to briefly touch on our expectations for the second quarter.

We expect total sales growth in the second quarter to be roughly consistent with the first quarter, in the low to mid single digit percentage range, driven by low single digit comparable store sales growth plus new stores, partially offset by foreign exchange rate impacts. We plan to open four new stores during the quarter. We expect profit margins for the balance of the year to be higher than they were in the first quarter due to normal seasonality and the continued maturing of our new stores. For the second quarter, we expect adjusted net income and adjusted EBITDA margins to be slightly higher than our full year outlook for those margins. We will provide more color on the second half during next quarter’s call, but in general, we expect comparable store sales growth to be higher in the third quarter than the fourth quarter due to the softer comparison last year.

We expect adjusted net income and adjusted EBITDA to be roughly balanced between the third and fourth quarters. We plan to open roughly half of our new stores this year during the third quarter. This concludes our prepared remarks. We would now like to open the call for questions. Operator?

Conference Call Operator: Thank Ladies we now begin the question Your first question comes from the line of Randy Konik from Jefferies. Please go ahead.

Randy Konik, Analyst, Jefferies: I guess, Mark, first and foremost, can we kind of unpack a little bit more on The U. S. Strength that you’re seeing? Are you seeing, I guess, some trade down beneficiaries? Are you seeing any kind of interesting, items like, more customers new to file?

Anything there would be super helpful. And just a little bit more granularity on the traffic or transaction count versus basket would be super helpful on The U. S. And then on Canada, just give us a little bit more clarity. You kind of said stable in the first quarter, but pressure persists, I guess, with the quotes.

Just give us a little more flavor of kind of how you see Canada unfolding, you know, from here. Are we kind of at the bottom? We’re gonna bounce along that bottom for the next, you know, few quarters. Just kind of give us your your flavor there. Thanks.

Mark Walsh, Chief Executive Officer, Savers Value Village: Thanks, Randy. Look. Why don’t I start with Canada First, and maybe the guys can jump in and help me with The US piece of the the answer. Look, I think on Canada, the team has done a great job of executing, Randy. I think first and foremost, selection, that price value equation, and just as importantly, our donation flow remains very, very strong.

You add to that what has been our first quarter with economic indicators moving modestly in a better direction. I think the result the results of those two factors really impacted the outcome and our positive comp. That said, I don’t think Michael nor Jabron nor I would say it’s ready to declare victory, but we’re really encouraged by the sequential improvements in the Canadian business. Tariffs add certainly an unwelcome dimension around consumer sentiment. But, you know, what we see is the donations continue to remain strong.

There’s been no meaningful change in demand trends since the beginning of the year, and that’s rolled into April as well. And so I think it’s too soon to call whether the change in consumer sentiment has had an impact on our business. And our approach is gonna be straightforward in Canada. We’re gonna maintain production levels that provide that customer or or thrifter with the selection they expect in demand. We’re gonna stay sharp on price value, and we’re gonna continue to innovate operationally.

And look, and I think what we do really well is we stay connected with our consumers with offers that’s that resonate. Remember, 72% of our sales comes from our loyalty program. On The US side, you know, unpacking the the basket, AUR items sold solid, transaction solid. We’re again, we’re seeing that same trend continue. We have not seen the degradation of that trend into the early part of the second quarter.

So in both Canada and The US, we feel like we’ve got good momentum as we head into the second quarter and the trend line has continued in the aggregate. Michael, to Brian, add anything to that?

Michael Mayer, Chief Financial Officer, Savers Value Village: Think you covered it.

Gerbrand Tannius, President and Chief Operating Officer, Savers Value Village: Yeah. That’s that’s that’s it.

Randy Konik, Analyst, Jefferies: Super helpful. I I guess one more follow-up, maybe perhaps for for Jebron or or Mark again. Just on the idea of continuous improvement process, you talked about that in the script. Maybe kind of give us some perspective on what are the some of the one, two, or three things you guys have been kind of working on across the field to improve kind of the way the stores operate and and so on and so forth. Thanks, guys.

Gerbrand Tannius, President and Chief Operating Officer, Savers Value Village: Yeah. Randy, this is Gibraltar. It’s a good it’s a good question. Well, the first thing that I would say is automated book processing, ABP is is our acronym for that. You know, that is currently servicing roughly half our fleet, a 70 stores.

Real breakthrough in technology and processing, and and we’ve loved the result. The question is how do you continue to build on that? And so we are we are in the process of expanding that model. It may take a little bit different form depending on how many stores you have clustered in a market. It’s clearly a technology that we can continue to leverage.

