Participants

Mark Walsh; Chief Executive Officer, Director; Savers Value Village Inc

Michael Maher; Chief Financial Officer, Treasurer; Savers Value Village Inc

Matthew Boss; Analyst; JPMorgan

Mark Altschwager; Analyst; Robert W. Baird & Co., Inc.

Brooke Roach; Analyst; Goldman Sachs

Bob Durbel; Analyst; Guggenheim

Michael Lasser; Analyst; UBS

Carlos Gallagher; Analyst; Jeffries

Anthony Chukumba; Analyst; Loop Capital

Presentation

Operator

Good afternoon and welcome to Savers Valley Villages conference call to discuss financial results for the 4th quarter ending December 28th, 2024. (Operator Instructions)
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&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 currently 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 required by app.com 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 the management on today's call are Mark Walsh, Chief Executive Officer; Jubran Tanious, President and Chief Operating Officer; Michael Maher, Chief Financial Officer; and Ed Yuma, Vice President of Investor Relations and Treasury.
Mr. Walsh, you may go ahead, sir.

Mark Walsh

Thank you, and good afternoon, everyone. We appreciate you joining us today. Let me start by giving you a few highlights on our fourth quarter performance and then talk about the things we are doing to drive the business forward. The overall trends we saw in the fourth quarter were within the range of our expectations and we saw a healthy acceleration in trends across the US and Canada. Our US business remains solid and continued to generate positive comp sales growth, driven by increase in both transactions and average basket. Our Canadian business saw sequential improvement over the last five months.
In the fourth quarter, continued focus on sharp value coupled with freshness engendered a positive consumer reaction. That said, we have more work to do as the sales trends in Canada are not yet where we expect. We opened nine new stores in the quarter and delivered against our 2024 new store targets. We are confident in our 25 to 30 new store opening plan for 2025. And as we called out at ICR, we believe that our targeted 20% store level adjusted EBITDA margins will drive long term profitable growth.
As a class, our new stores continue to perform well, which in 2025 will help drive sales growth, but will be a headwind to adjusted EBITDA. 2026 will be an important inflection point as we expect accelerating profit contribution from new stores. We also continue to see solid growth in our loyalty program with double digit percent growth in active members over last year. Loyalty members accounted for 72% of our total sales in the quarter, up from 70% last year. Finally, the resilience of our business model allowed us to generate $74,000,000 of adjusted EBITDA in the quarter or more than 18% of sales.
Our sales performance strengthened in the fourth quarter in both the US and Canada. We are especially pleased with double digit total revenue growth in the US, driven by accelerating new store growth and strong comparable store sales. US is our key growth market, and we continue to see significant white space opportunities. Our work on competitive pricing, looking across thrift, off price and discount retail reaffirms that we have a strong price value offering for consumers.
Our competitive pricing tools give us actionable insights that are particularly important in a challenging macroeconomic environment. These processes and analytics allow us to better respond to rapidly shifting competitive dynamics in a localized way, which we think further enhances our agility. This is a great example of how innovation is a key part of our DNA. We continue to identify more opportunities to use data and technology to better serve our customers. As we noted in our third quarter call, we pulled back too far on production levels in Canada during the summer months.
We are pleased the Canadian consumer has responded well to our rebalanced levels since then. We believe that improved inventory levels and surgical price adjustments helped drive a 500 basis point sequential improvement in our Canadian comp. For 2025, the Canadian landscape is ever changing. The Bank of Canada is reducing interest rates. Unemployment has ticked down slightly and there was a small improvement in consumer sentiment.
That said, the tariff issue certainly clouds the picture. We are staying focused on what we can control, planning conservatively and continuing to drive improvements in our processes, innovations and making our business stronger with the same great value Canadians have come to love. Our goal is simple, to get our Canadian business back to positive comparable store sales growth. We are excited about our expanding store footprint that accelerated in the second half of 2024 with 18 new store openings. We've done a comprehensive analysis to understand our store opening and maturation economics and added capabilities to our real estate and other support teams.
This underpins our confidence in our 25 to 30 new store openings this year and our long-term growth opportunity. With a targeted 20% store level adjusted EBITDA margin, we think that our first and best use of capital is to continue to grow our store fleet. The sector is highly fragmented and emerging, particularly in the US and we are underpenetrated in major regions such as the South and the West.
I also recently visited our Australian business and came away even more optimistic on our long-term growth opportunity and I'm excited that we will open four stores there in 2025. Another essential element to accelerating new store growth is the expansion of our off-site processing capabilities. Our network of central processing centers and off-site warehouse facilities enables us to open stores in locations that for various reasons can't support on-site processing. This has already proven to be a critical unlock for our new store growth plans, with more than half of our new stores going forward expect to utilize some form of off-site processing. We are seeing great collaboration between our central processing centers in an effort to share best operating practices, which will help continue to lower cost per unit.
In addition, we continue to embrace innovation and are always exploring new technologies to make our business run more efficiently. A great example of our innovation is automated book processing. And after seeing strong financial returns, we have now rolled it out to support over 156 stores. In closing, let me thank our more than 22,000 team members for their work and dedication to the Savers family. We took a year with challenging macroeconomic conditions and built new capabilities and refined our operating model.
We come out of 2024 as a better, more agile business. Our consumers react positively to our compelling assortment and great values, which make us highly confident in expanding our store footprint. We look forward to updating you on our progress throughout 2025. I am more confident than ever in our long-term growth prospects and in our mission to make secondhand second nature. Now, I'll turn the call over to Michael to discuss our fourth quarter financial performance and the outlook for 2025.

