Savers Value Village Q3 2025 Earnings Report

Savers Value Village EPS Results

• Actual EPS: $0.14
• Consensus EPS: $0.14
• Beat/Miss: Met Expectations
• One Year Ago EPS: $0.15

Savers Value Village Revenue Results

• Actual Revenue: $426.94 million
• Expected Revenue: $427.58 million
• Beat/Miss: Missed by -$641.00 thousand
• YoY Revenue Growth: +8.10%

Savers Value Village Announcement Details

• Quarter: Q3 2025
• Date: 10/30/2025
• Time: After Market Closes
• Conference Call Date: Thursday, October 30, 2025
• Conference Call Time: 4:30PM ET

Savers Value Village (NYSE:SVV) operates a network of for-profit thrift stores that sell donated and secondhand merchandise. Its product assortment generally includes clothing, accessories, shoes, books, household goods, furniture and other general merchandise. The company serves consumers seeking value-oriented shopping and supports the reuse of products through the resale of pre-owned goods.

The company operates under several retail banners, including Savers, Value Village, Village des Valeurs and Unique. It obtains merchandise through purchases from nonprofit organizations, direct donations and other sourcing arrangements. Savers Value Village also sorts and processes donated goods, with items that are not suitable for sale typically directed toward recycling, reuse or wholesale channels.

Founded in 1954, the company is headquartered in Bellevue, Washington, and serves communities in the United States, Canada and Australia. Savers Value Village became a publicly traded company on the New York Stock Exchange in 2023 under the symbol SVV.

Savers Value Village Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: U.S. momentum remained strong with U.S. net sales up 10.5% and comparable store sales rising 7.1%, driven by transactions and basket growth and supported by ~6.1 million loyalty members.
• Negative Sentiment: Canada showed sequential improvement (3.9% COMPS) but persistent macro headwinds and alignment of production to demand led management to expect roughly flat Canadian COMPS in Q4 and to tighten the full-year 2025 outlook.
• Positive Sentiment: Adjusted EBITDA was $70 million (16.4% margin), the company opportunistically refinanced debt (incurring a one-time $33M loss) and expects ~ $17M of annual interest savings, with a net leverage of 2.7x and a new $50M share repurchase authorization.
• Neutral Sentiment: Growth and portfolio actions: Savers opened 10 stores in Q3 (targeting 25 for 2025 and similar openings in 2026, increasingly U.S.-centric including entries into North Carolina and Tennessee) and took a $4M impairment to close six underperforming locations to improve future EBITDA.

Presentation

[Operator]

Good afternoon, ladies and gentlemen. Welcome to Savers Value Village's conference call to discuss financial results for the third quarter ending September 27, 2025. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and 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 investor 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 and historical performance.

[Operator]

Please review the disclosures 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 these 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, CEO at Savers Value Village]

Thank you, and good afternoon, everyone. We appreciate you joining us today. We are pleased with our third-quarter results, particularly in the U.S., where our momentum remains strong. Comps continued to strengthen in Canada, but challenging macro-economic conditions remain a headwind there. Let me start with a few highlights from the quarter. Sales in our U.S. business grew 10.5%, with comps sales up 7.1%, driven by both transactions and average basket. These results underscore our strong operational performance as well as an accelerating secular thrift trend. Powerful results like these reinforce our enthusiasm for the long-term growth opportunity in the U.S. In Canada, our business made further progress, delivering 3.9% comps sales growth, an acceleration of 130 basis points from the prior quarter, marking the fourth consecutive quarter of sequential improvement.

[Mark Walsh, CEO at Savers Value Village]

The Canadian macro environment remains very challenging, and we continue to lean into selection during the quarter while taking steps to better align production with demand trends going forward, which Michael will go over in more detail. We opened 10 new stores in the quarter and still expect to open 25 new stores in 2025. As a class, our new stores continue to perform in line with our expectations, delivering strong unit economics. We remain confident in our long-term store growth opportunity and a targeted 20% store-level contribution margin. Turning to our loyalty program, we reached approximately 6.1 million total active members. Financially, we generated $70 million of adjusted EBITDA in the quarter, or approximately 16.4% of sales.

[Mark Walsh, CEO at Savers Value Village]

Additionally, our strong cash flow generation and an attractive debt market allowed us to opportunistically refinance our debt, which will significantly reduce our interest expense and give us a more flexible capital structure. Just as a reminder, we do not have any direct impacts from tariffs. We continue to monitor pricing trends closely, and I feel very good about our competitive positioning and value gaps as new clothing and footwear pricing begins to increase in the U.S. Finally, based on our results year to date, we are tightening our revenue and earnings outlook for 2025. Michael will provide additional details on our outlook in his remarks. Parsing our results by geography, let's start in the U.S., where momentum is especially strong.

