Savers Value Village Q1 2026 Earnings Call - Thrift Adoption Accelerates in U.S. While Canada Optimizes for Margin

Brooke Roach, Analyst, Goldman Sachs0: Good afternoon, and welcome to Savers Value Village’s conference call to discuss financial results for the first quarter ending April 4, 2026. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will follow at that time. Please note that this call is being recorded, and a replay of this call and related materials will be available on the company’s investors relations website. The comments made during this call and the Q&A that follows are copyrighted by the company and cannot be reproduced without written authorization from the company. Certain comments made during this call may constitute forward-looking statements, which are subject to significant risks and uncertainties that could cause the company’s actual results to differ materially from expectations or historical performance.

Please review the disclosure on forward-looking statements included in the company’s earnings release and filings with the SEC for a discussion of these risks and uncertainties. Please be advised that statements are current only as of the date of this call, and while the company may choose to update these statements in the future, it is under no obligation to do so unless required by applicable law or regulation. The company may also discuss certain non-GAAP financial measures. A reconciliation of each of the historical non-GAAP measures to the most directly comparable GAAP financial measure can be found in today’s earnings release and SEC filings. Joining from management on today’s call are Mark Walsh, Chief Executive Officer, Jubran Tanious, President and Chief Operating Officer, Michael Maher, Chief Financial Officer, and Ed Yruma, Vice President of Investor Relations and Treasury. Mr. Walsh, you may go ahead, sir.

Mark Walsh, Chief Executive Officer, Savers Value Village: Thank you. Good afternoon, everyone. We appreciate you joining us today. We are pleased with our first quarter results as we once again delivered strong sales performance and continued our earnings inflection for the second consecutive quarter of year-over-year adjusted EBITDA growth. We increased segment profit in both of our major markets through a combination of continued strength in our U.S. comp store fleet, the ongoing maturation of our new stores, profit improvement initiatives, and tremendous operational discipline. We also made continued progress on our innovation agenda, which is already delivering benefits to our business. Let me start with a few highlights from the quarter. Sales in our U.S. business grew 11.2% with comps up 6.4%, driven by both average basket and transactions.

The secular trend towards thrift remains a powerful tailwind, and our maturing new store fleet is in the early stages of contributing to comp sales growth. In Canada, our sales trends were largely as expected, with a 0.6 comp decrease during the quarter, reflecting a roughly 70 basis point headwind due to an early Easter. I’m especially proud of our Canadian team’s execution this quarter. Despite flat comps, we grew Canadian segment profit almost 24% as we tightly managed production levels and benefited from some significant and sustainable profit improvement initiatives. We opened three new stores during the quarter, all of which were in the U.S., and we continue to expect around 25 total new store openings this year. Our new store portfolio continues to perform in line with expectations, giving us confidence in our ability to drive profitable sales growth as these stores mature.

Financially, we generated $44 million of adjusted EBITDA in the quarter, or 11% of sales. Finally, we are reaffirming our outlook for 2026, which Michael will address in more detail. Turning to our results by geography, let’s start in the U.S., where we believe that we are still in the early innings of consumer thrift adoption. Our 6.4% comp, despite some unusually disruptive weather, was broad-based with strong growth across regions, categories, and income cohorts. We continue to see the strongest growth in our younger and more affluent consumer cohorts, which speaks to the power of our model and its ability to resonate with shoppers across demos. We feel very good about our competitive positioning and value gaps as new clothing and footwear prices continue to face upward pressure.

Additionally, on-site donation growth continues to be robust, which helps power our flywheel, enabling our compelling assortment. In short, the U.S. business is firing on all cylinders. We are excited about our continued expansion in this market. In Canada, our 0.6 comp decrease was largely in line with our flattish comp expectation, with the Easter shift negatively impacting our comp by roughly 70 basis points. Macro conditions remain stable but sluggish, particularly in our key Southern Ontario market, including the Greater Toronto Area and Windsor, where we have roughly 35% of our Canadian store fleet. We do not expect a material change in the economic conditions in Canada in the near term. We continue to plan our business around a roughly flat comp. Having said this, our first quarter results demonstrated our ability to drive meaningful profit improvement in Canada despite limited top-line growth.

Canadian segment profit increased $6 million over last year, and profit margin expanded 310 basis points, which we attribute to our continued focus on productivity and tight management, matching demand and production. We also have a number of tests and initiatives underway to drive meaningful improvements in sales yield and cost per unit in our off-site facilities. We are quickly sharing learnings and best practices across our central processing centers and expect incremental benefits in the coming quarters. Moving on in these stores, we opened 3 new store locations in the U.S. during the quarter and continue to be pleased with the results as they are performing in line with our expectations. As I indicated earlier, we are excited to continue growing our store fleet in the U.S. and believe we can expand the current rates for years to come.

