Q1 2024 Savers Value Village Inc Earnings Call

Operator: Good afternoon, and welcome to the Savers Value Village conference call to discuss financial results for the first quarter ending March 30, 2024. At this time, all participants are in a listen-only mode.

Good afternoon, and welcome to Savers value village conference call to discuss financial results for the first quarter ending March 30, 2024 at this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions.

Operator: 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. Furthermore, certain comments made during this call may constitute forward-looking statements, which are subject to significant risk and uncertainties that could cause the company's actual results to differ materially from expectations or historical performance.

Operator: We will follow at that time.

Operator: 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.

Operator: The comments made during this call and the Q&A that follows are copyrighted by the company and cannot be reproduced without reading authorization from the company.

Operator: Please review the disclosure on forward-looking statements included in the company's earnings release and filings with the SEC for discussion on this risk and uncertainty. Please be advised that these statements are current only as of the date of this call, and 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-capital financial measures.

Operator: Certain comments made during this call may constitute forward looking statements, which are subject to say defense risks and uncertainties that could cause the company's actual results to differ materially from expectations our historical performance.

Operator: Please review the disclosure on forward looking statements included in the company's earnings release and filings with the S. E C for a discussion on this risk and uncertainties.

Operator: 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.

Operator: The company May also discuss certain non-GAAP financial measures I.

Operator: 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 S. E SEC filings.

Operator: 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 filing. Joining from management on today's call are Mark Walsh, Chief Executive Officer, and Jubran Tanious, President and Chief Operating Officer. Mr. Walsh, you may go ahead, sir.

Operator: Joining from management on today's call are Mark Walsh, Chief Executive Officer, and you run Tonya's, President and Chief Operating Officer. Mr. Walsh You May go ahead Sir.

Mark T. Walsh: Thank you. Good afternoon, everyone.

Mark T. Walsh: Thank you and good afternoon, everyone. I appreciate you joining us today.

Mark T. Walsh: Appreciate you joining us today. We started 2024 on solid footing, underpinned by secular trends, a growing wealthy program, and an underlying value proposition that is driven by our unique product selection and shopping experience. We have a number of areas that we want to discuss today, namely our first quarter results, our strong new store performance and pipeline, an opportunistic acquisition of a small thrift chain in the southeast that establishes a beachhead for accelerated growth in a key geography where we have considerable white sand, investments we are making to differentiate ourselves and support accelerated growth to higher trends, and finally, the CFO transition we announced this afternoon. I'll start with our results.

Mark T. Walsh: 2024 on solid footing underpinned.

Mark T. Walsh: Underpinned by secular trends for growth.

Mark T. Walsh: Welty program.

Mark T. Walsh: The underlying value proposition that is driven by our unique product selection and shopping experience.

Mark T. Walsh: We have a number of areas that we want to discuss today, namely our first quarter results.

Mark T. Walsh: Our strong new store performance and pipeline.

Mark T. Walsh: An opportunistic acquisition of a small drift chain in the southeast.

Mark T. Walsh: Establishing a beachhead for accelerated growth in a key geography, where we have considerable white space.

Mark T. Walsh: The investments, we are making to differentiate ourselves and support accelerated growth shopper trends and finally, the CFO transition we announced this afternoon.

Mark T. Walsh: I'll start with our results.

Mark T. Walsh: Overall, we are pleased that our first quarter results were in line with expectations we provided on our last earnings call. In Q1, we delivered $354 million in sales. $60.3 million in adjusted EBITDA, representing growth of 2.5% and 2.1% respectively. One theme which we will be discussing today is the divergence and the trends between the U.S. and Canada. Specifically, while our comparable sales on aggregate were 0.3%, the U.S. grew by 2.3%, while Canada saw negative comparable sales of 2.6%.

Mark T. Walsh: Overall, we are pleased that our first quarter results were in line with expectations. We provided on our last earnings call.

Mark T. Walsh: Q1, we delivered $354 million in sales at $63 million in adjusted EBITDA, representing growth of two five to two 1% respectively.

Mark T. Walsh: One theme, which we will be discussing today is the divergence in the trends between the U S and Canada.

Mark T. Walsh: Specifically, while our comparable sales on aggregate were <unk>, 3%. The U S grew by two 3%, while Canada saw negative comparable sales of two 6%.

Mark T. Walsh: Notably, on a two-year stack basis, our aggregate content store sales increased 7.5%, with the US up 7.9% and Canada up 6.4%. As I will discuss in a bit, we are facing more difficult macroeconomic conditions in Canada than what we are currently seeing in the United States. Moreover, given our existing established presence in Canada, where we are already considerably more penetrated and where thrift is already more widely adopted, the macro pressures have tended to be more impactful to our results in the U.S. Consumers also remain cautious with their discretionary dollars, but thrift exploration and acceptance continues to grow. As we have referenced, 85% of consumers have interacted with Thrift as a shopper or a donor, and one in five indicate they will increase their spending over the coming year.