[Mark Walsh, CEO at Savers Value Village]

We are thrilled to post a 7.1% comp, which I will point out is coming from a mature store base, as the majority of our 2024 class will not begin to enter the comp base until the fourth quarter. This speaks to our compelling assortment at great value and the consumer-friendly shopping experience that we offer, as well as the accelerating secular thrift adoption. As we've noted in previous calls, we continue to see growth in our younger and more affluent customer cohorts. In Canada, the economy remains challenging, but it has not impacted everyone the same. For example, tariffs and trade tensions have disproportionately impacted certain regions, such as Southwest Ontario, a key market of ours where the automotive industry is a large portion of the local economy.

[Mark Walsh, CEO at Savers Value Village]

Meanwhile, unemployment is above 7%, and the lower-income consumers have seen little or no disposable income growth, plus higher-than-average inflationary pressure in non-discretionary categories like food, shelter, and transportation. Against this backdrop, we are leading with a compelling selection, which helped drive positive comps over the past year, although we do think that the near-term Canadian comp upside will be limited by macro-economic headwinds. Throughout the third quarter, we actively worked to calibrate production to meet demand, making careful and targeted adjustments in response to sales trends. Exiting the quarter, Canadian comps leveled off at the lower end of our expected range, and we continue to drive improved gross margins also at the lower end of our expected range. We remain laser-focused on giving our Canadian consumer great value through sharp pricing and compelling selection.

[Mark Walsh, CEO at Savers Value Village]

We are controlling what we can control, and we will manage the Canadian business with the expectation that macro conditions may limit our growth in the near term. Moving on to new stores, we continue to be pleased with the results we are seeing, and as a whole, they are performing in line with our expectations. As new stores continue to mature as expected, they are beginning to contribute to an inflection in our profitability. We are especially pleased that our U.S. and Canadian segments had year-over-year profit growth this quarter for the first time since 2023, and we expect a return to profit growth at the enterprise level in the fourth quarter, putting us on track for our previously stated goal of annual profit improvement in 2026. We opened 10 new stores during the quarter and are on track to open 25 new stores in 2025.

[Mark Walsh, CEO at Savers Value Village]

As the 2026 lease pipeline has started to round out, we're expecting a roughly similar number of openings next year, but the focus of our new store growth going forward will even be more U.S.-centric as we believe the secular adoption of thrift remains in the early innings and we still have a significant amount of geographic white space. To this end, we're excited to enter new markets in 2026, including North Carolina and Tennessee. Store growth remains the highest return and most important use of our capital, and we could not be more pleased to bring our compelling value proposition to more consumers throughout the U.S. Finally, we recently released our 2025 Impact and Sustainability Report, which can be found on our investor relations website. We are a mission-driven business championing reuse and looking to inspire a future where secondhand is second nature.

[Mark Walsh, CEO at Savers Value Village]

This report highlights the impact and circularity ingrained in our model, and I am proud that over the past five years, we have kept 3.2 billion lb of usable items out of landfills and paid our charitable partners over $490 million. We hope you will take the time to review the report and our commitment to community impact, sustainability, and sound corporate governance. I would like to conclude my remarks by thanking our more than 22,000 team members for the hard work and commitment. As a team, we are more energized than ever as we see the fruits of our labor, with more people choosing us every day, whether it be due to our treasure-hunting experience, exceptional assortment at sharp value, or to contribute to the circular economy. 2025 continues to be a success, and while macro pressures persist, I believe that our value proposition positions us well.

[Mark Walsh, CEO at Savers Value Village]

Now I'll hand the call over to Michael to discuss our third-quarter financial performance and the updated outlook for the remainder of 2025.

[Michael Maher, CFO at Savers Value Village]

Thank you, Mark, and good afternoon, everyone. As Mark indicated, we had a strong third quarter. Total net sales increased 8.1% to $427 million. On a constant currency basis, net sales increased 8.6%, and comparable store sales increased 5.8%. We are especially pleased with our double-digit growth in the U.S., where net sales increased 10.5% to $235 million. Comparable store sales increased 7.1%, driven by both transactions and average basket. We also saw our fourth consecutive quarter of sequential improvement in Canada, where net sales increased 5.1%. On a constant currency basis, Canadian net sales increased 6.1% to $161 million, and comparable store sales increased 3.9%, fueled by an increase in transactions and average basket.

[Michael Maher, CFO at Savers Value Village]

While we are pleased with another quarter of positive comps, we believe that ongoing macro pressure places a near-term ceiling on Canadian comps store sales. Given the sluggish Canadian economy, we do not assume that conditions will change materially in the near term. Cost of merchandise sold as a percentage of net sales increased 80 basis points to 44.1% due to the impact of new stores and deleverage due to higher processing in Canada, partially offset by growth in on-site donations. Gross margins improved by roughly 100 basis points over the first half of the year, and we materially narrowed the gap versus last year as we lapped new store growth. We expect this trend to carry into the fourth quarter as new stores continue to ramp.