For 2026, we are planning to open around 25 new stores, over 20 of which will be in the U.S. across 11 states with a nice mix of infill and new markets. An upcoming highlight this quarter is our first North Carolina store, as our Burlington location opens later this month. Repeating our theme, our new store growth remains the highest return and most important use of our capital, and we are excited to bring our value offering to more consumers. Shifting now to innovation, where our key priority areas are strengthening our price value equation, driving efficiency and cost reduction, and expanding our data science and business insights. Last quarter, we announced the launch of ABP Lite, an asset-light extension of our Automated Book Processing or ABP system.

I am pleased to report that we have completed our rollout plans ahead of schedule, with the vast majority of the fleet now leveraging our ABP capability. We expect these stores will now reap the proven benefits of ABP. I think this is a great example of how we can deploy technology in a cost-effective and high-return way across our store portfolio. We also continue to significantly strengthen the foundation of our data science and business insights. The team has been working hard to transition to a more robust data state, structuring operating data that allows us to translate and communicate insights to drive field action. Thus improving our ability to, 1, react to changes in sales trends. 2, improve productivity. 3, support margin discipline. And finally, to help us continually refine our value proposition for consumers.

I would like to highlight the progress we’re making through a strategic partnership with Microsoft. For several months, Microsoft has had a team of forward-deployed engineers working closely with Savers to embed AI agents directly into our operating model. Our first agentic AI capability monitors our loyalty program, empowering our field organization with insights that boost consumer engagement and drive productivity. Our loyalty program is a strategically important part of our business as it represents roughly 73% of our sales and is a key focus as we continue to grow our store fleet. This deployment also provides us an agentic template for an agile future rollout of AI capabilities and insights across our enterprise. We have already identified several other use cases for AI agents across our business and are either deploying or finalizing for implementation as part of our broader innovation roadmap.

We look forward to sharing more updates on future calls. I’d like to thank our nearly 24,000 team members for their efforts in driving a strong start to 2026 and helping us deliver our commitments to our customers, nonprofit partners, and shareholders. Our mission is to make secondhand second nature, and that continues to gain momentum. We are well-positioned to build on this momentum and deliver continued success. I’ll now hand the call over to Michael to discuss our first quarter financial performance and the outlook for the remainder of 2026.

Michael Maher, Chief Financial Officer, Savers Value Village: Thank you, Mark, and good afternoon, everyone. As Mark indicated, we had a solid first quarter. Total net sales increased 8.9% to $403 million. On a constant currency basis, net sales increased 6.9% and comparable store sales increased 3.5%. We are especially pleased with our sales results in the U.S., where net sales increased 11.2% to $234 million. Comparable store sales increased 6.4%, fueled by both average basket and transactions, with broad-based gains across categories, regions, and income cohorts. Given the breadth of our sales performance and the fact that we have yet to see a material lift from our new store openings, we remain very confident in our ability to grow the U.S. business.

We also saw continued stability in Canada, where net sales increased 6.7%. On a constant currency basis, Canadian net sales increased 2% to CAD 131 million, and comparable store sales decreased 0.6%, reflecting an earlier Easter that negatively impacted comp by 70 basis points due to store closures on Good Friday. In the near term, we do not assume any material improvement in the Canadian economy. As such, we’ll be planning our Canadian business conservatively. However, as Mark mentioned, we did successfully expand segment margins and grow profit contribution even without comp sales growth through strong execution, efficiency gains, and the continued maturation of our new stores. All things considered, we believe this quarter is a good model for how we will continue to grow segment profit contribution even with limited sales growth going forward.

Cost of merchandise sold as a percentage of net sales decreased 10 basis points to 45.4% due to comp leverage and efficiency initiatives as well as growth in on-site donations, partially offset by the impact of new store openings. Salaries, wages, and benefits expense was $86 million. Excluding IPO related stock-based compensation, salaries, wages, and benefits as a percentage of net sales was roughly flat at 20.5%. Selling general and administrative expenses increased 13% to $98 million, and as a percentage of net sales increased 80 basis points to 24.4%, primarily due to growth in our store base, increased routine maintenance costs, namely higher snow removal expenses, and increased occupancy costs. Depreciation and amortization increased 18% to $23 million, reflecting investments in new stores.

Net interest expense decreased 15% to $13 million, primarily due to the impact of our debt refinancing last fall. GAAP net loss for the quarter was $5 million or $0.03 per diluted share. Adjusted net income was $2 million or $0.02 per diluted share. First quarter adjusted EBITDA was $44 million, and adjusted EBITDA margin was 11%. U.S. segment profit was $43 million, an increase of $4 million, primarily due to increased profit from our comparable stores. Canada segment profit was $31 million, or up $6 million due to disciplined management of production and expenses and the CPC productivity and efficiency initiatives Mark mentioned earlier. Our new stores continue to perform in line with our expectations and mature on schedule as their contribution ramps.