Michael Maher

Thank you, Mark, and good afternoon, everyone. As Mark indicated, the results of the fourth quarter were within our expectations. Total net sales increased 5% to $4.00 $2,000,000 On a constant currency basis, net sales increased 6% and comparable store sales increased 1.6%.
We are especially pleased with double digit sales growth in the US despite continued constraints on consumer spending power, which has had a disproportionate effect on lower income consumers. While our Canada results continued to be pressured by macroeconomic challenges, we were able to drive a 500 basis point sequential improvement in comparable store sales. We also opened nine new stores during the quarter, achieving our target of 22 organic new stores for the year. In the US, net sales increased 10.5% to $220,000,000 and comparable store sales increased 4.7%, driven by growth in both transactions and average basket.
In Canada, net sales declined 2.7%, reflecting a weaker Canadian dollar. On a constant currency basis, Canadian net sales declined 0.2% to $155,000,000 and comparable store sales declined 2.5%, primarily driven by a decrease in transactions. Cost of merchandise sold as a percentage of net sales increased two thirty basis points to 44.3%, with the increase reflecting the impact of new stores and deleverage on lower Canadian comparable store sales. Salaries, wages and benefits expense was $82,000,000 Excluding IPO related stock-based compensation, salaries, wages and benefits as a percentage of net sales increased 20 basis points to 18.3%. The increase was driven primarily by new store growth and higher wages and benefits.
Selling, general and administrative expenses as a percentage of net sales increased two thirty basis points to 22.9%, primarily due to new stores and preopening expenses, partially offset by continued expense discipline. Depreciation and amortization increased 3% to $17,000,000 reflecting investments in new stores, centralized processing centers and automated book processing systems. Net interest expense decreased 14% to $15,000,000 primarily due to reduced debt and lower average interest rates. Other expense of $15,000,000 reflects a net loss on foreign currency related to a weaker Canadian dollar. GAAP net loss for the quarter was $1,900,000 or $0.01 per diluted share.
Adjusted net income was $15,900,000 or $0.1 per diluted share. Fourth quarter adjusted EBITDA was $74,000,000 and adjusted EBITDA margin was 18.4%. US segment profit was $49,800,000 down $1,300,000 versus the prior year period, primarily due to new stores and preopening expenses.
Canada segment profit was $40,300,000 down $8,700,000 versus the prior year period due primarily to comp store sales declines, new stores and preopening expenses. Turning now to capital allocation. We remain committed to a disciplined approach that funds our growth and strengthens our balance sheet. As our business continues to generate strong cash flow, we will continue to repay debt and be opportunistic in returning capital to shareholders. Our balance sheet remains strong with $150,000,000 in cash and cash equivalents and a net leverage ratio of 2.1 times at the end of the quarter.
This month, we redeemed $44,500,000 of our senior secured notes or 10% of the outstanding balance. We repurchased approximately 1,100,000.0 shares of our common stock during the quarter at an average price of $9.67 per share. As of the end of the fourth quarter, we had approximately $18,000,000 remaining on our share repurchase authorization. Finally, I'd like to discuss our outlook for 2025, which we believe reflects continued momentum in the business, while also acknowledging the near-term impact of the macroeconomic environment and new store openings. I'll start by providing some important context for our outlook.
First, as we've previously discussed, we are 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. We expect an inflection in profitability by 2026 as these stores mature and drive both top and bottom-line growth.
Second, we are taking a conservative approach to planning comparable store sales growth with continued steady growth in the US and a cautious approach in Canada. As Mark indicated, the Canadian economy has shown some signs of stabilization recently, but the potential for new tariffs creates additional uncertainty.
On a related note, the Canadian dollar has weakened and is currently trading near a multi decade low relative to the US dollar. Our outlook for 2025 is based on an estimated exchange rate of USD 0.7 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.
Also, as we announced last month, effective in 2025, we are changing the way we report certain non-GAAP financial measures, including comparable store sales, adjusted EBITDA and adjusted net income to better reflect our accelerating growth and for improved consistency with peer companies. Please refer to today's earnings release for additional details on these changes and a recast of previous year amounts based on our new measurements for comparability. 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 is 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, most of which will occur in the second half of the year net sales of $1,610,000,000 to $1,650,000,000 comparable store sales up 0.5% to 2.5% with
The US continuing to outperform Canada net income of $36,000,000 to $52,000,000 adjusted net income using our new definition of $62,000,000 to $77,000,000 compared with $97,000,000 in 2024 using the same definition adjusted EBITDA using our new definition of $245,000,000 to $265,000,000 compared with $273,000,000 in 2024 using the same definition 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 are assuming an effective tax rate of approximately 27%. We're projecting weighted average diluted shares outstanding to be approximately $168,000,000 for the full year. This does not contemplate any potential future share repurchases. Finally, I'd like to briefly touch on our expectations for the first quarter. Q1 will be our smallest quarter of the year in terms of both revenue and adjusted EBITDA due to a number of factors.
The first quarter is typically our smallest due to normal seasonal variations. In addition, we will have a temporary lull in new store openings with two new stores and one relocation during the quarter before the pace picks back up again in the second quarter. Finally, since our 2024 new store openings were back half weighted, most of those stores are still early in their first year of operation and are therefore still generating operating losses in the first quarter. We expect most of them to begin achieving profitability by the end of this year. As a result of these factors, we expect total sales growth in the first quarter in the low single digits and the first quarter adjusted EBITDA margin in the high single digits to low double digits.
This concludes our prepared remarks. We would now like to open the call for questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Matthew Boss, JPMorgan.