[Michael Maher, CFO at Savers Value Village]

As Mark previously indicated, Canadian comps sales trends have leveled off at the lower end of our expected range, with a corresponding impact on gross margins as we worked to balance production levels throughout the quarter. Salaries, wages, and benefits expense was $85 million. Excluding IPO-related stock-based compensation, salaries, wages, and benefits as a percentage of net sales increased 220 basis points to 18.8%. The increase was driven primarily by new store growth, an increase in annual incentive plan expense, and higher wage rates. Selling, general, and administrative expenses increased 19% to $100 million, and as a percentage of net sales increased 200 basis points to 23.3%, primarily due to growth in our store base. SG&A expenses also included a $4 million impairment charge for the planned closure of six underperforming stores during the fourth quarter.

[Michael Maher, CFO at Savers Value Village]

This includes three of the 2 Peaches stores that we converted during the second quarter, whose post-conversion results were not meeting our expectations, along with one other store in the U.S. and two in Canada. We concluded the closure of these six stores would be EBITDA accretive in 2026, and we expect nearby stores to absorb much of the sales volume from the closed locations. Our store fleet remains healthy, with almost all comps stores generating positive EBITDA. In addition to the impairment charge, SG&A also included $2.1 million of debt refinance costs and the year-over-year change in fair value of acquisition-related contingent consideration. Depreciation and amortization increased 6% to $18 million, reflecting investments in new stores. Net interest expense increased 12% to $17 million, primarily due to the impact of unwinding our interest rate swaps last year, partially offset by reduced debt and lower average interest rates.

[Michael Maher, CFO at Savers Value Village]

As we disclosed during the quarter, we took advantage of a strong market and refinanced our debt. As a result of the refinancing, we expect interest expense savings of approximately $17 million on an annualized basis. For modeling purposes, this translates to an estimated interest expense of $14 million for the fourth quarter and $52 million for fiscal 2026. We incurred a $33 million loss on extinguishment of debt as part of the refinancing. GAAP net loss for the quarter was $14 million, or $0.09 per diluted share. Adjusted net income was $22 million, or $0.14 per diluted share. Third-quarter adjusted EBITDA was $70 million, and adjusted EBITDA margin was 16.4%. U.S. segment profit was $48 million, up $3 million versus the prior year period, primarily due to increased profit from our comparable stores, partially offset by the impact of new stores.

[Michael Maher, CFO at Savers Value Village]

Canada segment profit was $45 million, up $0.4 million versus the prior year period, due to improved comparable store performance, partially offset by deleveraging of cost of merchandise sold as a percentage of net sales, primarily associated with our efforts with Canadian production levels to maintain demand, as well as a weaker Canadian dollar. This marks our first year-over-year increase in both U.S. and Canadian segment operating profit since 2023, highlighting our imminent inflection in total company profitability as new stores continue to mature. Our balance sheet remains strong, with $64 million in cash and cash equivalents and a net leverage ratio of 2.7x at the end of the quarter. Our updated capital structure gives us increased liquidity through a $55 million expansion in our revolver capacity, extended debt maturities through 2032, and significant flexibility to pay down debt in the future.

[Michael Maher, CFO at Savers Value Village]

Our strong cash flow generation will enable us to further deleverage our business as we target a net leverage ratio of under 2x within the next couple of years. We are also pleased to announce that our board of directors approved a new $50 million share repurchase authorization. We will continue to take a balanced approach to capital allocation as our strong financial model allows us to fund organic store growth, reduce debt, and opportunistically repurchase shares. Finally, I'd like to discuss our updated outlook for the remainder of fiscal 2025. Our U.S. business remains strong entering the fourth quarter, while in Canada, macro pressures continued to weigh on results. We've made strides in better calibrating sales and production and are planning for Canadian macro conditions to remain challenging for the near term, with roughly flat Canadian comps in the fourth quarter.

[Michael Maher, CFO at Savers Value Village]

Our updated full-year outlook for 2025 now includes the following. Net sales of $1.67 billion-$1.68 billion, reflecting a weakening of the Canadian dollar since last quarter. Comparable store sales growth of 4.0%-4.5%. Net income of $17 million-$21 million, or $0.10-$0.13 per diluted share. Adjusted net income of $71 million-$75 million, or $0.44-$0.46 per diluted share. Adjusted EBITDA of $252 million-$257 million. Capital expenditures of $105 million-$120 million, and 25 new store openings. Our outlook for net income assumes net interest expense of approximately $62 million and an effective tax rate of approximately 41%. For adjusted net income, we are assuming an effective tax rate of approximately 26%. This concludes our prepared remarks. We would now like to open the call for questions. Operator.