However, as we mentioned last quarter, a more balanced store opening schedule this year means more front-loaded pre-opening expenses. While we expect pre-opening expenses for the year to be roughly flat with last year at approximately $14 million-$16 million, first quarter pre-opening expenses were approximately $1 million higher than last year. Our balance sheet remains strong with $62 million in cash and cash equivalents and a net leverage ratio of 2.5 times at the end of the quarter. We also repurchased 1.2 million shares at a weighted average price of $8.51. Our capital allocation strategy remains unchanged as we continue to prioritize organically funding new store growth, repaying debt as we target a net leverage ratio under 2 times by the end of next year, and opportunistically repurchasing shares.

I’d like to now turn to our guidance and discuss our outlook for fiscal 2026, which remains unchanged from the previous full year guidance we gave back in February. We continue to expect net sales of $1.76 billion-$1.79 billion. Comparable store sales growth of 2.5%-4%. Net income of $66 million-$78 million or $0.41-$0.48 per diluted share. Adjusted net income of $73 million-$85 million or $0.45-$0.53 per diluted share. Adjusted EBITDA of $260 million-$275 million. Capital expenditures of $125 million-$145 million. Approximately 25 new store openings.

Our outlook for net income assumes net interest expense of approximately $50 million and an effective tax rate of approximately 28%. For adjusted net income, we’re assuming an effective tax rate of approximately 27%. We’re projecting weighted average diluted shares outstanding to be approximately 163 million for the full year. This does not contemplate any potential future share repurchases. Finally, I’d like to briefly touch on our expectations for the second quarter. We expect total revenue growth to be 100 to 200 basis points lower than the first quarter due to the impact of foreign exchange rates. We expect constant currency total revenue and comp sales growth similar to the first quarter. We also expect Q2 adjusted EBITDA growth to be similar to Q1, with the cadence of earnings through the balance of the year to resemble 2025.

We plan to open six new stores during the quarter, in line with our goal of more ratably opening stores throughout the year. This concludes our prepared remarks. We would now like to open the call for questions. Operator?

Brooke Roach, Analyst, Goldman Sachs0: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. We’ll go to our first question from Matthew Boss at JPMorgan.

Matthew Boss, Analyst, JPMorgan: Great, thanks. Congrats on a nice quarter.

Michael Maher, Chief Financial Officer, Savers Value Village: Thanks, Matt.

Matthew Boss, Analyst, JPMorgan: Mark, can you elaborate on the step-up in comp trends that you’re seeing in the U.S. business in particular? Two straight quarters of double digits, same store sales on a two-year stack. Maybe if you can touch on new customer acquisition, secular thrift tailwinds, and just any puts and takes to consider with the second quarter comp trend, maybe relative to the mid-single digit full year guide.

Michael Maher, Chief Financial Officer, Savers Value Village: Yeah. Thanks, Matt. Look, I think it starts with what we’ve seen is widespread growth across geographies and merchandise categories.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: That obviously plays into a great experience, value, and selection winning. On top of that, we’re seeing accretive adoption trends amongst our younger and higher income households. We’ve seen that continue. We’re seeing trade down, trade in. I would also say that, you know, that demand is really healthy across a broad base of all income demographics, and I think that’s a key difference versus Canada. The secular trend certainly remains a tailwind. What’s really great is basket and transactions have driven comp. As we mentioned around the agentic initiative, the loyalty program is an important element in how we consider and drive growth, and we’ve continued to see really nice growth in our loyalty program in the U.S.

Michael Maher, Chief Financial Officer, Savers Value Village: Matt, to your question about how we think about Q2. So far what we’ve seen in April in the U.S. is actually a little bit of acceleration in the U.S. comps, but we do expect, you know, those comps get a little tougher to lap as we progress through the year. Still thinking about a mid-single digit. In Canada, really haven’t seen much change. Remains roughly flattish as we’ve now lapped the Easter shift.

Matthew Boss, Analyst, JPMorgan: That’s great color. Michael, maybe just as a follow-up, could you update us on the new store waterfall and maturity curve and just the expected contribution from the waterfall in this year’s comp outlook relative to multi-year as more of the store cohorts mature?

Michael Maher, Chief Financial Officer, Savers Value Village: Sure. New stores continue to perform in line with our expectations and consistent with the waterfall, as you describe it, that we’ve laid out here for the last year or so. Just as a reminder for everyone, typically in year one, we see about $3 million in top line sales. We do lose money, both from the pre-opening expenses that we incur, as well as in the first year of operations, as we’re still ramping volume and developing, building that on-site donation foundation. Profitability, we typically pass break even in the second year, and then continues to ramp as the sales improve. Ultimately, we target, excuse me, a year five, top line of about $5 million and something close to a 20% contribution margin.