And then inside the central processing centers and the the smaller off-site processing warehouses, Randy, I’ll be honest with you. It’s tough to put our finger on one thing. I would tell you there’s a whole basket of tactical improvements that have to do with mechanizing movement, economy of movement by our team members who do a great job. I mean, we’re seeing our cost per item continue to fall in those locations. And that’s not a one and done.

I mean, this is this is truly about year on year continuous improvement in all things. And that’s well, that’s on top of the unlock that those facilities provide in terms of new store growth, which I think Mark mentioned earlier. So you’re really getting a few different strands of goodness from that that we expect to continue into the future.

Randy Konik, Analyst, Jefferies: Thanks, guys.

Mark Walsh, Chief Executive Officer, Savers Value Village: Thanks, Randy.

Conference Call Operator: Thank you. And your next question comes from the line of Michael Lasser from UBS. Please go ahead. Good

Michael Lasser, Analyst, UBS: evening. Thank you so much for taking my question. It’s likely that there’s going to be significant pricing that will be taken across the retail sector, maybe not by all of the retailers that Savers typically benchmark itself against, but maybe against many of them. Would Savers use that as an opportunity to raise prices selectively? Or would it let the price gaps widen?

And to what degree would widening price scrap price gaps drive incremental comp upside from here?

Mark Walsh, Chief Executive Officer, Savers Value Village: Hey. Great question, Michael, and thanks for it. Look. I think I’ll start by reiterating the fact that this is a business that is not exposed to tariff pressure. So we’re unique in that in that perspective in the retail landscape.

And, yeah, the competitive analytics that we’re we utilize are clear. We’ve got a great value proposition versus discount retailers pre tariffs, and we’re very confident in our positioning. If the tariffs do cause that value gap to widen, it represents obvious opportunities for us, trial, multi growth, market share gains. I would not say we’re gonna we’re gonna put a pin in on saying we’re gonna raise prices. We think we that if there is price gap widening, it’s a great opportunity for us to get that and build our customer base and add to our loyalty mix.

Michael Lasser, Analyst, UBS: Thank you very much for that. My second question is if indeed there is a tougher macro environment and the the labor market really starts to weaken, do you think, a, that has an impact on some of the sourcing, meaning that consumers are simply gonna less be less likely to donate goods? Or, b, if there’s a an inflationary environment, could that mean that you’re gonna have to pay your, charity partners a bit more for the good that that they’re getting for for for donation and that could have some impact on your margins? Thank you very much.

Gerbrand Tannius, President and Chief Operating Officer, Savers Value Village: Yeah. Hi, Michael. This is Jabron. Good questions. I’ll I’ll take the the supply question first.

And I think inside that question is the and we’ve stated this in the past, our reliance on the on-site donation. Right? These are donations that we’re receiving on behalf of our nonprofit, our donation centers. The first thing I would say is we have seen robust growth in on-site donation across all countries so far year to date. We have not seen any change in the volume performance, and that’s not happenstance.

We’ve done enough research. We have enough surveys to know that what drives the donor is a donation experience that is reliably fast, friendly, and convenient. And so we strive to do that in every store. And if we do that well and execute it, we control that, we would expect on-site donations to continue to grow. As far as what some macro environment could cause, that’s a very difficult question to answer.

I’d say, a, we haven’t seen any evidence of that in our stores, and b, we know what we can control that drives performance. With regard to an inflationary environment that could affect our staffing, the first thing I would say is as we sit today, labor availability has not been an issue for us. Turnover has actually declined in both countries. Vacancies are low as low as they’ve been over the last several years. So, yes, wage increases are a normal part of our business.

The best thing that we can do is continue to stay ahead of it. And if there’s anything over the last few years, Michael, that we’ve done with regarding competitive wage rates is how our internal team, the frequency with which they assess each market. So that we get ahead of that, we obviously place a tremendous premium on team member engagement in our stores. All those things work together for Savers Value Village to be a compelling place to work. So can’t predict the future precisely, but feel good on both fronts.

Michael Lasser, Analyst, UBS: Thank you very much, and good luck. Thank you. Thank you.

Conference Call Operator: Thank you. And your next question comes from the line of Matthew Boss from JPMorgan. Please go ahead.

Matthew Boss, Analyst, JPMorgan: Thanks and congrats on a nice quarter.

Michael Lasser, Analyst, UBS: Thanks, Matt. Thanks, Matt.