[Operator]

Thank you, sir.

[Operator]

Ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your touch-tone phone. You will then hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by two. If you're using a speakerphone, please lift the hands up first before pressing any keys. Please go ahead and press star one now if you have any questions. First, we will hear from Randy Konik at Jefferies. Please go ahead, Randy.

[Randy Konik, Managing Director at Jefferies]

Yeah, thanks a lot, and good evening, everybody. I guess first, why don't we just kind of unpack Canada a little bit further? You gave us some good color in the script around the top line continuing to improve. You talked about the macros, maybe unpack that a little more.

[Randy Konik, Managing Director at Jefferies]

Then you talked about some processing impacting, I guess, the margins a bit. That sounds like something that can be corrected, obviously, and fixed and improved from an efficiency standpoint going forward. Maybe give us some a little more color there working on the processing side. Thanks, guys.

[Mark Walsh, CEO at Savers Value Village]

Randy, thanks. Look, from our perspective, a little recap. From our perspective, the third quarter was definitely another step forward in Canada. We'd like to highlight the fourth quarter of sequential comp improvement and, more significantly, the first quarter of profit growth since 2023. That said, the macro challenges do persist. There's stubborn unemployment and inflationary pressures on consumables. We're not planning for that to change. We see, from an unemployment perspective in the greater Toronto market, coverage just below 9%, and in Windsor, it's over 10%. It's an important market for us, just to give you some context.

[Mark Walsh, CEO at Savers Value Village]

As we think about the third quarter, more progress, but a lot more to do, and we landed Canada at the lower end of our expectations. Tactically, we remain focused on delivering sharp value, that AUR of $5 USD, and measuring our price gaps to protect and gain share where we can. I think in an environment of limited growth and higher wages, we've got to improve productivity through process improvements, resulting in cost reductions while not impacting the consumer proposition. Rest assured, Michael and Jubran's team are all over this challenge. Lastly, just bringing it back from a corporate perspective, because I think it's important, from a strategic enterprise perspective, we're going to deploy 75%-80% of our growth capital in 2026 and beyond to the U.S., where we do have tremendous white space and momentum. I think it's very important to note.

[Mark Walsh, CEO at Savers Value Village]

I'll let Jubran sort of dive into a little more around selection and some of the other questions you asked.

[Jubran Tanious, President and COO at Savers Value Village]

Yeah. Hi, Randy. Thanks, Mark. It really comes down to the three or four things that we can control. To be clear, and I think Michael mentioned this earlier, as we sit today, we are balanced between sales and production and feel very good about that going forward. Again, around controlling the controllables, the first thing is providing selection and value that our customers expect. We believe we're doing that. In fact, our own internal surveys tell us that customer perception of both price and selection has increased year-over-year as we look to put out the right items in the right amount at the right price.

[Jubran Tanious, President and COO at Savers Value Village]

The second thing that we can control, and Mark alluded to this, is being as efficient as we possibly can be in delivering that selection to our customers. Ours is a labor-intensive model, but our teams do an excellent job at executing as efficiently as possible. Frankly, we'll continue to do that through the remainder of the year. We are relentless about looking for tactical and innovative ways to improve labor efficiency. We've got a few things in the hopper that we're looking forward to as we get into 2026. Finally, growing on-site donations. We've talked about this in the past. It's really about how you show up to the donor in terms of being reliably fast, friendly, and convenient. That is something that we control entirely. We measure it not just in terms of on-site donation growth, but also donor sentiment and satisfaction.

[Jubran Tanious, President and COO at Savers Value Village]

Our own internal voice of the donor surveys tell us that overall satisfaction is north of 90%. We feel good about that. Overall, in terms of controlling the controls, I think we're doing that amidst an otherwise challenging macro.

[Randy Konik, Managing Director at Jefferies]

Yeah, super helpful. I guess last question. Obviously, this U.S. business feels really good. Any color you can give us on the traffic or the transactions that are being done with existing customers versus new to file? I'm sure that you're getting a healthy amount of new customers entering the business. It'd just be helpful to get some perspective there. Any kind of feel for what the awareness level is for the banner in the United States right now? Obviously, again, it seems like we're still very early innings in this U.S. story going forward.

[Jubran Tanious, President and COO at Savers Value Village]

Yeah, Randy, great question. Look, transactions at basket definitely drove comps.

[Jubran Tanious, President and COO at Savers Value Village]

We have seen a nice increase in our loyalty program in the U.S. That momentum is continuing. Beyond that, we love what we're seeing from a consumer and who's entering the mix. High household income cohort continues to become a larger portion of our consumer mix. It's trade down for sure. Our younger cohort also continues to grow in numbers. We couldn't ask for a better outcome. I think it's largely driven by great store experience, merchandise mix that's unusual and powerful, and great value. That all feeds into the secular momentum. Consumers are liking what they see. Needless to say, we're very pleased with that trajectory.