Matthew Boss

Great thanks and congrats on the progress.
So Mark, maybe could you speak to current health of your US business, elaborate on drivers of the sequential improvement in Canada, and just maybe putting the pieces together, the support or your confidence in the pivot to same store sales growth in 2025.

Mark Walsh

Thanks, Matt. I appreciate the positive thoughts. Look, as we have articulated.
In the prepared remarks. So US business continues to be consistently solid throughout the year, and we did see acceleration in the 4th quarter.
It's a strong consumer base that continues to grow within our new loyalty membership, and the growth is in both transactions and across cohorts.
Canada obviously remains a bit more complicated beginning in August when the team rebalanced production levels. That's really when we saw that sequential improvement in the Canadian business through the end of the 4th quarter.
And as we articulated in the in the prepared remarks, the improvement has not gotten us where we want to be. So while welcome and in the right direction, we're certainly not satisfied. You're going a little deeper into Canada, the back end of the year did see some sequential improvement in the overall Canadian economy, stabilizing over the last several months, and unemployment has ticked down slightly. The Bank of Canada has been a little more aggressive in lowering interest rates and consumer confidence was inching upwards. Tariffs did create a bit of an uncertainty, a new uncertainty for us. In terms of what's happening with our core business donations remain strong. The first quarter, I mean the 3rd 4th quarter translated well into the first half of this first quarter of 2025 as we saw a nice progression into January. February has been a little more muddy as the weather impacts of clouded the picture.
Our approach though is very simple. Maintain that level of production that provides our consumer and our customer with the selection they demand. You know it was the key lesson learned. If Jaron wanted to jump in after this, he would re-articulate that point.
Second, stay sharp on price value.
Third, continue to connect with our consumers with offers that give them added value throughout the year, essentially controlling what we can control, plan conservatively. I think with the additional innovation and again that sharp attractive price value when the cycle turns, we'll be well positioned to serve our Canadian consumer with great selection and value.