Matthew Boss, Analyst, JPMorgan: So Mark, in The U. S. Business, maybe if we think about the two straight quarters now of mid single digit comps, could you break down this inflection in business? Maybe if we think about new customer acquisition relative to existing customer spend? And also any noticeable change that you’ve seen in spending across income cohorts?

Mark Walsh, Chief Executive Officer, Savers Value Village: Well, we’re I would say we’re really pleased about the way our loyalty program is growing. Another good quarter for us sequentially year over year. What’s really fabulous about what we’re seeing is our loyalty cohorts are growing at both the younger cohorts and the highest household income cohorts. So I think in those two those that that’s a that’s a perfect storm for us moving forward. So we love what’s happening in that regard.

In terms of basket AUR items sold again, we’ve seen continued sequential positive improvement in basket and transactions. It’s driving that comp growth. And we’ve not seen any any particular things that are worrisome as we get into the the second quarter for that trend continuing. Did I miss anything, Michael? Got it.

Matthew Boss, Analyst, JPMorgan: Great. And then maybe, Michael, to, to follow-up, could you break down the drivers of first quarter gross margin contraction? And then just walk through the gross margin puts and takes to consider in the second quarter relative to the back half.

Michael Mayer, Chief Financial Officer, Savers Value Village: Yeah. You got it, Matt. So the deleverage around 80 basis points that we saw in the first quarter was virtually entirely driven by deleverage on the new stores. Remember that we’ve got a significant cohort of twenty twenty four class new stores that opened in the back half of the year. They’re still in their first year of operation.

They weren’t open at this time last year, so that’s creating pressure on the margins. Now offsetting that were two factors. The biggest one being, as Jabron mentioned earlier, really healthy growth in our on-site donations. The the metric we like to cite on-site donations plus GreenDrop combined was 74% of our total volume during the quarter, which was up from 72% a year ago. So that was a nice tailwind to our margins during the quarter that helped offset the new store deleverage.

And then as Yaron also mentioned, just the continued improvements that we’re making in off-site processing are helping to reduce the gaps between that and on-site processing cost in stores. So as far as the looking ahead to the second quarter, I do expect that we’ll continue to see deleverage in margin due to the new store openings. I think it’s going to be most pronounced in the first half of the year because, again, of the nature of those twenty twenty four openings that were that were back loaded. I think that deleverage probably will be slightly better in the second quarter than it was in the first, and then we expect to see continued improvement as we move into the back half of the year.

Matthew Boss, Analyst, JPMorgan: It’s great color. Best of luck.

Michael Lasser, Analyst, UBS: Thanks, Matt. Thanks, Matt.

Conference Call Operator: Thank you. And your next question comes from the line of Mark Altschwager from Baird. Please go ahead.

Mark Altschwager, Analyst, Baird: Thank you. Good afternoon. I guess, first on the guide, maybe for Michael. The prior guide implied some comp acceleration through the year. The reaffirmed guide after the stronger Q1 now implies more consistency versus Q1 levels.

Any change to your thinking regarding the drivers that could yield some acceleration in the upcoming quarters?

Michael Mayer, Chief Financial Officer, Savers Value Village: Yeah. Great question, Mark. I I think what I would say, first of all, just in terms of general context, is that while we’re pleased with the results so far, including, you know, our start to q two, there’s a lot of the year left to go. And the macro pressures remain, especially in Canada. There’s some additional policy uncertainty in both countries.

So with all of that, we still feel really good about our ability to execute through that. And just given where we are in the year, we felt like it was appropriate for us to to hold guidance at this point. As far as, you know, what’s assumed in the in the comp range and and what it would take for that to change, I I guess what I would say is this, that while the macro thus far has generally been stable, the the high end of our range would contemplate and be consistent with continued acceleration in in The US and strengthening in The US economy and further recovery in our Canadian business. So, you know, thus far, like Mark said earlier, what we’ve seen generally has been some stability. There’s we are watching the consumer confidence, The potential impact of tariffs on on consumer spending more broadly, have not seen it thus far in our business.

But that’s what that’s that’s sort of the context for the guidance.

Mark Altschwager, Analyst, Baird: Thank you. And then thinking about supply, I think you flagged robust growth in on-site donations. Is that an acceleration in what you’ve seen? And if so, what’s driving it? And then used sales yield is actually down a bit year over year.

Help me understand, is that primarily a function of the newer stores as well? Or just maybe give us some color on the quality of supply you’re seeing and to what extent that’s a factor there? Thank you.

Gerbrand Tannius, President and Chief Operating Officer, Savers Value Village: Yeah. Good questions, Mark. This is Jibran. Why don’t I grab the first one around on-site donation, and Michael can jump in on the second. Would not describe our on-site donation growth across all the countries as an acceleration.