[Randy Konik, Managing Director at Jefferies]

Thanks, guys.

[Operator]

Thank you. Next question will be from Matthew Boss at JPMorgan. Please go ahead, Matthew.

[Matthew Boss, Equity Research Analyst at JPMorgan]

Great, thanks. Mark, could you elaborate on the cadence of same-store sales over the course of the third quarter in the U.S.?

[Matthew Boss, Equity Research Analyst at JPMorgan]

Maybe just comment on what you're seeing in October. You mentioned the value gap. How do you see your value proposition positioned in the U.S., maybe against the broader marketplace?

[Mark Walsh, CEO at Savers Value Village]

Yeah, thanks, Matt. I'll start with the value gap. I'll let Michael do the October cadence and what we're seeing. We spend a lot of energy and time understanding where we are relative to our competitive set. We define our competitive set in two ways. One is obviously thrift competitors, and the other is discount retail. We gather a ton of information. As I said in previous calls, we can tell you in our Issaquah store what's happening down the street at TJX or other discount retailers. We try to get between 40% and 70%, maintain that gap, continue to give our thrifters value that brings them back and is compelling. I think we're doing that both in the U.S. and in Canada. We look at these metrics in both countries. We're really driven by these metrics, and we want to make sure that we're always delivering that price-value gap to our customers everywhere they shop in the Value Village Savers chains.

[Michael Maher, CFO at Savers Value Village]

Hey, Matt, it's Michael. Your question about the cadence of our comps. As we expected, the comps were strongest in July, eased slightly in August and September, as we expected because we are starting to go up against tougher comparers last year. As we've kicked off the fourth quarter, what we're seeing thus far is continued strength in the U.S., continued to be really pleased with the momentum there, and continued moderation in Canada. We have had a warmer-than-usual start to the fall that weighed on our results a little bit in late September and early October.

[Michael Maher, CFO at Savers Value Village]

Over the last week or so, as the weather has cooled, we're starting to see that improve. As I mentioned in my remarks, we're assuming roughly flat low growth in Canada for Q4 and planning conservatively given what we see in terms of the macro.

[Matthew Boss, Equity Research Analyst at JPMorgan]

Great. Michael, on gross margin, maybe could you help break down the drivers of the 80 basis point contraction in the third quarter? Maybe just some gross margin puts and takes that we should consider for the fourth quarter, anything to be mindful of for next year at this point.

[Michael Maher, CFO at Savers Value Village]

Yeah, you got it. As we mentioned on the last call, we expected to narrow that gap from the first half, and we did. The biggest driver of the gap year-over-year continues to be new store growth. That gap is shrinking as the new stores are progressing in line with our expectations.

[Michael Maher, CFO at Savers Value Village]

The other driver in this quarter was the Canadian processing. As we've mentioned, comps being at the lower end of our expected range. We were very careful, very deliberate about reducing processing to ensure we didn't repeat the mistakes of last year and prematurely choke off demand. That did weigh on our margins in the quarter. As Jubran mentioned a little bit ago, we exited the quarter essentially at equilibrium with processing and demand lined up well. To a lesser extent, the 2 Peaches. I mentioned the underperformance of those three stores that we've elected to close. Those were the big factors. I expect the gap to last year to continue to narrow, Matt, in Q4. We are continuing to move through the new store pipeline. Those new stores continue to mature and ramp very nicely. That's helping to drive and lead us toward that inflection that we talked about.

[Michael Maher, CFO at Savers Value Village]

Being better at equilibrium in Canadian processing, both of those should contribute to a further narrowing of the gap in the fourth quarter.

[Matthew Boss, Equity Research Analyst at JPMorgan]

Great. Best of luck.

[Michael Maher, CFO at Savers Value Village]

Thanks.

[Operator]

Next question will be from Brooke Roach at Goldman Sachs. Please go ahead, Brooke.

[Brooke Roach, VP of Equity Research at Goldman Sachs]

Good afternoon, and thank you for taking our question. Mark, I was hoping to get your thoughts on new market expansion for the Savers brand given the announcement to enter Tennessee and North Carolina. What did you learn from the 2 Peaches stores that you're closing that can help you ensure that new market expansions will be successful?

[Jubran Tanious, President and COO at Savers Value Village]

I can jump in.

[Mark Walsh, CEO at Savers Value Village]

Sure. Jubran, why don't you jump in?

[Jubran Tanious, President and COO at Savers Value Village]

Yeah, sure. Hi, Brooke. It's Jubran. I can help provide some color. We converted the 2 Peaches stores per plan, and it's really pretty straightforward.

