I wrote about Savers Value Village (NYSE: SVV ) previously with a hold rating as I was worried about the near-term growth and margin outlook. Although SVV US business continues to perform well, Canada remains a significant drag, andI am an individual investor that is now fully focus on managing my own capital that I have saved up over the years. My investing background spreads across a wide spectrum as I believe there are merits to each approach, for instance: Fundamental investing [Bottoms-up etc.], Techni ...

Financial Position and Debt - As of December 28, 2024, the company had $123.8 million available to borrow under the Revolving Credit Facility, with no advances made[230]. - A 100 basis point increase in interest rates would result in a $3.2 million change in annual interest expense on the company's variable rate indebtedness[229]. - The company does not anticipate paying any cash dividends for the foreseeable future due to limitations imposed by its indebtedness[236]. - The company is exposed to interest rate risk due to reliance on variable rate borrowings, which could impact net income and cash flows[229]. Shareholder Influence and Governance - The Ares Funds owned 84.6% of the company's common stock as of December 28, 2024, allowing them significant influence over corporate governance[243]. - The company is classified as a "Controlled Company" under NYSE rules, allowing it to opt out of certain corporate governance requirements[246]. - The Ares Funds control a majority of the voting power, which may limit stockholder protections compared to companies fully compliant with NYSE governance standards[247]. - Provisions in the company's certificate of incorporation and bylaws may delay or prevent changes in control, potentially affecting stock price and investor interest[248]. - The company has opted out of Section 203 of the Delaware General Corporation Law, which generally restricts business combinations with interested stockholders owning 15% or more of voting stock[250]. - The exclusive-forum provisions in the certificate of incorporation may limit stockholders' ability to bring claims in preferred judicial forums, potentially discouraging lawsuits[252]. - The company’s certificate of incorporation allows Ares Funds and affiliates to engage in similar business activities without liability for breaching fiduciary duties[256]. Business Risks and Challenges - The company faces risks related to attracting and retaining customers, particularly in the context of growing acceptance of secondhand items[18]. - The company has no operations in the growing online retail marketplace, which poses a risk to its business model[18]. - The company may face challenges in opening new profitable stores or entering new markets in a timely manner[18]. - The company is subject to various risks including geopolitical instability and regulatory changes that could adversely affect its operations[18]. - The company relies heavily on key executive officers and employees, and their loss could adversely affect business operations[258]. Regulatory and Compliance Issues - Compliance with public company regulations may strain resources and divert management's attention, impacting overall business performance[261]. - Changing laws and regulations regarding corporate governance may increase compliance costs and create uncertainty for the company[263]. - Disclosure requirements as a public company may expose the company to increased litigation risks, affecting financial condition and operational focus[265].

Savers Value Village, Inc. (NYSE:SVV) Q4 2024 Earnings Conference Call February 20, 2025 4:30 PM ET Company Participants Mark Walsh - Chief Executive Officer Michael Maher - Chief Financial Officer Jubran Tanious - President & Chief Operating Officer Conference Call Participants Matthew Boss - JPMorgan Mark Altschwager - Baird Brooke Roach - Goldman Sachs Bob Drbul - Guggenheim Michael Lasser - UBS Carlos Gallagher - Jefferies Anthony Chukumba - Loop Capital Markets Operator Good afternoon, and welcome to S ...

Core Insights - Savers Value Village (SVV) reported revenue of $401.99 million for the quarter ended December 2024, reflecting a 5% increase year-over-year, while EPS decreased to $0.10 from $0.15 in the previous year [1] - The reported revenue was in line with the Zacks Consensus Estimate of $402 million, indicating no surprise, but the EPS fell short of the consensus estimate of $0.12, resulting in a -16.67% EPS surprise [1] Financial Performance Metrics - Comparable Store Sales Growth for the total was 1.6%, matching the average estimate from three analysts [4] - Comparable Store Sales Growth in the United States was 4.7%, aligning with the three-analyst average estimate [4] - Comparable Store Sales Growth in Canada was -2.5%, consistent with the average estimate from three analysts [4] - The number of stores in the United States was 172, slightly below the two-analyst average estimate of 173 [4] - The number of stores in Canada was 165, also below the two-analyst average estimate of 168 [4] - Total number of stores was 351, compared to the average estimate of 354 from two analysts [4] - U.S. Retail revenue was reported at $220.46 million, a year-over-year increase of 10.5%, slightly below the two-analyst average estimate of $220.48 million [4] - Other revenue was $30.39 million, representing an 8.8% year-over-year increase, exceeding the two-analyst average estimate of $29.75 million [4] - Canada Retail revenue was $151.13 million, a decrease of 2.7% year-over-year, compared to the average estimate of $151.78 million from two analysts [4] Stock Performance - Shares of Savers Value have returned -0.5% over the past month, while the Zacks S&P 500 composite increased by 2.6% [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance against the broader market in the near term [3]