So far our new store classes continue to perform in line with that waterfall. You know, thus far, Matt, we’re still too early in that pipeline for those stores to be meaningfully contributing to our comps. The comps that we’re posting in the U.S. really are mature store comps. Recall now that we only started opening new stores at this pace in the last couple of years, and really only the 24 class at this point has entered the comp base. You know, it’s less than 50 basis points in total benefit to the comp, but we expect that’s gonna continue to build as more of those stores enter the comp base going forward.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Let me supplement Michael’s answer, Matt. It remains the highest and best use of our capital to open up new stores.

Matthew Boss, Analyst, JPMorgan: Helpful color. Best of luck.

Michael Maher, Chief Financial Officer, Savers Value Village: Thanks.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Thanks.

Brooke Roach, Analyst, Goldman Sachs0: We’ll move next to Brooke Roach at Goldman Sachs.

Brooke Roach, Analyst, Goldman Sachs: Good afternoon, and thank you for taking our question. I was hoping you could unpack the improvement in profitability that you’re seeing in your Canadian business. How should we expect that to continue for the rest of the year? Then more broadly, can you help us understand what the quantitative opportunities that you see from your AI capability monitors and your agents in profitability as you look on a multi-year basis?

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Yeah. Hi, Brooke. This is Jubran. I can take the Canadian profitability question. The first thing I’d say is actually, it’s driven by a few factors. It’s not one thing. The first of which is some of our initiatives in CPC, and Mark Walsh talked about those in his opening comments. Those continue to get better, more efficient, more effective through a variety of process improvements. We’ve been very pleased with that and proud of the team. We’re in the midst of expanding that to all of our off-site locations. That’s 1. The 2nd thing, and we’ve talked about this on past calls, is striking the right balance in total pounds processed, right? The amount of production level and maintaining a good equilibrium so that we are feeding customers fresh product, but also doing it in a very healthy gross margin way.

We think the team did an excellent job at striking that equilibrium this past quarter. The third thing I’d cite is, you know, just ongoing refinement and improvement of our data and analytical tools. That’s important because as you think about converting pounds into items, those improvements have helped us better align items that we supply to the customer at the category level. It improves our ability to put the right thing at the right time in front of the customer, and that obviously benefits our sales yield. Then Brooke, the last thing I would cite is just the ongoing on-site donation growth, which we are seeing improve in a broad-based way. This past quarter, over three-quarters of our supply came from on-site donation and GreenDrop mix. Nice year-on-year improvement and one that we expect to continue.

You put all that together, and yeah, we absolutely expect those trends to continue through the balance of the year and that’s all contemplated in our guidance for Canada.

Michael Maher, Chief Financial Officer, Savers Value Village: Brooke, on your question around AI and the agentic deployment, let me say that it’s just one element of a much broader innovation approach that includes ABP Lite, it includes a number of process and efficiency improvements that we’re.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: We’re driving in our offsite production centers, and then applying data science and business insights to what is a data-rich business. From an AI specific perspective, these efforts are primarily efficiency and productivity driven. We will develop a better sense for how big of an impact it will be over time.

Michael Maher, Chief Financial Officer, Savers Value Village: Yeah. Brooke, Michael, just one closing thought on that. I think first of all, as Jubran stated, what we’re seeing in Canada, really pleased with that. We do While we don’t guide segment profits specifically, we do expect directionally that to continue, and we have contemplated that in the guidance for this year. I think longer term, to your question about innovation, you know, I think it just gives us added confidence in that longer term algorithm of getting back to that high teens EBITDA margin as we continue to see the new stores mature, but also see the innovation initiatives really take root.

Brooke Roach, Analyst, Goldman Sachs0: Great. Thanks so much. I’ll pass it on. Next, we’ll move to Randy Konik at Jefferies.

Brooke Roach, Analyst, Goldman Sachs2: Yeah, thanks a lot. Michael, I just wanna jump off of the last thing you said there in terms of segment profit or geographic profit margins continuing to move higher. You know, can you give us some perspective on where we sit with those Canadian margins versus history in the U.S., and, you know, Are there things you’re doing in Canada that you intend to apply to the U.S. business to kind of further take those margins higher? Just give us some thoughts on some of these profit initiatives you’re working on and where they are in that kinda life cycle. How much higher can we go from here?

Michael Maher, Chief Financial Officer, Savers Value Village: Sure, Randy. Why don’t I start, and then maybe I’ll let Jubran jump in and provide a little color too. First of all, you know, we’ve long seen that we have structurally higher contribution margins in Canada than the U.S. I actually think that gap probably widens in the short term in 2026 because we continue to invest in growth in the U.S., which as we have said now for a while, does create a short-term headwind. Long-term, it’s absolutely value accretive. You know, we know that there’s some short-term margin pressure as a result of opening new stores. Now we’re generating nice comp growth, and we’re seeing healthy gains from on-site donations and yield improvements in the U.S. as well, you do have that headwind. Whereas in Canada, the focus really is on profit improvement and, you know, process optimization.

