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Savers Value Village, Inc. (SVV)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid top-line growth and raised FY2025 guidance: Net sales rose 7.9% to $417.2M; U.S. comps +6.2% and Canada comps +2.6% as assortment and value resonated; Adjusted EBITDA margin 16.5% .
  • Results beat Wall Street on revenue and EPS: Revenue $417.2M vs ~$406.7M consensus; Adjusted EPS $0.14 vs ~$0.12 consensus; management cited transitory margin headwinds in Canada processing and accelerated Two Peaches conversions, with margins expected to normalize in H2 * * .
  • Guidance raised across revenue, comps, net income, adjusted EPS, and Adjusted EBITDA; store openings refined to 25 and capex trimmed to $125–$140M; net interest expense guided at ~$67M and effective tax rate ~30% GAAP/~27% adjusted .
  • Strategic catalysts: strong U.S. momentum, improving Canadian trends, pipeline of high‑quality real estate deals, and technology initiatives (Automated Book Processing now supplying ~50% of fleet), positioning long‑term margin recovery and share gains .
  • Capital allocation: 2.7M shares repurchased in Q2, including 2.3M in conjunction with Ares’ secondary; $2.8M authorization remains, supporting per‑share metrics amidst improving fundamentals .

What Went Well and What Went Wrong

What Went Well

  • U.S. strength and demographic broadening: U.S. net sales +10.5% to $228.8M; comps +6.2% driven by transactions and basket; customer base trending younger and higher income, consistent with secular thrift adoption .
  • Canadian progress: comps +2.6% with favorable basket/transactions; third consecutive quarter of sequential improvement as assortment strengthened .
  • Technology and operations: ABP rollout expanded to supply nearly 50% of fleet, supporting efficiency and selection; On‑site donations plus GreenDrop reached 79% of supply, bolstering sourcing .
    • “After seeing strong financial returns from our rollout of Automated book processing (ABP), we've expanded ABP to supply nearly 50% of the fleet.” — CEO Mark Walsh .
    • “OSDs plus GreenDrop… accounted for 79% of supply versus 78% last year.” — CFO Michael Maher .

What Went Wrong

  • Gross margin pressure: Cost of merchandise sold rose 270 bps to 44.8% on higher Canadian processing levels and new stores; management expects H2 gross margins closer to last year as equilibrium is reached .
  • Canada segment profit down: Canada segment profit fell $4.6M YoY in Q2 due to deleveraging and weaker CAD; FX translation lifts sales but is hedged with limited near‑term earnings impact .
  • Near‑term investment drag: Accelerated conversion of the seven Two Peaches stores created modest, low‑single‑digit million‑dollar costs in Q2; largely behind the company now .

Financial Results

Consolidated P&L and KPIs (Q4 2024 → Q1 2025 → Q2 2025)

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($USD Millions)$402.0 $370.1 $417.2
GAAP Diluted EPS ($)$(0.01) $(0.03) $0.12
Adjusted EPS ($)$0.15 (2025 def) $0.02 $0.14
Adjusted EBITDA ($USD Millions)$67.4 (2025 def) $42.8 $68.8
Adjusted EBITDA Margin (%)16.8% (2025 def) 11.6% 16.5%
Net Income Margin (%)(0.5)% (1.3)% 4.5%
Total Comparable Store Sales (%)1.6% 2.8% 4.6%
U.S. Comps (%)4.7% 4.2% 6.2%
Canada Comps (%)(2.5)% 0.6% 2.6%

Estimate Comparison (Q2 2025)

MetricConsensusActualSurprise
Revenue ($USD Millions)$406.7*$417.2 +$10.6; +2.6% — bold revenue beat
Primary EPS ($)$0.121*$0.14 +$0.019 — bold EPS beat
EBITDA ($USD Millions)$66.7*$68.8 (Adj EBITDA) +$2.1 — note definition differences

Values marked with an asterisk were retrieved from S&P Global.

Segment Breakdown (Q2 2025)

SegmentNet Sales ($USD Millions)Segment Profit ($USD Millions)
U.S. Retail$228.8 $48.5
Canada Retail$155.0 $39.5
Other (Australia Retail & Wholesale)$33.4 $8.7

Operating Drivers & KPIs

KPIQ4 2024Q1 2025Q2 2025
Pounds Processed (mm lbs)259 262 279
OSD + GreenDrop (% of pounds)78.3% 74.0% 78.5%
Sales Yield ($ per lb)$1.50 $1.38 $1.46
Cost of Merchandise Sold per lb ($)$—$0.64 $0.67

