Savers Value Village Inc. ((SVV)) has held its Q1 earnings call. Read on for the main highlights of the call.
Savers Value Village Inc. recently held its earnings call, which conveyed a generally positive sentiment. The company reported strong U.S. sales growth and positive trends in Canada, alongside the expansion of its loyalty program and new store openings. However, there are challenges, particularly in Canada, due to macroeconomic pressures and currency fluctuations. Despite these hurdles, the company’s focus on innovation and expansion positions it well for future growth.
U.S. Sales Growth
The company experienced nearly double-digit sales growth in the U.S., driven by increases in both transactions and average basket size. This robust performance underscores the strength of Savers Value Village’s operations in its largest market.
Positive Comp in Canada
In Canada, the company achieved its first positive comparable store sales growth since Q4 2023, despite challenging macroeconomic conditions. This marks a significant milestone for the company as it navigates a difficult economic landscape.
Loyalty Program Expansion
Savers Value Village’s loyalty program has reached nearly 6 million total active members by the end of the first quarter. This expansion highlights the company’s successful engagement with its customer base and its ability to foster brand loyalty.
New Store Openings
The company opened two new stores in the quarter and plans to open 25 to 30 new stores this year. This expansion strategy is a testament to Savers Value Village’s commitment to growth and market penetration.
Adjusted EBITDA Performance
The company generated nearly $43 million of adjusted EBITDA in the quarter, which is approximately 11.6% of sales. This strong financial performance reflects the company’s operational efficiency and profitability.
Central Processing Centers Expansion
Savers Value Village opened its sixth Central Processing Center in Southern California ahead of schedule to support market growth. This expansion is crucial for enhancing the company’s supply chain capabilities.
Strong Cash Position
The company ended the quarter with $73 million in cash and cash equivalents, maintaining a net leverage ratio of 2.4x. This strong cash position provides financial flexibility for future investments and growth initiatives.
Canadian Sales Decline
Net sales in Canada declined by 4.1% due to a weaker Canadian dollar, although constant currency sales increased by 2.2%. This indicates that the underlying business remains strong despite currency headwinds.
Increased Expenses
The cost of merchandise sold as a percentage of net sales increased by 80 basis points, and SG&A expenses rose by 160 basis points. These increased expenses highlight the challenges the company faces in managing costs.
Net Loss
Savers Value Village reported a GAAP net loss of $4.7 million, or $0.03 per diluted share, including a $2.7 million pretax loss on debt extinguishment. This loss reflects some of the financial challenges the company is navigating.
Macroeconomic Challenges in Canada
The company continues to face macroeconomic challenges in Canada, with tariffs adding uncertainty to consumer spending. These challenges are a significant concern for the company’s Canadian operations.
Forward-Looking Guidance
Looking ahead, Savers Value Village plans to open 25 to 30 new stores in 2025, focusing on expanding its U.S. store portfolio. The fiscal year 2025 guidance includes projected net sales of $1.61 billion to $1.65 billion, with comparable store sales growth anticipated to be between 0.5% and 2.5%. Adjusted EBITDA is expected to range from $245 million to $265 million, and capital expenditures are forecasted at $125 million to $150 million.
In summary, Savers Value Village’s earnings call highlighted a generally positive outlook, driven by strong U.S. sales growth and strategic expansions. While challenges persist, particularly in Canada, the company’s proactive approach to growth and innovation positions it well for future success. Investors and stakeholders will be keenly watching how these strategies unfold in the coming quarters.