We are not really investing meaningfully in new store growth in Canada at this point. We are a mature business there, much more highly penetrated obviously than we are in the U.S. That gives us a chance to really focus on the productivity and efficiency initiatives that Jubran described earlier and really see those flow through into the bottom line as you saw in here in the first quarter and the improvement in our Canadian segment profitability. I do expect directionally that trend to continue this year. I’ll let Jubran speak to how we’re thinking about, you know, leveraging that across both countries.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Yeah. Hi, Randy. It’s absolutely is. When we think about production, productivity and efficiency improvements, that cuts across borders. The team does a very good job of working collaboratively on discovery, leveraging best practices, scaling that across all of our facilities. I’ll take 2 of them that we talked about earlier. Offsites. The improvements that we have made in offsites are going to benefit all locations, not just in Canada. Data and analytics. That refinement that I mentioned where we have tools that are better than they have been in terms of putting the right thing, the right time in front of the customer, that cuts across all segments. The short answer to your question is, yes, we expect goodness broad-based from that.

Brooke Roach, Analyst, Goldman Sachs2: Just to follow up, it looks like you managed payroll well in the quarter. I think you’ve had some deleveraging that, in that item in the last two quarters or less, you know, four to six quarters. Is that something where now we’re kind of turning the corner on that payroll side of things? We’ll start to get some leverage going forward out into the balance of the year and into 2027 and beyond. How do you think about that?

Michael Maher, Chief Financial Officer, Savers Value Village: Randy, a couple things on the OpEx line. You know, remember that we are on the, you know, the SW, Salaries, Wages, and Benefits line I think you’re referring to. We are continuing to step down the IPO related stock comp in that line. We’ve got 1 quarter left of that here in the second quarter. That’s roughly $4 million in each of Q1 and Q2. That falls away completely in Q3 and beyond. You will see that. You know, excuse me, excluding those sort of non-recurring items though, I think so. We do still have some pressure from new stores and those maturing and getting to scale there. You know, I think you’ll see that kinda normalize as we go forward, get past the one-time items.

I would expect actually more of the improvement this year to come from gross margin rather than the operating expense lines as we continue to see the new stores mature and the benefit of that and their related on-site donation ramp flowing through to the margin line.

Brooke Roach, Analyst, Goldman Sachs2: Super helpful. Thanks, guys.

Michael Maher, Chief Financial Officer, Savers Value Village: Thanks, Randy.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Thanks, Randy.

Brooke Roach, Analyst, Goldman Sachs0: We’ll go to our next question from Michael Lasser at UBS.

Michael Lasser, Analyst, UBS: Good evening. Thank you so much for taking my question. How long can you continue to grow the profitability in Canada on a flat comp? At some point, do you start to experience deleverage if the same-store sales do not grow and you need to take action to reinvigorate the same-store sales growth in that market?

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Hey, Jubran Tanious, I’ll grab the profitability question. Yes, I understand your question. Long term, I think there is merit to what you’re saying, but we think there is still a tremendous amount of opportunity, certainly for the remainder of this year, on all the initiatives that we have to improve efficiency and effectiveness. The trends that we saw in Q1, we expect to continue this for the remainder of this year.

Mark Walsh, Chief Executive Officer, Savers Value Village: Hey, Michael, thanks for the question. Look, we’re not satisfied with a flat comp at all. We continue to test differential marketing approaches, whether it be using our influencers, to a higher degree, social, paid, and then broadcast opportunities. We’re investing in the core fleet as well. We’ve got some renovations teed up, and we’ve also got some relocations planned. We just continue to focus on that price value equation to make sure that we’re delivering a terrific experience to our Canadian consumers. Our goal is to not have that deleverage happen, and we’re certainly not gonna sit still with a flat comp.

Michael Lasser, Analyst, UBS: Okay. My follow-up question is on the delta between your sales yield and what you are paying for donations. What are you seeing in, with respect to the sales yield? How much is of the improvement in sales yield is being driven by like-for-like pricing? On the payment for donation, are you experiencing any inflation as a result of the overall environment and some of the strains that charities are under around the country?

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Why, why don’t Jubran Tanious, I’ll grab your supply cost question first. Reminder to the group that our supply costs, these are a set of contracts that we have with all of our great nonprofit partners across our three countries that are typically anywhere between one and three years. They are deliberately relatively short to medium term because we are always evaluating what market is so that we can stay very competitive in terms of what we pay for, whether that is a delivered goods, a delivered product as we talk about, or on-site donation, which we have reliably continued to grow across all segments. The short answer to your question is, are we experiencing any unexpected upward pressure or cost on supply? No, we’re not. That’s all very, very predictable.

