• Total Net Sales: Increased 5% to $402 million.
• Comparable Store Sales: Increased 1.6% overall; US increased 4.7%, Canada declined 2.5%.
• US Net Sales: Increased 10.5% to $220 million.
• Canadian Net Sales: Declined 2.7%; on a constant currency basis, declined 0.2% to $155 million.
• Adjusted EBITDA: $74 million, representing 18.4% of sales.
• GAAP Net Loss: $1.9 million or $0.01 per diluted share.
• Adjusted Net Income: $15.9 million or $0.1 per diluted share.
• New Store Openings: Nine new stores in the quarter, achieving 22 new stores for the year.
• Store Level Adjusted EBITDA Margin Target: 20%.
• Cash and Cash Equivalents: $150 million at the end of the quarter.
• Net Leverage Ratio: 2.1 times.
• Share Repurchase: Approximately 1.1 million shares repurchased at an average price of $9.67 per share.
• 2025 Outlook - Net Sales: $1.61 billion to $1.65 billion.
• 2025 Outlook - Comparable Store Sales Growth: 0.5% to 2.5%.
• 2025 Outlook - Net Income: $36 million to $52 million.
• 2025 Outlook - Adjusted EBITDA: $245 million to $265 million.
• 2025 Outlook - Capital Expenditures: $125 million to $150 million.

• Warning! GuruFocus has detected 4 Warning Sign with SVV.

Release Date: February 20, 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 a healthy acceleration in trends across the US and Canada, with the US business generating positive comp sales growth.
• The company opened nine new stores in the fourth quarter, meeting its 2024 new store targets and plans to open 25 to 30 new stores in 2025.
• SVV's loyalty program saw double-digit percent growth in active members, with loyalty members accounting for 72% of total sales in the quarter.
• The company generated $74 million of adjusted EBITDA in the quarter, representing more than 18% of sales.
• SVV's competitive pricing tools and innovation in data and technology are enhancing its agility and ability to respond to market dynamics.

Negative Points

• The Canadian business is not yet meeting expectations, with net sales declining 2.7% due to a weaker Canadian dollar and a decrease in transactions.
• Cost of merchandise sold as a percentage of net sales increased, reflecting the impact of new stores and deleverage on lower Canadian comparable store sales.
• Selling, general, and administrative expenses increased due to new stores and preopening expenses.
• The company reported a GAAP net loss for the quarter of $1.9 million or $0.01 per diluted share.
• The Canadian economy presents challenges with potential new tariffs and a weakened Canadian dollar impacting year-over-year comparisons for sales and adjusted EBITDA.

Q & A Highlights

Q: Could you speak to the current health of your US business, the drivers of the sequential improvement in Canada, and your confidence in the pivot to same-store sales growth in 2025? A: Mark Walsh, CEO: The US business remains solid with growth in transactions and loyalty membership. In Canada, we saw improvement after rebalancing production levels, but it's not yet where we want it to be. The Canadian economy has shown some stabilization, but tariffs create uncertainty. Our approach is to maintain production levels, stay sharp on price value, and connect with consumers through offers.

Q: Could you elaborate on the new store pipeline for 2025 and the timeline for the inflection to new store profitability? A: Michael Maher, CFO: New stores typically open with $3 million in sales in their first year and become profitable by year two, reaching a 20% EBITDA margin by year five. The new store growth is a short-term headwind to profit margins, quantified at about $10 million in 2025. We expect profitability to ramp up as these stores mature.

Q: Can you unpack the factors driving the deleverage on EBITDA margin in 2025 and how we should think about gross margins through the year? A: Michael Maher, CFO: The $10 million headwind from new store investments and a $6.5 million impact from a weaker Canadian dollar are key factors. Our core EBITDA is essentially flat on a 1.5% comp. We expect EBITDA growth to follow in 2026 as new stores mature.

Q: Can you speak more about the changes in customer cohorts and the impact of macroeconomic pressures on your loyalty program? A: Mark Walsh, CEO: We see an increase in higher-income households as part of our customer base, with some trade-down from higher-income cohorts. However, pressure on lower-income consumers in Canada offsets these gains. The weakness in non-loyalty customer trends in Canada is a focus area for us.

Q: Do you expect the Canadian business to comp positive in the first quarter, and when would you expect it to turn positive? A: Michael Maher, CFO: Our guidance suggests a downside scenario similar to 2024, with a low to mid-single-digit decline, and an upside case of modest growth. We saw momentum in January, but February's severe weather has muddied the outlook. Overall, we expect low single-digit total sales growth for Q1.

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