Savers Value Village, Inc. Q3 FY2024 earnings call

• U.S. business remained steady with positive comp sales growth driven by transactions and average basket. • Canadian business impacted by macro environment but trends improving early in the quarter. • Opened 9 new stores in the quarter, on track for 29 new stores in 2024 and 25-30 in 2025. • Loyalty program saw double-digit percentage growth in active members, with loyalty members accounting for 72% of total sales. • New stores continued to perform well with sales and earnings exceeding expectations. • Innovations like centralized processing, automated book processing, and self-checkout embedded in the business. • Testing different pricing and selection approaches in Canada to address macro challenges.

The U.S. business had net sales increase 6.2% to $212 million, with comparable store sales up 1.6%. The U.S. segment profit was $43.8 million, down $8.5 million versus last year. The Canadian business had net sales decline 7.1% to $152 million, comparable store sales down 7.5%, and Canada segment profit was $45.4 million, down $11 million versus last year. Loyalty members accounted for 72% of total sales in the quarter.

• Full year 2024 outlook: net sales to range $1.53 billion to $1.54 billion, comparable store sales down 1% to flat, net income $44 million to $49 million, adjusted net income $81 million to $86 million, adjusted EBITDA $290 million to $300 million. • 2025 new store opening plan: expect 25 to 30 new stores. • Full year 2024 new store openings remain at 29. • Capital expenditures planned in range of $105 million to $115 million.

• Macro environment in Canada challenging with 6.5% unemployment and rising cost of living hard on low-income consumers. • Pulled back too far on processing in Canada initially, causing sales trends to decelerate. • Competitive pricing landscape posing challenges.

Q: Elaborate on the progression of same-store sales trends in Q3 and early Q4 in U.S. and Canada A: Mark Walsh said the trend in both Canada and the U.S. improved from July through September and continued into early Q4 Q: Break down drivers of Q3 gross margin contraction and margin profile outlook A: Michael Maher said gross profit margin deleverage in Q3 was due to new stores and deleverage on lower comp sales; new stores are at half mature sales levels, and off-site processing cost per unit approaching in-store levels Q: Elaborate on tests in Canada to improve performance and margin implications A: Mark Walsh discussed promotional and pricing tests, with strategic price reductions by category and grade showing promise; Michael Maher said no significant Q4 impact expected yet Q: Guidance thought process and Canada comp trend outlook A: Michael Maher said guidance narrowing reflects Q3 performance; U.S. comps expected to continue low single-digit growth, Canada could be down low to mid single-digits Q: Production and inventory flow management in Canada and margin flexibility A: Jubran Tanious said selection is critical, balance between production and demand, using transaction volumes to manage; need baseline comp to hold four-wall gross margin flat Q: New store economics and paybacks A: Michael Maher said new stores lose money first year but profitable by second; Jubran Tanious said new store predictive model close to pin, pipeline growing Q: On-site donations and GreenDrop processing percentage A: Michael Maher said just shy of 80% was on-site donations and GreenDrop combined, up from ~78% last year Q: Canada macro difficulties mitigation and actions A: Mark Walsh said tested promotional and pricing strategies, investing in tools to monitor price value; will roll out in North America early 2025 Q: Actions to bridge gap between Q3 and long-term algorithm and processing calibration A: Michael Maher said focusing on Canada comp improvement and new store growth; Jubran Tanious said matching production to transaction volume gradually Q: Processing calibration and 2 Peaches acquisition integration A: Jubran Tanious said production levels calibrated to transaction volume, not banging wildly; 2 Peaches acquisition: 2 stores converted, seeing double-digit comp growth, expect to convert remaining 5 over 12-18 months