[Jubran Tanious, President and COO at Savers Value Village]

We had three of them that we converted and, frankly, didn't like the performance on them. We acted quickly to close them. I think your broader question is, and kind of higher level, our strategic goal was always to enter the U.S. Southeast, where we previously had no presence, and we wanted to take advantage of all that white space. While we're closing these three acquisition locations, the local supply that we now have in our mix will help us feed those new organic stores in 2026, where I think Mark mentioned that we will be opening our first store in Tennessee, our first stores in North Carolina, and an additional store in the Atlanta market. Very excited about these locations. These are, again, exciting centers that we think are going to show strong for our first stores in those states.

[Jubran Tanious, President and COO at Savers Value Village]

We continue to stay enthusiastic about our expansion opportunities in the Southeast.

[Brooke Roach, VP of Equity Research at Goldman Sachs]

Great. Maybe a follow-up from Michael. As you contemplate the modestly lighter EBITDA margin guide that you've provided for the back half this year, how should we be thinking about the path back to EBITDA margin expansion into 2026? Do the recent pressures in the Canadian business impact your view on the cadence and magnitude of improvement that you could see into next year?

[Michael Maher, CFO at Savers Value Village]

Yeah, thanks, Brooke. This really doesn't—nothing has changed our view of the near or longer-term financial algorithm. Just as a reminder for everyone, we see over the long term high single-digit total revenue growth, which will be driven primarily by new stores. Now, next year, and I'm not guiding to next year, but do remember that next year we go back to a 52-week year after a 53-week year this year.

[Michael Maher, CFO at Savers Value Village]

That two points we picked up this year, we're going to give that back next year. That aside, continue to see over the long term low single-digit comps. I think what we're seeing now is probably reasonably representative of how that's going to shake out by country, with Canada in the low single digits and the U.S. somewhere in the mid-single digits, averaging out to roughly low single. We still see high teens EBITDA margins in the long-term algorithm. That's not going to be a step change. We've been saying that for a while. I don't expect to see that happen next year. We've got to continue building out the new store pipeline and letting that mature. We continue to believe, as we said before, that EBITDA margins are at their trough this year, and we would expect to see some modest growth in 2026.

[Brooke Roach, VP of Equity Research at Goldman Sachs]

Thanks so much.

[Brooke Roach, VP of Equity Research at Goldman Sachs]

I'll pass it on.

[Mark Walsh, CEO at Savers Value Village]

Thanks, Brooke.

[Operator]

Next question will be from Mark Altschwager at Baird. Please go ahead, Mark.

[Mark Altschwager, Senior Research Analyst at Baird]

Great. Thanks for taking my question. Just following up on the U.S. momentum, can you talk about the opportunity in pricing given the quality of supply you're seeing and the inflation you're beginning to see within the U.S. apparel market?

[Mark Walsh, CEO at Savers Value Village]

Yeah. Look, hey, Mark. This is Mark. We are starting to see new apparel and footwear prices increase. How we're approaching that is if the gap widens significantly beyond that 40%-70% range that I articulated, it gives us an advantageous optionality. Whether we choose to just gain share or some modest strategic price increases or both, it's just going to highlight our well-positioned price-value equation within that market. We see that as a big opportunity for us moving forward.

[Mark Altschwager, Senior Research Analyst at Baird]

Thank you.

[Mark Altschwager, Senior Research Analyst at Baird]

Just on Canada, you've made a handful of comments here as we think about Q4 and into 2026. I guess guiding flattish Q4, I think you just said low single digit is kind of your baseline expectation for next year. I mean, I know you're not guiding, but comparisons do begin to get tougher next year as you cycle the recovery or the improvement you delivered this year. Maybe just help us understand the factors that could drive sort of a stable low single in Canada given the macro headwinds you outlined.

[Michael Maher, CFO at Savers Value Village]

Yeah, Mark. I think that the assumption is that we're going to continue to focus on the things Mark talked about earlier in terms of sharp value, great execution. We are seeing sort of stability there. The macro is growing, albeit slowly.

[Michael Maher, CFO at Savers Value Village]

We do think that we can sustain low, and we're going to plan for conservatively low single-digit comps in Canada and hopefully outperform that. We'll stay cautious in terms of the planning. Like I said, we continue to see really strong momentum in the U.S. We're more in the mid-single digit range there, comfortably in the mid-single digit range in Q3, obviously. We remain confident that we can average that out in something around a low single digit overall comp.

[Mark Altschwager, Senior Research Analyst at Baird]

Thank you.

[Operator]

Next question will be from Bob Drbul at BTIG. Please go ahead, Bob.