I would say what we’ve seen is nice, healthy, stable growth. And that cuts across multiple regions, multiple vintages of stores. I mean, even very mature stores, what you find is that if you do what I mentioned earlier, showing up to the donor in a reliably fast, friendly, and convenient way, you remain the donation destination of choice. And you’re much more likely to get the advocacy where that donor will tell their friend, family member, neighbor about us. So and I wouldn’t describe it as an acceleration.

I would say it’s a continuation of good, stable, robust comp growth on on-site donations that, frankly, we expect to continue.

Michael Mayer, Chief Financial Officer, Savers Value Village: So, Mark, you asked about the sales yield, and that’s sort of a corollary to the healthy growth in the on-site donations. We’re we’re able to process more volume very cost effectively. And even if that means a a a marginal erosion at you know, in the in the sales yield, you’ll also notice in that same table in the release where where you see that improvement in the cost per pound processed. And so it’s still profitable at the margins for us, and it helped us to drive some healthy business at healthy margins during the quarter.

Michael Lasser, Analyst, UBS: Thank you.

Conference Call Operator: Thank you. And your next question comes from the line of Brook Roach from Goldman Sachs. Please go ahead.

Brook Roach, Analyst, Goldman Sachs: Good afternoon and thank you for taking our question. Mark, you noted in the prepared remarks that new stores are performing in line with your expectations. How much variability versus the mean do you see in individual stores for those newly opened stores? And then longer term, how are you thinking about the EBITDA margin potential of the business? Is high teens still achievable?

Gerbrand Tannius, President and Chief Operating Officer, Savers Value Village: I can hi, Brooke. This is DeBron. I can jump in on the variability question around new stores. It’s one thing that that is challenging is that you you don’t necessarily have a trend. Again, as Mark as Michael mentioned earlier, the preponderance of stores in 2024 opened in that back half including q four.

So you’re going through the winter months in some winter sensitive markets. But by and large, not seeing huge fluctuations. I mean, our model has gotten more and more precise about predicting what transactions, sales, and on-site donations are going to do. So there’s a little bit of variability here and there, but but nothing that is outside of our expectations, particularly over the the midrange multiple months in a row.

Michael Mayer, Chief Financial Officer, Savers Value Village: And then, Brooke, your question about the long term financial model, this is Michael. We still see high teens EBITDA margins as our long term financial algorithm. In the near term, as we’ve indicated before, there will be some pressure on that just by virtue of our accelerated growth and the impact of new stores. But as we continue to fill that new store pipeline and those those two and three and four year old stores are starting to contribute meaningful earnings growth, we think that’ll counteract the impact of whatever the new store class is for any given year, and and we should see a return to high teens EBITDA margins over the longer term.

Brook Roach, Analyst, Goldman Sachs: Great. Thank you so much.

Michael Lasser, Analyst, UBS: Got it. Thank you.

Conference Call Operator: And your next question comes from the line of Peter Keith from Piper Sandler. Please go ahead.

Peter Keith, Analyst, Piper Sandler: Hey, thank you very much. Nice quarter guys. And I hope that this is a low mark, Well, this could be a low mark for tariff questions on recent earnings calls. Kudos to you on that. I was wondering, there’s been quite a few retail bankruptcies and liquidations in recent quarters.

And just as you’re starting to look at real estate for ’26 or perhaps even ’27, what are you seeing out there in terms of availability and maybe rent dynamics? Also on a related note, could you give us an update on how the two Peaches integration has been going?

Gerbrand Tannius, President and Chief Operating Officer, Savers Value Village: Yeah. Sure. Hey, Peter. Gibran. I’ll kick us off.

You guys can jump in if I miss anything. So your first question on, you know, really taking advantage of opportunities that may come our way. So first of all, we absolutely are looking. We are we are prospecting in every major market in North America. We are well aware of some of the boxes that have come become available, some of our peer retailers, and we have acted on that.

I can tell you, currently, we have some in our pipeline that are a direct result of that, and there will be more to come. So we very much like where our pipeline is at, but I I also wanna be cautious. You know, we’ve always said that we’re not gonna open new stores to open new stores, that we’ve gotta be smart. We’ve gotta take a disciplined approach. We will not open a new store unless we feel very good about that supply equation, and that starts first and foremost with that on-site donation.

So encouraged by what we have. Our pipeline for 2026 looks fabulous. I will tell you we are in a a better position as we sit right now than we were this time last year. We’ve talked about wanting to feather these new store openings in a more balanced way across the year. Last year, the midpoint of our new store openings was September.