It’s contract based, and we can see it clearly, and we plan for it many, many, many months in advance. I’ll just also take the opportunity to say that in terms of availability of supply, both for our comp stores and to feed new store growth, no concerns at all. The team continues to execute well. We see no ceiling on how high on-site donations can go, and that’s what we’re seeing in the business.

Michael Maher, Chief Financial Officer, Savers Value Village: Yeah. Michael, this is Michael. I’ll take your question on the sales yield. We were really pleased with the roughly 6.5% increase in sales yield that we delivered in the first quarter. There’s an element of higher ASP in that. We strive to keep that, though, at or below inflation over time. That’s sort of a normal recurring thing. Really what drove that outsized growth this quarter was kind of things Jubran talked about earlier, being very careful about how we’re managing production and lining that up to demand, especially in Canada, but also the productivity initiatives in our offsite processing facilities, which is helping us to drive, you know, getting the right item to the right location at the right time, and therefore, greater sales yields on those items as well.

Michael Lasser, Analyst, UBS: Thank you very much, and good luck.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Thank you.

Mark Walsh, Chief Executive Officer, Savers Value Village: Thank you.

Michael Maher, Chief Financial Officer, Savers Value Village: You’re welcome.

Brooke Roach, Analyst, Goldman Sachs0: We’ll take our next question from Bob Drbul at BTIG.

Bob Drbul, Analyst, BTIG: Hey, guys. good afternoon. John, a couple questions for you. The first one is, when you look at, you know, I guess, energy cost impact, you know, can you talk about how you’re being impacted throughout the business, you know, from that perspective? Then I guess the second question I have is just, can you expand a bit more just new store productivity and, you know, are you seeing any variations? As you more measured approach to this year, you know, 5 in the first quarter, 6 in the second, like the benefits to a more measured rollout from an execution perspective, what you’re seeing there. Thanks.

Michael Maher, Chief Financial Officer, Savers Value Village: Yeah. Bob, let me take the first question. I’ll let Jubran take the new store one. Energy costs. Yeah, you know, the run-up in fuel costs came fairly late in the quarter for us, not really a material impact to our first quarter. At these levels, we think there is some modest pressure for the balance of the year. Nothing that we think we can’t mitigate, obviously a fast evolving situation that we’ll just continue to monitor. Jubran, you wanna talk about the new store question?

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Yeah. New stores have been very pleased, as Mark talked about in his opening comments, Bob, in line with our expectations.

Mark Walsh, Chief Executive Officer, Savers Value Village: I think our ability to pick winners and refine our modeling of new stores has just gotten better and better over the years, and we’re seeing that in performance. To your question of are we seeing any outliers, it’s been pretty consistent. We feel very good about our ability to predict and then also execute all the things that have to go into play to make a new store open on time and be successful. In terms of our ability to prospect and find attractive new locations and fill up that pipeline, that has only gotten stronger as we think about the remainder of this year and what we have committed to in 2027. We are right on track with where we hopefully would be.

Bob Drbul, Analyst, BTIG: Great. Thank you very much.

Mark Walsh, Chief Executive Officer, Savers Value Village: Thanks, Bob.

Brooke Roach, Analyst, Goldman Sachs0: We’ll move next to Mark Altschwager at Baird.

Mark Altschwager, Analyst, Baird: Thank you. Good afternoon. I wanted to follow up on the price value framework you’ve been building on here in the last few calls. With the U.S. comp now nicely in the mid-single digits and your competitive set continuing to take price, has anything in your testing changed your view on the AUR opportunity? Are you taking any incremental price tactically by category or by geography? How are you thinking about further opportunity if that value gap widens? Is it more about loyalty growth with new customer acquisition on that trade down, or is there maybe some incremental AUR contribution to comp as we move forward? Thank you.

Mark Walsh, Chief Executive Officer, Savers Value Village: Great question. Look, I think it starts with we are very focused on maintaining a super deliberate and very attractive price value relationship for our customer base. That’s U.S. and Canada, and we’re focused on it. We’ve got great data set that informs our approach on where we’re putting category pricing at a given geography. Critical element. As we think about watching the item ratio or our flow-through, that really informs us as to where there are certain opportunities and certain geographies and certain categories. Again, very analytically data science driven approach to how we’re deploying pricing across our fleet. Again, that’s U.S. and Canada. The differences are obviously the geographies and the sensitivities to price relative to how quickly those garments or those goods sell. It is very data science oriented.

We’re monitoring our approach carefully, and in this environment, we seem to be winning. I mean, we’re really pleased with the throughput that we’ve gotten in both in both countries when it comes to our price value relationship.

Mark Altschwager, Analyst, Baird: Thank you. Just a follow-up on the loyalty program, the loyalty file, can you size up where that is today and how much it grew in Q1? Trying to get a better understanding of how much the U.S. strength is growth in that file versus deeper engagement with your existing base. Thank you.