Core Viewpoint - Savers Value Village (SVV) reported quarterly earnings of $0.10 per share, missing the Zacks Consensus Estimate of $0.12 per share, and showing a decline from $0.15 per share a year ago, indicating an earnings surprise of -16.67% [1][2] Financial Performance - The company posted revenues of $401.99 million for the quarter ended December 2024, which aligns with the Zacks Consensus Estimate and represents an increase from $382.77 million year-over-year [2] - Over the last four quarters, Savers Value has not surpassed consensus EPS or revenue estimates [2] Stock Performance - Savers Value shares have increased approximately 9.3% since the beginning of the year, outperforming the S&P 500's gain of 4.5% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations for it to outperform the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.07 on revenues of $381.93 million, and for the current fiscal year, it is $0.51 on revenues of $1.66 billion [7] - The trend of estimate revisions for Savers Value is currently favorable, which could influence future stock movements [5][6] Industry Context - The Textile - Apparel industry, to which Savers Value belongs, is ranked in the top 15% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8]

Sales Performance - Net sales for the fourth quarter increased 5.0% to $402.0 million, with constant currency net sales rising 6.0% to $405.9 million[3] - U.S. net sales increased 10.5% in the fourth quarter, while Canada net sales decreased 0.2%[3] - Comparable store sales for the fourth quarter rose 1.6%, with the U.S. increasing 4.7% and Canada decreasing 2.5%[3] - Fiscal 2024 net sales increased 2.5% to $1.54 billion, with constant currency net sales up 3.1% to $1.55 billion[3] - U.S. net sales for fiscal 2024 increased 6.7%, while Canada net sales decreased 1.6%[3] - Comparable store sales for fiscal 2024 decreased 0.1%, with the U.S. increasing 2.7% and Canada decreasing 4.0%[3] Financial Outlook - The company reaffirms its fiscal 2024 Adjusted EBITDA outlook of approximately $290 million to $300 million[2] Expansion Plans - The company plans to open 25-30 new stores in 2025, continuing its new store growth strategy[2] Investor Engagement - The company participated in the 27th Annual ICR Conference from January 13-15, 2025, to engage with investors[4] Reporting Practices - The company emphasizes the importance of constant currency reporting to facilitate period-to-period comparisons[10]

Core Insights - Savers Value Village (SVV) is expected to report quarterly earnings of $0.12 per share, a decline of 20% year-over-year, with revenues projected at $402 million, reflecting a 5% increase compared to the same period last year [1] Financial Projections - Analysts predict 'U.S. Retail' revenues will reach $220.48 million, indicating a year-over-year increase of 10.5% [4] - The 'Other' category is estimated to generate $29.75 million, showing a year-over-year growth of 6.5% [4] - 'Canada Retail' revenues are expected to be $151.78 million, representing a decline of 2.3% year-over-year [4] Comparable Store Metrics - 'Comparable Store Sales Growth - United States' is projected at 4.7%, up from 3.1% in the previous year [5] - The estimated 'Number of Stores - United States' is 173, an increase from 155 reported in the same quarter last year [5] - The 'Number of Stores - Canada' is projected to be 168, compared to 159 a year ago [5] - The total 'Number of Stores' is expected to reach 354, up from 326 year-over-year [6] Market Performance - Shares of Savers Value have returned +0.4% over the past month, while the Zacks S&P 500 composite has increased by +4.7% [7] - SVV holds a Zacks Rank 2 (Buy), indicating expectations to outperform the overall market in the near future [7]

