Savers Value Village, Inc. Reports Quarterly Results for the Period Ended March 29, 2025
Savers Value Village, Inc. (SVV) filed its quarterly report for the period ended March 29, 2025, reporting a net loss of $12.1 million and a comprehensive loss of $12.3 million. The company’s revenue decreased by 10.2% to $143.6 million, primarily due to a decline in sales at its retail stores. SVV’s gross profit margin decreased to 34.1% from 35.5% in the same period last year, mainly due to higher costs and lower sales. The company’s cash and cash equivalents decreased to $23.4 million from $34.1 million at the end of the previous quarter. SVV’s management discussed the challenges faced by the company, including increased competition, declining sales, and higher costs, and emphasized the need to improve operational efficiency and reduce costs to improve profitability.
Overview of Financial Performance
The company reported mixed financial results for the thirteen weeks ended March 29, 2025. Net sales increased 4.5% year-over-year to $370.1 million, driven by growth in the U.S. retail segment. However, the company reported a net loss of $4.7 million compared to a net loss of $0.5 million in the prior year period.
The increase in net sales was primarily due to a 9.4% increase in U.S. retail sales, partially offset by a 4.1% decline in Canada retail sales due to the impact of foreign currency exchange rates. Comparable store sales increased 2.8% overall, with a 4.2% increase in the U.S. and a 0.6% increase in Canada.
The net loss was driven by higher operating expenses, including a 6.5% increase in cost of merchandise sold and a 12.0% increase in selling, general and administrative expenses. Interest expense also remained elevated at $14.8 million. These factors more than offset the increase in net sales.
Revenue and Profit Trends
The company’s revenue growth was led by its U.S. retail segment, which saw a 9.4% increase in net sales to $210.8 million. This was driven by both new store openings and a 4.2% increase in comparable store sales. The increase in comparable store sales was attributed to higher average basket size.
In contrast, the Canada retail segment saw a 4.1% decline in net sales to $128.6 million, primarily due to the unfavorable impact of foreign currency exchange rates. Comparable store sales in Canada increased 0.6%, driven by higher average basket size but offset by a decline in transactions.
On the profitability side, U.S. retail segment profit decreased 4.0% to $39.0 million, while Canada retail segment profit decreased 27.1% to $25.3 million. The decline in Canada profitability was due to deleverage of expenses as a percentage of net sales on the comparable store sales increase.
Overall, the company’s Adjusted EBITDA margin declined from 16.0% in the prior year period to 11.6% in the current quarter, reflecting the pressure on profitability.
Strengths and Weaknesses
A key strength of the company is its ability to grow its store base, with the total number of stores increasing from 326 to 353 over the past year. This includes 10 net new stores in the U.S., 7 net new stores in Canada, and 3 new stores in Australia. The company’s store expansion strategy appears to be effective in driving top-line growth.
Another strength is the company’s focus on increasing the proportion of supply from its OSD (offsite donation) and GreenDrop channels, which comprised 74.0% of total pounds processed in the current quarter compared to 71.9% in the prior year. Donations from these sources are typically of higher quality and have a lower cost than other supply channels.
However, a key weakness is the company’s inability to translate its top-line growth into bottom-line profitability. The increase in operating expenses, particularly in cost of merchandise sold and SG&A, outpaced the revenue growth, leading to the net loss in the quarter. The company will need to find ways to better leverage its growing scale to improve margins.
Additionally, the company continues to face foreign currency headwinds, with the stronger U.S. dollar negatively impacting the translation of its Canadian operations. This is an ongoing challenge the company must manage.
Outlook and Future Prospects
Looking ahead, the company faces a challenging macroeconomic environment with significant uncertainty driven by factors such as global trade policies and tariffs. While the company is not directly impacted by tariffs due to its localized procurement model, periods of unfavorable economic conditions could adversely impact consumer demand and the company’s profitability.
To address these headwinds, the company will need to focus on improving operational efficiency and cost management. This may include further optimization of its supply chain, labor productivity initiatives, and careful management of discretionary spending.
The company’s share repurchase program, with $6.4 million remaining as of the end of the quarter, provides some financial flexibility and a potential avenue to return capital to shareholders. However, the company will need to balance share repurchases with investments in growth initiatives to drive long-term value creation.
Overall, the company’s financial performance in the quarter was mixed, with top-line growth offset by profitability challenges. Going forward, the company’s ability to navigate the uncertain macroeconomic environment, improve operational efficiency, and leverage its growing scale will be critical to its success.