Matthew Boss

Maybe Michael just to follow up on that, maybe could you elaborate on the new store pipeline for 2025 if you could walk through the economics on some of the more recent builds and just speak to the timeline for the inflection to new store profitability.

Michael Maher

Yeah, you got it, Matt. So as we talked about it, ICR last month. New stores typically open around $3 million in sales on average in their 1st year. They lose money in.
The first year though, because of the, they're roughly at 60% of their mature store volume and the on-site donation mix is lower, but the profitability quickly ramps.
They typically become profitable by year two on their way to a roughly 20% EBITA margin by year 5.
So as we accelerate new store growth, there is a headwind to profit margins in the short term, which we've quantified at about $10 million in 2025, and this is especially pronounced in 2025 because as you'll recall.
Matt, most of our new store class from last year, the 22 stores we opened last year, were back loaded and now we're adding 25 to 30 more new stores in the current year.
So that becomes a tailwind as these stores work their way up the maturity curve, become profitable by their 2nd year, and continue to ramp that profitability as we go. But the nature of that new store, those new store economics that I just laid out, essentially means there's a 1 year lag.
From the sales inflection, which we're seeing this year to the earnings inflection which we expect to see next year as far as the cadence of that through the year mat, it's a little bit like I said.
A little bit of a lull in Q1. We have two new store openings. It's a temporary lull. Q2. We'll get back to sort of a normal pace and we'll see, we'll be largely caught up to that pace by Q we'll kind of over index in Q3.

Mark Walsh

And Matt, let me add one more thing on the new stores. Look, it remains our best use of capital to open those new stores. The white space in the US is very compelling. I think in 2025 and more so in 2026, the US will be the lion's share of our new store growth. Our Canadians new store opening cadence will slow considerably after this year, focusing really on strategic relocations as well as strong market fill-ins.
Gron and the operations real estate teams have done really a great job in developing the muscle to effectively roll out these targeted stores that we can count on into the future. And just as importantly, supply is growing, and we continue to look to supplement that supply base with with new opportunities. So I think the group, we feel really good as a group about the direction of our new store initiative, the results, and the opportunity ahead.

Matthew Boss

It's a great color. Best of luck.

Operator

Mark Altschwager, Baird. Please go ahead.

Mark Altschwager

Good afternoon. Thank you for taking my question.
We're just hoping to unpack the 25 guide a little bit further, so you're going to a couple 100 basis points of the leverage on E.margin at the midpoint. I know you called up the $10 million specifically for the impact of new store kind of year one contribution. Can you unpack some of the other factors there that are driving that deleverage and maybe specifically how we should be thinking about gross margins through the year?

Michael Maher

Yeah, you got it, Mark. So let me step back and just maybe try to help bridge from our 202,040 dot to the outlook for 2025. So we'll start first by just making sure we're grounded on the number. Recall that we're changing.
The definition to include store pre-opening and other expenses beginning in 2025, expenses that we used to exclude. Under that new definition, 2024 IBEA was $273 million.
Now we have two unique elements. To 2025 that are pressuring those IBEDA comparisons this year. Number one is the new store investments that we talked about a $10 million dollar headwind because like I said.
We're in the inflection point for sales. But the inflection for earnings will follow a year later, so that's $10 million. The second is the weaker Canadian dollar, so it's trading at around $0.70 USD today. That's sort of where most of the forward curves have it for the year as well.
That's down. That's weaker than the average rate for 2024. And so that means an additional $6.5 million dollar headwind to in 2025 relative to 2024. So if you just take those two unique items that. Bridges you from our 2024 number of 273 roughly to the midpoint of our 2025 guidance right around 255 to 256.
At that midpoint. We have comp sales at about 1.5% increase, so our core copy, the da, excluding those two distinct items that I called out are essentially flat on that 1.5% comp. If you move up from there and go like to the high end of our guidance range where our comp sales are 2.5% then we have EIA $10 million dollar higher, $10 million higher.
So I think that it's consistent with our long-term growth algorithm at a low we've talked about low single digit comps. We expect EBITDA do growth to drive EBITDA Growth at low single digit comps. But as we've said now for a while, 2025. Is the investment year. We're investing in the new stores. We will see. That in sales, but the earnings follow in 2026. And of course, now we have the added headwind of the foreign currency translation.