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
Net SalesFY2025$1.61B–$1.65B $1.67B–$1.69B Raised
Comparable Store Sales GrowthFY20250.5%–2.5% 3.0%–4.5% Raised
Net Income (GAAP)FY2025$36M–$52M; $0.21–$0.31 EPS $47M–$58M; $0.29–$0.36 EPS Raised
Adjusted Net IncomeFY2025$62M–$77M; $0.37–$0.46 EPS $67M–$78M; $0.41–$0.48 EPS Raised
Adjusted EBITDAFY2025$245M–$265M $252M–$267M Raised (midpoint)
Capital ExpendituresFY2025$125M–$150M $125M–$140M Lowered (tightened)
New Store OpeningsFY202525–30 25 Refined
Net Interest ExpenseFY2025—~$67M New detail
Effective Tax Rate (GAAP/Adjusted)FY2025—~30% GAAP / ~27% Adjusted New detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q4 2024; Q-1: Q1 2025)Current Period (Q2 2025)Trend
AI/Technology/Process AutomationPreparing for growth; updated non‑GAAP reporting to reflect store growth impacts .ABP expanded to ~50% of fleet; continued tech/process innovation focus .Acceleration in tech leverage
Supply Chain/SourcingOSD+GreenDrop strengthening; loyalty members +11% YoY to 5.9M .OSD+GreenDrop 79% of supply; 6M+ active members .Stable and improving sourcing mix
Tariffs/MacroCanada macro pressures; FX headwinds; hedging limits near-term profit impact .Canada macro stable with lingering unemployment/inflation; tariff/trade uncertainty noted; FX translation helps sales, hedged for profit .Gradual stabilization
Product/Assortment/SelectionSequential improvement in both U.S. and Canada .Strong selection driving comps; tactical investment in Canadian production .Further improved
Regional TrendsU.S. momentum; Canada challenging .U.S. robust; Canada improving; Two Peaches conversions completed to build Southeast beachhead .U.S. strong; Canada improving
Regulatory/Legal—No material updates in Q2 call/press .Neutral
Real Estate Pipeline25–30 openings planned for 2025 .Refined to 25 in 2025; high-quality pipeline for 2026+ .Healthy pipeline

Management Commentary

  • “Sales in our U.S. business grew 10.5%, with comparable store sales up 6.2%, driven by both transactions and average basket… our customer base has been getting younger and more affluent… not driven by economic circumstances.” — CEO Mark Walsh .
  • “In Canada, higher production levels are improving assortment… This investment… has had a transitory impact on Canadian profit margin, which we expect to normalize over the next few quarters.” — CEO Mark Walsh .
  • “Second quarter adjusted EBITDA was $69 million, and adjusted EBITDA margin was 16.5%… GAAP net income was $19 million, or $0.12 per diluted share. Adjusted net income was $23 million, or $0.14 per diluted share.” — CFO Michael Maher .
  • “We are raising our previously stated outlook… Net sales of $1.67B to $1.69B… adjusted EBITDA of $252M to $267M… effective tax rate ~30% GAAP / ~27% adjusted.” — CFO Michael Maher .
  • “Our price gaps to discount retail [are] between 40% and 70%… If that price gap were to widen, it gives us… optionality… opportunity to really gain share.” — CEO Mark Walsh .

Q&A Highlights

  • Margin cadence and transient headwinds: Q2 marked peak impact from Canadian production ramp and Two Peaches conversions; expected H2 gross margins to be closer to last year as equilibrium is reached .
  • Comps momentum: Acceleration noted in May/June, continuing into July for both U.S. and Canada, driven by transactions and basket .
  • Pricing optionality and AUR: Sustained 40–70% price gaps vs discount retail provide optionality to maintain gaps while potentially lifting AUR if industry pricing rises .
  • Operating expense and mix: OpEx expected slightly better as % of sales vs last year; reasonably consistent between Q3 and Q4; new store maturation tailwind into Q4 .
  • FX and hedging: Stronger CAD boosts translated sales; profit impact limited in 2025 due to hedging; long‑term positive if CAD remains stronger .

Estimates Context

  • Q2 beat on revenue and EPS vs S&P Global consensus: Revenue $417.2M vs ~$406.7M; EPS $0.14 vs ~$0.121 — both ahead, reflecting strong U.S. performance and improving Canadian trends * *.
  • Consensus inputs were based on ~9 covering estimates for revenue and EPS; estimate dispersion modest, suggesting potential upward revisions post‑print [GetEstimates]*.
  • Street may raise FY revenue, comps, EPS, and Adjusted EBITDA ranges given guidance raise and continued comps momentum, while modeling H2 gross margin normalization and the maturing 2024 store class .

Values marked with an asterisk were retrieved from S&P Global.

Key Takeaways for Investors

  • U.S. momentum remains the anchor; demographic broadening and value positioning support share gains and secular thrift adoption .
  • Canada is improving; margin normalization in H2 should support consolidated profitability as processing equilibrates .
  • FY2025 guide raised across key metrics; near‑term trading catalyst is continued comps strength and confirmation of gross margin recovery trajectory in Q3 .
  • Operational initiatives (ABP to ~50% of fleet; OSD+GreenDrop at ~79%) underpin sourcing efficiency and assortment quality, supporting sales yield and turn .
  • Real estate pipeline quality suggests sustained unit growth into 2026+, aiding medium‑term revenue scale and margin leverage as cohorts mature .
  • Capital allocation (2.7M shares repurchased) provides per‑share leverage; authorization balance remains, though near‑term focus is growth investments and new store maturation .
  • Watch FX and tariffs: FX translation benefits sales but is hedged on profit; tariff‑driven new retail price inflation could widen SVV’s price gap and accelerate share gains .

Notes:

  • Q2 2025 documents read in full: earnings call transcript and 8‑K press release – – –.
  • Prior quarters used for trend: Q1 2025 8‑K –; Q4 2024 8‑K –.
  • No additional standalone Q2 press releases beyond the 8‑K exhibit were identified within the Q2 window.