The following is a summary of the Savers Value Village, Inc. (SVV) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Savers Value Village reported Q3 2024 adjusted EBITDA of $82 million, constituting over 20% of sales, despite challenging conditions. Total net sales increased slightly by 0.5% to $395 million, with U.S. net sales up 6.2% and Canadian net sales down 7.1%.

• Cost of merchandise sold rose to 43.3% of net sales due to new store openings and the operational scale-up, impacting gross profit margins.

• Adjusted net income was $25.1 million, or $0.15 per diluted share, highlighting the resilience of their financial model in a mixed economic environment.

Business Progress:

• Savers Value Village opened nine new stores in Q3 and is on track for a total of 29 new store openings for 2024, aligning with long-term growth plans.

• Innovations such as centralized processing, automated book processing, and self-checkout were effectively integrated across the operational framework, supporting scalability and efficiency.

• The company's loyalty program observed double-digit growth in active members, contributing to 72% of total sales, an increase from the previous year.

Opportunities:

• Significant expansion plans for 2025 with 25 to 30 new stores, primarily in underpenetrated U.S. markets like the South and Southeast.

• Continued advancements in off-site processing capabilities to bolster new store openings and drive operational efficiencies.

Risks:

• The Canadian segment continues to face macroeconomic challenges impacting sales, with strategies in testing to mitigate softening demand. The broader economic pressures include a high unemployment rate and rising living costs affecting consumer spending.

• The introduction of numerous new stores which typically open at half their mature sales levels may temporarily pressure profit margins despite long-term gains expected from matured outlets.

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