Savers Value Village (NYSE:SVV) reported second-quarter results marked by continued U.S. comparable-sales growth, higher profitability in both major markets and an updated full-year outlook that incorporates a phased rollout of its ThriftIQ pricing platform.
Chief Executive Officer Mark Walsh said the company recorded its third consecutive quarter of year-over-year adjusted EBITDA growth, while new-store profitability began to ramp faster than originally anticipated. Management said the combination of store maturation, productivity initiatives and ThriftIQ supports a path toward high-teens adjusted EBITDA margins within the next three years.
Second-Quarter Sales and Earnings
U.S. net sales increased 11.6% to $255 million, with comparable-store sales up 6.6%. Walsh said the U.S. performance was driven by both higher transaction counts and average basket size, with growth across regions, categories and demographic groups. Management said younger and more affluent customers remained the company’s fastest-growing consumer cohorts, while growth was also strong among lower-income shoppers.
Canadian net sales increased 2.2% to $158 million, and comparable-store sales rose 0.8%, including an approximately 70-basis-point benefit from the timing shift of Easter. While management characterized Canadian macroeconomic conditions as stable but sluggish, Canada segment profit increased nearly 16% and segment profit margin expanded 330 basis points.
Chief Financial Officer Michael Maher attributed the Canadian profit improvement to tighter production management, off-site processing improvements and the continued maturation of new stores. He said the company is planning its Canadian business around roughly flat comparable-store sales in the near term.
- Adjusted EBITDA increased 8% to $75 million, representing 16.6% of sales.
- GAAP net income was $22 million, or $0.14 per diluted share.
- Adjusted net income was also $22 million, or $0.14 per diluted share.
- U.S. segment profit increased by $10 million to $59 million.
- Canada segment profit increased by $6 million to $46 million.
Cost of merchandise sold declined 170 basis points as a percentage of sales to 43.1%, which Maher said reflected comparable-sales leverage, efficiency initiatives and growth in on-site donations. The improvement was partly offset by the impact of new-store openings.
SG&A expenses rose 15% to $102 million and included a $2 million impairment charge tied primarily to the consolidation of a Canadian warehouse processing facility, as well as $1 million of costs associated with the repricing of the company’s term loan.
ThriftIQ Rollout and Margin Goals
The company announced ThriftIQ, a proprietary data-driven platform designed to improve precision and consistency in pricing men’s and women’s apparel. The system has been tested for nearly two years and has priced more than 25 million items across 45,000 brands, according to management.
ThriftIQ is now operational in 58 stores in the U.S. and Canada, including most locations opened during the past six months. Walsh said the platform uses data on brands, categories, price points and sell-through outcomes to recommend pricing while maintaining an average discount of 40% to 70% below traditional retail prices.
Maher said pilot stores using ThriftIQ have generated gross-profit-dollar growth approximately 100 basis points higher than non-pilot stores. He said customers in pilot locations have responded through higher unit sell-through, larger baskets and stronger sales yields, while average prices were the same as or lower than the rest of the store fleet.
President and Chief Operating Officer Jubran Tanious said the platform reduces the subjectivity of the previous grading process. Rather than requiring team members to assess each apparel item’s quality and condition to determine a price, ThriftIQ asks them to identify the brand and uses factors including seasonality and sell-through to establish pricing.
Management said ThriftIQ also has reduced training time for new graders by about half. More than half of the company’s 2025 class of new stores generated positive four-wall contribution during the second quarter, ahead of prior new-store classes.
Maher said Savers expects its innovation agenda, new-store maturation, comparable-sales leverage and other profit-improvement initiatives to support 50 to 100 basis points of annual adjusted EBITDA margin expansion beginning in 2027. The contribution from ThriftIQ is expected to build as deployment expands through 2027 and into early 2028, with full annualization anticipated in 2028 and beyond.
Store Growth, Capital Allocation and Outlook
Savers opened four U.S. stores and two Canadian stores in the second quarter. Walsh said a recently opened Burlington, North Carolina, location delivered the highest opening-week sales in company history. The company expects to open approximately 25 stores in 2026, with more than 20 planned in the U.S. across 11 states. Its first Tennessee store is expected to open later this year.
Tanious said the company’s site-selection process, dedicated leadership support for new stores, rollout of ThriftIQ and local marketing efforts have contributed to improved store-opening performance. Management also said on-site donations and GreenDrop accounted for 84.9% of total pounds processed during the quarter, compared with 78.5% a year earlier.
The company ended the quarter with $92 million in cash and cash equivalents and a net leverage ratio of 2.4 times. It repurchased 1.2 million shares at a weighted average price of $8.10. Maher said capital allocation priorities remain funding new-store growth, reducing debt toward a net leverage ratio below two times by the end of next year and opportunistically repurchasing shares.
For fiscal 2026, Savers now expects net sales of $1.77 billion to $1.79 billion, comparable-store sales growth of 3% to 4%, adjusted EBITDA of $265 million to $275 million, and approximately 25 new-store openings. The company forecast net income of $67 million to $76 million, or $0.42 to $0.47 per diluted share.
For the third quarter, management expects total revenue growth to fall between first- and second-quarter levels, with comparable-sales growth moderating somewhat as the company laps stronger comparisons. Adjusted EBITDA is expected to be modestly below the second quarter, primarily due to the timing of new-store openings and related pre-opening expenses. Savers plans to open eight stores during the third quarter.
About Savers Value Village (NYSE:SVV)
Savers Value Village, Inc (NYSE: SVV) is a publicly traded thrift retailer that operates a network of donation-based retail stores. Headquartered in Bellevue, Washington, the company specializes in selling second-hand apparel, footwear, household items, accessories and other pre-owned goods. Through its retail stores, SVV offers value-conscious shoppers the opportunity to purchase quality, gently used merchandise at affordable prices.
At the heart of the company’s model is a partnership network with more than 500 nonprofit organizations across North America.
