Savers Value Village (NYSE: SVV) wrapped up Q4 2024 with steady growth in the U.S. but faced continued macroeconomic challenges in Canada. CEO Mark Walsh highlighted the company’s strong U.S. comparable sales growth, bolstered by increased transactions and higher basket sizes. Meanwhile, Canada showed signs of improvement but remains below desired performance levels.
Q4 2024 Financial Highlights
- Total Net Sales: $402 million, up 5% year-over-year, exceeding analysts’ estimates of $397 million.
- U.S. Sales Growth: 10.5% increase to $220 million.
- Canadian Sales Decline: Down 2.7% to $155 million, impacted by macro pressures and currency depreciation.
- Adjusted EBITDA: $74 million (18.4% of sales), with a $10 million headwind expected from new stores in 2025.
- EPS: Adjusted EPS of $0.10 vs. analyst expectations of $0.13.
- Net Loss: $1.9 million ($0.01 per diluted share) under GAAP.
Store Expansion and Strategic Growth Initiatives
The company successfully opened nine new stores in Q4, meeting its 2024 goal of 22 openings. Looking ahead, Savers Value Village plans to open 25 to 30 new stores in 2025, with a strong emphasis on U.S. expansion.
President and COO Jubran Tanious stressed the importance of centralized processing centers and off-site warehouses in supporting store growth and improving cost efficiency.
2025 Outlook and Key Projections
- Total Net Sales: Expected to range from $1.61 billion to $1.65 billion.
- Comparable Store Sales Growth: Forecasted between 0.5% and 2.5%.
- Adjusted EBITDA: Projected at $245 million to $265 million, with a $6.5 million negative impact from the Canadian dollar.
- Q1 2025 Expectations: Modest low single-digit total sales growth, with EBITDA margins in the high single digits to low double digits.
Analyst Q&A and Market Sentiment
During the earnings call, analysts acknowledged Savers Value Village’s continued U.S. momentum but raised concerns about the company’s exposure to Canadian macroeconomic challenges and new store profitability timelines.
- Matthew Boss (JPMorgan): Questioned confidence in U.S. growth sustainability. Walsh reiterated that demand remains strong and comparable sales growth is achievable.
- Mark Altschwager (Baird): Asked about EBITDA margin guidance. CFO Michael Maher highlighted the $10 million EBITDA headwind from new store openings and the weaker Canadian dollar.
- Brooke Roach (Goldman Sachs): Probed customer trends and loyalty dynamics. Walsh noted increased engagement from higher-income consumers but pressures on lower-income shoppers in Canada.
- Anthony Chukumba (Loop Capital): Queried long-term Canadian store strategy. Tanious confirmed that U.S. expansion remains the priority, with selective growth in Canada.
Quarter-over-Quarter and Competitive Landscape
Compared to Q3 2024, the company’s outlook has become more cautious, particularly in Canada. EBITDA margin guidance reflects a notable headwind from new store openings and currency exchange rates, while the overall strategy remains centered on expanding the U.S. footprint.
Management’s tone remained confident on long-term growth potential, but analysts focused on mitigating profitability risks and stabilizing Canadian operations.
Key Risks and Challenges
- Canadian Macroeconomic Uncertainty: High inflation and weakened purchasing power continue to pressure consumer spending.
- New Store Profitability Timeline: Expected to contribute meaningfully by 2026, with an initial drag on EBITDA in 2025.
- Currency Exchange Impact: The weaker Canadian dollar is projected to reduce EBITDA by $6.5 million in 2025.
- Scalability Concerns: Analysts questioned whether production adjustments and cost efficiencies can offset macro pressures.
Strategic Growth Path Forward
Despite near-term challenges, Savers Value Village is doubling down on U.S. store expansion, loyalty program growth, and operational efficiencies to drive long-term profitability. With increasing traction in the U.S. market and measured improvements in Canada, the company remains focused on delivering sustainable value through competitive pricing and enhanced customer engagement.