Mark Altschwager

That's very helpful.
Thank you, and I was going to follow up just on the kind of bigger picture algorithm beyond 2025. You just spoke to part of it, leverage on on a comp kind of north of 1.5%. And how should we think about the comp algo, I guess as you start to realize the benefit from a large cohort of ramping stores, presumably that's going to be a building tailwind. So just maybe speak a little bit more about how you're thinking about the kind of the medium term comp outlook.

Michael Maher

Yeah, that's right, Mark. I mean, we're obviously not going to guide to 2026 with any specificity, but.
But that's right. I mean, we first of all, let me reiterate the long term financial model as we see it. We see high single digit total revenue growth driven primarily by new stores.
Low single digit comps and we do expect the US, which is our growth market. To outperform Canada, which is a more mature business for us.
And over the next few years, we think that will support a high teen margin as those growth growth investments continue to mature. And that will continue to expand. So we have some near to medium term headwinds as we're accelerating the new store openings, which we think will continue through 2025.
But by 2026, as you mentioned, we'll have a significant. Number of maturing young stores that are entering that comp base and as we continue to build that pipeline. That will help feed not only the new store growth, but our comp store growth, because as you'd expect, younger comp stores tend to outgrow more mature comp stores.

Mark Altschwager

Great. Thank you for all the detail, and best of luck. Thank you.

Operator

Brooke Roach, Goldman Sachs.

Brooke Roach

Good afternoon and thank you for taking our question, Mark. In the prepared remarks you spoke to an increase in the proportion of sales from loyalty customers. Can you speak a little bit more about what you're seeing among your repeat customers and the changes in the customer cohorts that you're seeing as you expand the store base, but also given the macroeconomic pressures in the environment today.

Mark Walsh

Thanks, Brooke. Great question. So I would say the trend line on the customer cohorts continues to remain pretty steady, and that is that we continue to see in both countries, in both Canada and the US, an increase in that household income cohort above 100,000 as a, as an overall perspective of our pie.
The the place where we're seeing that decline, the matching decline is at the lower end of the Income household income cohort chain.
While we may be seeing some trade down, we are seeing some trade down in in the higher income cohorts. Unfortunately, some of these gains are being offset by continued pressure on the lower income consumer in Canada.
And when you, when we think about our con construct.
The real issue for us in Canada is around the weakness and non-loyalty customer trends, and that's where we're continuing to put a lot of effort and focus.

Brooke Roach

That's really helpful color for Michael. I was hoping that you could help us understand the cadence of the EBITDA margin that you expect throughout the year. Understood that the first quarter is likely to see some healthy pressure as a result of the low single digit sales growth, but what drives that additional pressure in the first quarter and how should we be thinking about the path to a return to EBITA margin growth?

Michael Maher

Yeah, good question. Thanks.
Brooke. So That's right. Q1 first of all is Typically just because of our normal seasonality, our lowest sales quarter of the year, and that's no different this year.
We also have.
As I mentioned earlier, a temporary slowdown in new store openings. We'll just have 2 this quarter and so the contribution of new stores to our total sales growth will be lower and And then in addition, I mentioned that the weaker Canadian dollar is about a 1.7%.
Drag to total sales growth on the year. It's actually a little higher than that in the first quarter just because of the year over year comparison. It's a little north of 2% in the first quarter. So all of that to say then that we we get to low single digit total sales growth in the first quarter, which is basically comprised of a low single digit comp.
The new store contribution and then that higher FX drag on. The EIA margin. The real, the driver there is twofold. Number one is the lower sales, right? Just leveraging on the cost base. There's a little bit of the leverage in 21. But on top of that, it's the timing and the dynamics of the new stores. So the 2024 class as I mentioned earlier was significantly backloaded. So those stores are very early in their 1st year ramp and obviously still generating operating losses.
And so the upshot of that is that we expect the margin in the first quarter somewhere in the high single digits. So low double digits that is the outlier quarter. The remaining quarters we would expect the EBAAt margins to be more consistent with our full year outlook.