Mark Walsh, Chief Executive Officer, Savers Value Village: Yeah. The file is growing quite nicely. We’re a little north of 6 million total loyalty members across North America. We continue to see nice growth. We’re very pleased with I think the thing we’re most pleased about is at that top loyalty cohort behavior really continues to outperform in both countries, and it represents roughly 73%, 74% of our sales. A great ability for us to connect with our consumers very cost efficiently at any given time.

Mark Altschwager, Analyst, Baird: Great. Thank you for the detail.

Mark Walsh, Chief Executive Officer, Savers Value Village: Thanks, Mark.

Brooke Roach, Analyst, Goldman Sachs0: Our next question comes from Peter Keith at Piper Sandler.

Brooke Roach, Analyst, Goldman Sachs1: Thank you very much. Nice quarter, guys. I know you sound like Q2 has continued the trend, but with the backdrop of higher gas prices, in the past, you have spoken to a lower income element as a portion of your customer base. Wondering if with the loyalty program, are you seeing anything of note as it relates to sort of trade-in versus trade-out in this kind of evolving economic backdrop?

Mark Walsh, Chief Executive Officer, Savers Value Village: I’ll take that one. Look, I think in both countries, we continue to see a real nice adoption trend amongst younger and higher income consumers. When you think about higher income consumers, certainly trade-in, trade-down is part of our growth mix in our loyalty platform. There are some differences, though, between the countries. We see in the U.S. consistently that demand has remained healthy and broad-based across all income demographics. In Canada, where there is a little more of an economic sluggishness, sorry about that, we see our lower household income cohort disproportionately impacted. That’s really the only difference we’re seeing between the two countries and how they’re engaging with us and through the loyalty program.

Brooke Roach, Analyst, Goldman Sachs1: Okay. Helpful. Mark, to follow up on the prepared remarks with, using AI and applying it to your loyalty program. I guess I was hoping you can kind of unpack exactly what you guys are doing. It sounds like maybe something that would enhance sales, but I’d like to just get a better understanding of what’s happening.

Mark Walsh, Chief Executive Officer, Savers Value Village: Well, I think it’s a really good question. I think what we’re our goal is, and we’re picking very important and critical strategic elements of our business model, and what the stores do. Obviously the loyalty program is an important element of our consumer engagement platform. Having our store managers, having our store leadership continually focus on this very critical element was a great starting point for us to kick off our agentic strategy. What this agent is doing is basically communicating to our store managers this is where you are relative to your peer set from a loyalty perspective. Could be great, could be, you know, depending on where you are in that continuum.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: It gives you things to consider and actions to take relative to how you’re engaging with the consumer at that moment when they could either sign up or the opportunity to get them signed up. We see this as the unlock for several more agents to come right behind that, again, to allow us to keep our team and our store managers focused on critical issues throughout the week, period, month. Then providing the information upward so that district managers, regional managers, Jubran and the country leads can drill down when appropriate to ensure that those key disciplines are being met and focused on throughout the year.

Brooke Roach, Analyst, Goldman Sachs1: Okay. That sounds great. Thank you very much.

Brooke Roach, Analyst, Goldman Sachs0: We’ll move to our next question from Jeremy Hamblin at Craig-Hallum.

Brooke Roach, Analyst, Goldman Sachs3: Hey, this is Will on for Jeremy. Thanks for taking my questions. First, I was just wondering if you’re able to quantify the weather impact you saw in Q1. Then you noted the 70 basis point headwind from Easter. I guess should we be considering a similar magnitude of benefit here in Q2 from the late Easter last year?

Michael Maher, Chief Financial Officer, Savers Value Village: Well, it’s Michael. Yeah, you know, I don’t know if I’d quantify a weather impact other than to say it really was more about how the quarter played out. Very lumpy in terms of the comps, just given the weather patterns this year versus last. February was our best comp because February last year had some really extreme weather. January was our softest comp because we had some really extreme storms in both the U.S. and Canada this year. You know, actually, I would say that some degree of extreme weather is just par for the course in Canada in particular. It was probably more extreme than normal in the U.S. and therefore arguably even a little bit more disruptive to our U.S. comp which continued nevertheless to be strong.

Again, we’re focused on what we can control and as we exit the quarter and see that all kind of normalize, we’re pleased with the re-acceleration in the U.S. comp. As far as the Easter impact, yes, that headwind of roughly 70 basis points to Q1 will flip and benefit us in Q2 by a similar amount.