[Bob Drbul, Managing Director and Consumer Retail Analyst at BTIG]

Hi. Good afternoon. Just a couple of follow-up questions. On the 2 Peaches, the stores that you updated and then closed, I guess, what did you guys learn from why do you think that didn't work for those stores?

[Bob Drbul, Managing Director and Consumer Retail Analyst at BTIG]

The other question I have is just on the new markets, Tennessee, North Carolina, and the other store in Atlanta. Can you just talk about the entry and how you're approaching the market and any marketing around. Those stores and that initiative? Thanks.

[Mark Walsh, CEO at Savers Value Village]

Hey, Bob, it's Mark. On the Tennessee, North Carolina stores, we'll take the same approach that we have in all of our new store openings. We've got great real estate, great traffic patterns around it, putting that community donation center first and foremost as part of that facility, critical for us in the long term. We typically start with an event, and then we do paid search around it. That's been very successful for us throughout our last three years of openings in the U.S.

[Mark Walsh, CEO at Savers Value Village]

We feel confident about our approach, and we don't see why it would be any different or the success rate of that approach would be any different in North Carolina and Tennessee. On the issue around 2 Peaches, as Jubran mentioned, we converted those stores three months ago. I think we looked at them out of the chute. We did not like the way they were performing. We wanted to get to a better place from a 2026 perspective on EBITDA and it being accretive. We decided to close them, and we made a quick decision based on what we thought was the base case in terms of potential growth within those three environments. We decided to move on.

[Mark Walsh, CEO at Savers Value Village]

We feel good about that decision, and we like the fact that we're setting ourselves up for 2026 accretion versus continuing to fight a fight that we didn't think was going to be that fruitful. Bob, the only other thing I would add to Mark's comments is we've got our first stores in Tennessee, North Carolina, a new one in Atlanta. What we didn't mention is sitting behind that is a pretty growing, robust pipeline of other attractive locations that are sitting a little bit behind those stores but are equally attractive in terms of site quality, demographics, trade area that we'd be operating in. Like Mark said, pretty excited about the future for us in the Southeast.

[Bob Drbul, Managing Director and Consumer Retail Analyst at BTIG]

Great. Thank you.

[Operator]

Next question will be from Michael Lasser at UBS. Please go ahead, Michael.

[Michael Lasser, Equity Research Analyst on Hardlines, Broadlines, and Food Retail at UBS]

Good evening. Thank you so much for taking my question.

[Michael Lasser, Equity Research Analyst on Hardlines, Broadlines, and Food Retail at UBS]

If the macro is getting worse in Canada, why are you not seeing the trade down? If the macro remains challenged in 2026, how far are you willing to sacrifice the profitability of the U.S. business to support the Canadian segment? Thanks.

[Mark Walsh, CEO at Savers Value Village]

I'll answer that first part of the question. I think Michael will tackle the second part. We are actually seeing trade down in Canada. Similar to the U.S., I just didn't mention it because the original answer was focused on the U.S. Like the U.S., our key cohorts, U.S., I mean, the high household incomes and younger consumers, they're both growing in Canada as well. We're actually really pleased about how the loyalty base is morphing in Canada as well. We are, in fact, seeing trade down, probably not to the same degree as we are in the U.S., but we are certainly seeing it.

[Michael Maher, CFO at Savers Value Village]

Yeah, Michael.

[Michael Maher, CFO at Savers Value Village]

This is Michael. I didn't quite follow the second part of your question about Canadian versus U.S. profit in 2026. Could you repeat that?

[Michael Lasser, Equity Research Analyst on Hardlines, Broadlines, and Food Retail at UBS]

You took down the guide. Yeah, you took down the guide because of a slowdown in the Canadian business for the fourth quarter. If we assume that continues into next year, do you have to sacrifice some of the improving profitability in the U.S. business to support the Canadian business? Alternatively, if you experience deleverage on the Canadian business, to what degree is that going to eat into the profitability of the U.S. business?

[Michael Maher, CFO at Savers Value Village]

I see. We're not ready to guide for 2026 specifically yet. I guess what I would say, though, is, and Mark mentioned this earlier in his remarks in response to the first question, we're planning for, in the near term at least, a slow growth business.

[Michael Maher, CFO at Savers Value Village]

That means really tight execution, but also a really aggressive posture on costs in Canada. We believe that at a low single-digit growth rate, which we think is sustainable into next year in Canada, we can be disciplined enough on costs to still achieve our bottom line objectives as well. In the U.S., really happy with the top line momentum there. That is also our investment, our growth market, and our new store growth is going to be disproportionately in the U.S. going forward. Nothing we see at this point changes our view in the near or longer term about the financial algorithm.

[Michael Lasser, Equity Research Analyst on Hardlines, Broadlines, and Food Retail at UBS]

Thank you very much. Good luck.

[Michael Maher, CFO at Savers Value Village]

Thank you.