Brooke Roach

Thanks so much. I'll pass it on.

Michael Maher

Thank you.

Operator

Bob Durbel, Guggenheim.

Bob Durbel

Hi, good afternoon. Just a couple of questions for me. The first one just in Canada. I think you talked a little bit about some of the drivers, but are any pricing adjustments made to really help improve the trend?
I that's my first question. In the US, when you think about some of the weather impacts and, sort of in December, but even in, the first two months of this year, can you just talk about, have you been able to sort of have the right apparel in the stores and any impact that you think weather has had to the business thus far?

Mark Walsh

Bob, thanks so I'll start with the the pricing.
Tests and then I'll pass it over to Jaron talking about the trends we're seeing. Look, we have talked a lot and we've looked closely at price gaps between Saver's Value Village and not just Thrift but also discount and off price competitors, and all of that work reaffirms that we really have strong price gaps relative to that broader competitive set and that our $5 USDAUR provides great value.
We did Sharpen price on a small set of items. We were pleased with the results, but frankly that was not a material impact to our fourth quarter improvement. So we will remain focused on looking at competitive pricing, respond dynamically when needed both in geography and in category, but There's there's a really solid price value equation there for our consumer in both countries.

Yeah, hey Bob, this is Bron, in terms of, having the selection that's needed for, a rough winter or what have you.
We're pretty well covered on that, we backstock throughout the year, so in the warm weather months we're backstocking cold weather items, and that's a very important metric that we measure at every store at the store level, and we know exactly what we want to accumulate in the months leading up to the start of the winter season. That's very important because while we maintain the proper production levels for the demand that we're seeing. It allows us to be very opportunistic if we want to have, say, more sweaters and ski jackets out there based on the weather that we're seeing. So we're in good shape in both countries on that, and I would tell you, as we sit here in February, we are approaching the end of the backstocking season for the warm weather months, and we feel very good about where we're at on that as well.

Operator

Michael Lasser, UBS.

Michael Lasser

Good evening. Thank you so much for taking my question. Do you expect the Canadian business to comp positive in the first quarter? And if not, when would you expect that business to turn to positive comps? Thank you.

Michael Maher

Yeah, Michael.
I think if you look at our guidance range for the year and given what we said about the US continuing to outperform Canada, it's somewhere in the a downside scenario that looks a little bit like 24 with a low to mid single digit decline to an upside case of some recovery and driving, modest improvement, modest growth.
I don't think, we want to guide specifically to Q1. I would just say that our our Q1 results to date are consistent with the outlook that we've given for Q1, which is that low single digit overall total sales growth.
As far as how that's progressed, I think Mark mentioned it earlier, but we did see continued momentum in January coming out of the 4th quarter. That was helped a little bit by some favorable weather comparisons to last year. It was tough in January last year that that pattern flipped this year.
February has been the more severe weather in both the US and Canada, so that's muddied the waters a bit. Not uncommon for Q1. But quarter to date, if you just step back and look at our results through basically today consistent with the outlook that we've discussed of of low single digits total revenue growth.

Michael Lasser

In my, just to clarify, you do, I think in response to another question, you do expect positive comps in one cuue. Is that right?

Michael Maher

Yeah.

Michael Lasser

Got you. And then as we think about 2026, does the arc of the impact to EBIT from the new stores work symmetrically where you have a $10 million dollar EBIT drag from the new stores this year, Should you get all of that back and maybe even more in 2026 as they ramp up to full maturity and full profitability over the.

Michael Maher

Next few years? Yeah, I mean. I think the dynamic here is such that You've got such a large number that are late 2024 and then 2025.
That are essentially, I said this in the prepared remarks, 50 stores really between those two years that for some portion at least of 2025 are in their 1st year, which is, as we've said, stores are slightly unprofitable in their 1st year and add to that now we're including pre-opening expenses as well that dynamic.
First of all is starting to smooth out. So this year's openings, like I said, a little bit back half loaded, not as much as last year we largely caught up by Q3. So that impact of 2026 won't be nearly the.
Same as 2024 was on 2025. Add to that that those 50 stores will largely many of them be entering their 2nd year. In 2026, or even their 3rd year, some of them, and so we're now starting to fill the. Pipeline of stores in their 1st 5 years when sales and profits both grow pretty rapidly and provide a meaningful tailwind that we aren't up till now we have not.
Yet had. We've not had the benefit of that. So as we reach the 2nd year of this inflection. We'll see the benefit. Not only the top line but also the bottom line.