Core Viewpoint - Shares of Savers Value Village (SVV) have increased by 7.5% recently, with a mean price target of $15.33 suggesting a potential upside of 36.6% from the current price of $11.22 [1] Price Targets - The average price target consists of nine estimates ranging from a low of $10 to a high of $25, with a standard deviation of $5.34, indicating variability among analysts [2] - The lowest estimate suggests a decline of 10.9%, while the highest indicates a potential upside of 122.8% [2] - A low standard deviation signifies a higher agreement among analysts regarding price movement [7] Analyst Sentiment - Analysts are optimistic about SVV's earnings prospects, as indicated by a trend of upward revisions in earnings estimates, which historically correlates with stock price movements [9] - Over the past 30 days, two earnings estimates have increased, leading to a 7.6% rise in the Zacks Consensus Estimate [10] Zacks Rank - SVV holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, suggesting strong potential for upside [11] Conclusion on Price Targets - While consensus price targets may not reliably indicate the extent of potential gains, they can provide a directional guide for stock movement [12]

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Financial Data and Key Metrics Changes - Total net sales increased by 0.5% to $395 million, with a constant currency increase of 1.2% and comparable store sales decreased by 2.4% [22] - Adjusted EBITDA was $82 million, representing an adjusted EBITDA margin of 20.8% [28] - GAAP net income for the quarter was $21.7 million, or $0.13 per diluted share, while adjusted net income was $25.1 million, or $0.15 per diluted share [28] Business Line Data and Key Metrics Changes - U.S. net sales increased by 6.2% to $212 million, with comparable store sales up by 1.6% driven by growth in both transactions and average basket [22] - Canadian net sales declined by 7.1% to $152 million, with comparable store sales down by 7.5%, primarily due to declines in transactions [22] Market Data and Key Metrics Changes - The Canadian macroeconomic environment remains challenging, with a 6.5% unemployment rate and rising cost of living affecting low-income consumers [9] - Loyalty program growth was solid, with double-digit percentage growth in active members in both the U.S. and Canada, accounting for 72% of total sales in the quarter, up from 70% last year [8] Company Strategy and Development Direction - The company plans to open 29 new stores this year and has accelerated its new store opening plans for 2025, now expecting to open 25 to 30 new stores [14][25] - The company is focusing on expanding off-site processing capabilities, which is critical for new store growth and operational efficiency [16] - The long-term strategy emphasizes growth in the U.S. market, with approximately 60% of new store openings in 2025 planned for the U.S. [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth prospects despite current challenges, particularly in Canada, and emphasized the importance of innovation and operational effectiveness [19][85] - The company is actively testing different pricing and discounting approaches to improve performance in Canada, with a focus on strategic price reductions by category and grade [12][45] Other Important Information - The company repurchased approximately 1.8 million shares during the quarter at an average price of $9.86 per share, with $29 million remaining on the share repurchase authorization [30] - The balance sheet remains strong with $138 million in cash and cash equivalents and a net leverage ratio of 2.1 times at the end of the quarter [30] Q&A Session Summary Question: Can you elaborate on same-store sales trends in Q3 and early Q4? - Management noted that trends in both Canada and the U.S. improved from July through September, continuing into early Q4 [35] Question: Can you break down drivers of gross margin contraction in Q3? - Gross margin contraction was primarily driven by new stores and deleverage on lower comparable sales [36][37] Question: What tests were conducted to improve Canadian business performance? - Management conducted several promotional and pricing strategy tests, with strategic price reductions showing the most promise [44][45] Question: What is the thought process behind the guidance adjustments? - The guidance was narrowed to reflect the softer performance in Canada and consistent trends in the U.S. [52] Question: What actions are being taken to mitigate macro difficulties in Canada? - Management is implementing targeted pricing changes and monitoring competitive pressures to improve performance [76][78] Question: Can you provide updates on the integration of the 2 Peaches acquisition? - The company has converted two of the seven stores acquired from 2 Peaches to its operational model, with positive early results [101]