[Operator]

Next question will be from Peter Keith at Piper Sandler. Please go ahead, Peter.

[Alexia Morgan, Assistant VP on Equity Research at Piper Sandler]

Hi. This is Alexia Morgan on for Peter. Thanks for taking our question. My first question is a clarification on guidance.

[Alexia Morgan, Assistant VP on Equity Research at Piper Sandler]

Could you elaborate on the key drivers behind the narrowing of your EBITDA guidance and lowering the range at the high end? Was that primarily due to Canada, or are there other factors that went into that recalibration as well?

[Michael Maher, CFO at Savers Value Village]

Yeah. Canada is the largest factor. That was really the biggest variable going into the back half of the year for us. We were going up against some really challenging business from a year ago. As we mentioned, we saw the comps settle out at the lower end of our expectations there. Processing had to follow, but it did follow. We had some additional pressure on margin in the third quarter. That's the biggest driver of the narrowing of the guide toward the lower end on EBITDA. To a lesser extent, it's the 2 Peaches performance that we talked about earlier.

[Alexia Morgan, Assistant VP on Equity Research at Piper Sandler]

Thank you. One more on tariffs.

[Alexia Morgan, Assistant VP on Equity Research at Piper Sandler]

I know you're not exposed to tariffs, but considering just the price increases being seen broadly across the industry, have you noticed any interesting mixture in your sales, or are there certain categories of yours that you think might be outperforming and indirectly benefiting from prices raising across the industry?

[Jubran Tanious, President and COO at Savers Value Village]

We have not seen that phenomenon in our sales metrics.

[Alexia Morgan, Assistant VP on Equity Research at Piper Sandler]

Thank you.

[Operator]

Once again, ladies and gentlemen, a reminder to please press star one if you do have any questions. Next, we will hear from Owen Rickert at Northland Capital Markets. Please go ahead, Owen.

[Owen Rickert, Equity Research Associate at Northland Capital Markets]

Hey, guys. Thanks for taking my question here. Just quickly, on the automation front, have you started to see any tangible benefits from the new centralized processing centers and automated book systems? Maybe secondly, what's the latest thinking around CapEx as you continue to roll those out?

[Jubran Tanious, President and COO at Savers Value Village]

Why don't I take the CPC?

[Jubran Tanious, President and COO at Savers Value Village]

You can talk CapEx. Hi, Owen. This is Jubran. The CPCs, the automated book processing. We have made progress in terms of efficiency and effectiveness on those quarter after quarter after quarter. Pleased with the progress. What I will say is I don't think that we will ever get to a place where we say we've arrived. There's still a tremendous amount of opportunity that we see. I don't mind sharing I spend quite a bit of my own time and focus on this topic where, as we think about 2026, the opportunities that we have to become more efficient, more effective in those facilities. We think that there's a lot of opportunity there. I can't get into, I don't have the liberty of getting into the specifics on that.

[Jubran Tanious, President and COO at Savers Value Village]

We have quite a few different tactics in the hopper that we think are going to play well for us into the future.

[Owen Rickert, Equity Research Associate at Northland Capital Markets]

Great. Thank you.

[Michael Maher, CFO at Savers Value Village]

Owen, this is Michael on your second question about CapEx. Again, we'll give more specifics when we guide for next year. We have said that the current level at roughly a high single-digit percentage of revenue is probably pretty indicative of where we'll be as long as we are in this growth mode. Most of that investment is going to be in growth and in new stores. It may include amounts for additional enablers like off-site processing facilities or other technology investments as well. Overall, that's probably a reasonable envelope.

[Owen Rickert, Equity Research Associate at Northland Capital Markets]

Got it. Thanks, guys.

[Jubran Tanious, President and COO at Savers Value Village]

Thank you. Sure.

[Operator]

At this time, Mr. Walsh, it appears we have no other questions, sir. Please proceed.

[Mark Walsh, CEO at Savers Value Village]

We'd like to thank everyone for their time today and their interest in Savers Value Village. We look forward to connecting with you after our fourth quarter. Thanks again.

[Operator]

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your line.

Participants

Executives

• Mark Walsh, CEO
• Michael Maher, CFO
• Jubran Tanious, President and COO

Analysts

• Randy Konik, Managing Director at Jefferies
• Matthew Boss, Equity Research Analyst at JPMorgan
• Brooke Roach, VP of Equity Research at Goldman Sachs
• Mark Altschwager, Senior Research Analyst at Baird
• Bob Drbul, Managing Director and Consumer Retail Analyst at BTIG
• Michael Lasser, Equity Research Analyst on Hardlines, Broadlines, and Food Retail at UBS
• Alexia Morgan, Assistant VP on Equity Research at Piper Sandler
• Owen Rickert, Equity Research Associate at Northland Capital Markets