Brooke Roach, Analyst, Goldman Sachs3: Got it. That’s helpful. Just wanted to touch on the ABP Lite rollout. It sounds like it’s solidly a case here. It may be too early, but just curious if there’s any quantifiable benefits you’ve been able to realize thus far from the rollout.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Yeah. This is Jubran. It is a little bit early to cite the results, but very pleased with the rollout between our traditional Automated Book Processing, ABP, and now its derivative, ABP Lite. We’ve rolled it to roughly 85% of the fleet. Rollout has gone well. Reminder Books is only about 5% of our business, but I think ABP Lite is a great example of our innovative process. Data intensive stress testing and a smart rollout plan that we feel good about. We’ll continue to monitor it in the coming months.

Brooke Roach, Analyst, Goldman Sachs3: Got it. Appreciate the color.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Yep.

Brooke Roach, Analyst, Goldman Sachs0: We’ll go next to Owen Rickert at Northland Capital Markets.

Keaton Shoki, Analyst, Northland Capital Markets: Hi, this is Keaton Shoki on for Owen. You’ve called with the strength in the younger and more affluent cohorts, I was curious to hear how their basket size, purchase frequency, and category mix has been trending versus legacy customers and curious how you expect that to trend going forward.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Yeah. Thanks for the question. Pretty consistent. Nothing out of the ordinary, in terms of the trend lines that we’re seeing from that particular customer cohort.

Keaton Shoki, Analyst, Northland Capital Markets: Okay. Thank you. Any early read on Tennessee and North Carolina stores, are those markets ramping faster or slower than prior cohorts, and kind of what are you expecting out of those?

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: We’re excited about those markets to be, to be sure. We have not yet opened those stores. Our first store in North Carolina will open later this month. Our first store in Tennessee will be several months beyond that, maybe end of this year, early next year, that sort of thing. Nothing to report on that, but suffice to say very energized by the white space opportunity and the quality of the sites that we’ve secured.

Keaton Shoki, Analyst, Northland Capital Markets: Great to hear. Thank you. I return to the queue.

Brooke Roach, Analyst, Goldman Sachs0: We’ll go next to Dylan Carden at William Blair.

Dylan Carden, Analyst, William Blair: Thanks a lot. I guess I’m curious, is there any incremental or change in the competitive dynamic in Canada? I know that market tends to lag from an online migration standpoint, if that’s a piece of it. To the extent that there isn’t, just the line of sight you have into some of the improvement in that market, you know, or if it’s more, if you’re managing a business to a flat comp, that becomes more of a manifest destiny, you feel more comfortable with it. Thanks.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Yeah. Ron, I can take a piece of that, and then guys can jump in. In terms of, you know, longer term expectation of growing the top line, I think Mark spoke to that earlier. We’re not satisfied with the flat comp. We think there’s a number of things that we can test and tinker with and trial. What we do know is that we can control what we can control now, and that is efficient and effective use of our material and labor to put the right thing at the right time in the right amount in front of the customer. I think doing that well in a more sophisticated way allowed us to, you know, have the gross margin improvement that we saw in Q1.

In terms of competitive landscape, directly for us in Canada, nothing specific that we could point to that’s materially changed that.

Mark Walsh, Chief Executive Officer, Savers Value Village: The not-for-profit is really our number one competitive set in the Canadian market. Being within 12 miles of 90% of the population, we’re fairly saturated.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Yeah.

Mark Walsh, Chief Executive Officer, Savers Value Village: We’re highly competitive in every market in Canada. Again, we’re not satisfied with our comp trends. We’re doing a lot to try to improve those trends.

Michael Maher, Chief Financial Officer, Savers Value Village: Yeah, Dylan, I think it’s Michael. Just to kind of put a bow on that. To your point, I just to underline what Mark and Jubran said, we continue to work to drive the business in all facets, including top line. In the near term, though, we are mindful of the macro environment, and we believe it’s prudent to plan for a flattish comp for the balance of this year. We continue to believe that even with that backdrop, we can drive profit improvement on the order of what we saw in the first quarter.

Dylan Carden, Analyst, William Blair: On the, you know, AI technology side of things, any incremental thinking on how you might use that from an inventory management standpoint, pricing, decisions on what to keep versus donate? Yeah, I guess sort of an open-ended question there.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: We’ve got a robust innovative pipeline for sure, and we’ve got a lot of promising initiatives in test. We’re pretty conservative though about bringing them public. Once we get to a place where we’re ready to deploy, we will certainly be sharing those opportunities.

Dylan Carden, Analyst, William Blair: Understood. Thank you very much for the time.

Jubran Tanious, President and Chief Operating Officer, Savers Value Village: Thanks, Dylan.

Brooke Roach, Analyst, Goldman Sachs0: That concludes our Q&A session. I will now turn the conference back over to Mark Walsh for closing remarks.

Mark Walsh, Chief Executive Officer, Savers Value Village: Just wanna thank everyone again for their interest, and we look forward to talking to you in roughly 3 months.

Brooke Roach, Analyst, Goldman Sachs0: This concludes today’s conference call. Thank you for your participation. You may now disconnect.