This year, it’s improved into August. But, ideally, we would be at June, July. So there’s still more work to go. We’re feeling very good about that in 2026. And then lastly, the tone of the conversations with landlords, it continues to be very, very positive as they see us as a part of their mix and as thrifting becomes more and more mainstream, particularly in The US.

Peter Keith, Analyst, Piper Sandler: Okay. And and then sorry. Did slip in a second question there on Two Peaches. Could you just give

Matthew Boss, Analyst, JPMorgan: us an update on how that’s been going for you?

Gerbrand Tannius, President and Chief Operating Officer, Savers Value Village: I’m sorry, Peter. Yes. Two Peaches. So reminder to the group, Two Peaches is small acquisition, small seven store chain in Atlanta, Georgia that we made last year. So far, we’re right on track with where we thought we were gonna be.

Our plan had always been to elevate the selection value atmospherics and overall experience of the savers model to those customers. We have done that in three of the stores. The results have been in line with what we expected, and we’re on a very good track. I I will say those seven stores are relatively de minimis to our overall p and l, but what’s important is this represents a dedicated Southeast Region of The US where we have tremendous white space opportunity, and we are currently prospecting additional locations in The US Southeast, and we’re excited about that. So going well.

Peter Keith, Analyst, Piper Sandler: Okay. That’s exciting. A separate question I had because maybe for Marcus, looking forward, certainly, it’s an intriguing dynamic where retail prices for apparel and various items could go up quite a bit. You guys could see an improved value proposition. How are you thinking about that going after that opportunity maybe from an advertising perspective?

I know you work with a number of influencers, but is advertising a lever that that you could pull in a short period of time to maybe, you know, put more focus on the on the value proposition that you have?

Mark Walsh, Chief Executive Officer, Savers Value Village: That that’s a great question. Look, I think what we’ve done and we’ve been very steadfast in our approach around marketing, we’re very productive. The influencer network we have continues to grow and is strong. We’ll leverage that influencer network as we see fit, but I I think it goes back to the comments I made earlier. As that value gap begins to widen, if it does, it does represent opportunities for us for trial, loyalty growth, market share gains, and we will absolutely use our resources within the influencer network to to drive that message home beyond that current that current following to maybe expand that following to drive more traffic into the stores.

Peter Keith, Analyst, Piper Sandler: Okay. Sounds great. Thanks so much and good luck.

Randy Konik, Analyst, Jefferies: Thanks, Peter.

Conference Call Operator: You. Your next question comes from the line of Anthony Chukumba from Loop Capital Markets. Please go ahead.

Mark Walsh, Chief Executive Officer, Savers Value Village0: Thanks for taking my question. So you mentioned that you opened your sixth central processing center and their off-site processing will is servicing half of your new store openings, if I heard that correctly. What’s the total number of stores that are being serviced right now through through the CPCs?

Michael Mayer, Chief Financial Officer, Savers Value Village: Yeah. Got that for you. Give me one second for you. Right now, it is 45, so about nine per existing CPC.

Mark Walsh, Chief Executive Officer, Savers Value Village0: Got it. Okay. And then, so so nonpersisting CPC, what what what would you like, what what do you what do think is kind of a max for CPC?

Gerbrand Tannius, President and Chief Operating Officer, Savers Value Village: That’s a good question, Anthony. I I think that’s actually a moving target because what we’re finding is that as we get more and more efficient in these facilities, you’re able to have more stores serviced on a single eight hour

Peter Keith, Analyst, Piper Sandler: shift. So

Gerbrand Tannius, President and Chief Operating Officer, Savers Value Village: I I hate to box us in with a ceiling on how many stores can be serviced by these because I think that number continues to grow. But, again, you know, the key and Mark mentioned this, and and you just reiterated it, that it is really helping power our new store growth. New stores are being made possible that would not have existed without these off-site production facilities. So and and that’ll continue into 2026 and beyond.

Mark Walsh, Chief Executive Officer, Savers Value Village0: That’s helpful. Thank you. Thank you.

Conference Call Operator: Thank you. There are no further questions at this time. I will now hand the call back to Mr. Mark Walsh for any closing remarks.

Mark Walsh, Chief Executive Officer, Savers Value Village: I’d just like to thank all of you for your continued interest in Savers, and we’re looking forward to recapping our second quarter in late July. Thanks again.

Conference Call Operator: This concludes today’s call. Thank you for participating. You may all disconnect.

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