Operator

Carlos Gallagher, Jefferies.

Carlos Gallagher

Hi all on here for Randyonic at Jeffrey's.
Thank you for taking our questions. Just following up on Canada here, would you say that there is a trade down benefit they should be capturing as a result of the more pressured Canadian consumer or difficult macro or I guess I just want to unpack the dynamics there and if you would expect to be more of a beneficiary going forward if pressures persist.

Mark Walsh

Thank you for the question.
Look, I think in terms of as previous in previous calls we've discussed a couple of things. One, we've got great brand awareness in Canada. We're part of the retail fabric at 90+%. Our price value is sharp, and we did the work and as I answered Bob's question earlier around price gaps, not just against Tri but discount off price competitors, but we're focused on making sure that that's sharp. We may be seeing trade down from the higher income cohorts.
And unfortunately, the gains that we're seeing from those trade down trade that benefit is being offset by continued pressure on our lower income consumer base, which is a meaningful cohort in our Canadian customer base.
A sizable a portion of our customer base household income is at or below the poverty line, and the pressure on those Canadian households has been enormous. 10% of the purchasing power has disappeared really in the last year due to increases in fuel, housing, and food costs. And as we mentioned in the last quarter, they're not trading down, they're just, they're simply on the sidelines. So From a data perspective, what we feel good about is When you look at shopper frequency combined with the low attrition.
Rates that we're seeing across cohorts, we're building our customer base, loyalty loyalty customer base is up, double digit, double digits again in Canada. So the stability of that of that base is solid. We do have a lower income cohort who's simply on the sidelines. We think we're filling up the top of the funnel and the bottom of the funnel is on the sidelines, and once that gets a little healthier, we'll be able to get get it at both ends.

Carlos Gallagher

Very helpful, thanks.

Operator

Anthony Chukumba, Loop Capital.

Anthony Chukumba

Thank you for taking my question.
So you mentioned in Canada that you were planning to significantly slow down new store openings in 2026. How do you think about, the long term sort of store target in Canada?

Hey Anthony, this is Jaron. I can answer and the guys can jump in, but no question, it's the US with all of the white space that we have that is our big growth opportunity.
And so I think you know to answer your question about what is the long term look like in Canada, look, I think that we're always going to be looking for opportunistic deals that we can do that put us in parts of a market where we know we'll be successful, but our saturation is.
Pretty expansive in Canada and so it really comes down to opportunistic deals, infill and markets, strategic relocations.
Those are things that we will always be looking at, but no question, the growth of new stores is going to be coming from the US, and we're pretty excited about that. I mean, we are prospecting in virtually every major market, including in some white spaces that we have not in the past. Mark talked about the southern tier and the Southeast. And we're starting to prospect locations in those markets as well, so pretty exciting.

Anthony Chukumba

Got it. And then just as a quick follow up, and you sort of mentioned a few sort of macroeconomic Canadian KPIs you mentioned the Bank of America lowering interest rates, unemployment declining, consumer confidence taking up. Would you say those are like sort of the three main KPIs that we should be looking at or maybe tracking if we want to TRY to get a gauge at a very high level, for, what's going on with and consumer.

Michael Maher

Yeah, Anthony, this is Michael. I mean what we are certainly not economists and don't want to pretend to be experts in that regard, but I think obviously the state of the Canadian economy is material and relevant to our business there. I think in addition to those things, we obviously look at inflation and particularly when you think about who our core consumer is, it's inflation in non-discretionary categories food, housing, transportation. That really has put pressure on their discretionary spending over the last year or so and so, I think that was a major driver for the pressure on our.
Canadian business in 2024.

Anthony Chukumba

That's helpful. Thank you.

Operator

Got it. Ladies and gentlemen, as a reminder, should you have any questions, you can press the star key, followed by the number one on your touchtone phone. We will pause just a moment for any further questions.
There are no further questions at this time, please proceed with losing remarks.

Mark Walsh

Once again, I'd like to thank everyone for their continued interest in Savers Value Village, and we look forward to our next call at the end of the first quarter. Thanks again.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.