Mark T. Walsh: Notably on a two year stack basis, our aggregate comp store sales increased seven 5% with the U S up seven 9%.

Mark T. Walsh: In Canada up six 4%.

Mark T. Walsh: As I will discuss in a bit we are facing more difficult macro conditions in Canada than what we're currently seeing in the United States.

Mark T. Walsh: Moreover, given our existing established presence in Canada, where we already are considerably more penetrated and where thrift is already more widely adopted the macro pressures it tended to be more impactful to our results.

Mark T. Walsh: In the U S.

Mark T. Walsh: <unk> also remain cautious with the discretionary dollars, but thrift exploration at acceptance continues to grow.

Mark T. Walsh: As we have referenced 85% of consumers that have interacted with threat as a shopper or donor and one in five indicate they will increase their spend over the coming years.

Mark T. Walsh: While we are facing some macro headwinds in Canada, we continue to invest to drive accelerated unit growth, and As you will recall, we opened 12 stores in 2023 and are pleased to report that we are on track to reach our 22 store opening target this year in 2024, with 21 leases already signed. As Jubran will discuss shortly, with seven additional stores in the southeast via our two peaches acquisition, we expect to add a total of 29 stores this year, representing 9% growth of our consolidated store base at the start of the year.

Mark T. Walsh: While we are facing some macro headwinds in Canada, we continue to invest to drive accelerated unit growth in sales.

Mark T. Walsh: As you will recall, we opened 12 stores in 2023 and are pleased to report that we are on track to reach our 22 store opening target. This year in 2024 was 21 leases already signed.

Mark T. Walsh: Brian will discuss shortly with seven additional stores in the southeast via our two Peaches acquisition, we expect to add a total of 29 stores. This year, representing 9% growth of our consolidated store base at the start of the year.

Mark T. Walsh: More importantly, the performance of our newly opened stores has demonstrated strong economics, with a targeted return on investment north of 20% and is performing in line with our underwriting model. We continue to expect a back-end-weighted opening schedule this year and a more balanced quarterly cadence opening schedule next year, resulting in significantly more new store openings in the beginning of 2025 on a year-over-year basis. The investments we have made in the real estate development team are powering the new store growth engine; we are well positioned to accelerate this growth given the significant white space opportunity we have in front of us. I'll now turn the call over to Jubran to discuss our recent acquisition and our exciting plans for the South. Thanks, Mark.

Mark T. Walsh: Importantly, the performance of our newly opened stores as demonstrated strong unit economics with a targeted return on investment north of 20% and are performing in line with our underwriting model.

Jubran: We continue to expect a backend weighted.

Jubran: Turning schedule this year and a more balanced quarterly cadence opening schedule next year, resulting in significantly more new store openings in the beginning of 2025 on a year over year basis.

Jubran: The investments we have made in our real estate development team are powering the new store growth engine.

Jubran: We are well positioned to accelerate this growth given the significant white space opportunity, we have in front of us.

Jubran: Now I will turn the call over to Djabran to discuss our recent acquisition and our exciting plans for the southeast Thanks Mark.

Jubran Tanious: Echoing Mark's comments, we continue to have tremendous growth opportunities, fueled by strong secular trends and the huge white space ahead of us. Right now, in the United States, we are underpenetrated in most major markets that we currently operate in, and we have no presence in the U.S. Southeast and virtually no presence in the U.S. South, which obviously presents a significant opportunity for us. We announced this morning the acquisition of a regional thrift store chain in Georgia by the name of 2PG.

Jubran: Echoing Mark's comments, we continue to have tremendous growth opportunities fueled by strong secular trends and the huge white space ahead of us right.

Jubran Tanious: Right now in the United States, we are Underpenetrated in most major markets that we currently operate in.

Jubran Tanious: And we have no presence in the U S southeast and virtually no presence in the U S South.

Jubran Tanious: Which obviously presents a significant opportunity for us.

Jubran Tanious: We announced this morning, the acquisition of a regional thrift store chain in Georgia by the name of two pieces.

Jubran Tanious: As part of the diligence process, our analysis indicates significant upside potential, given the local demographics and attractiveness of the real estate itself. While the impact of the acquisition will not be material to our 2024 financials, this is a key development in our unit growth strategy, as it provides a beachhead from which to grow in an important new geography like the South, home to some of the fastest growing states in the country.

Jubran Tanious: As part of the diligence process, our analysis indicates significant upside potential given the local demographics and attractiveness of the real estate itself.

Jubran Tanious: While the impact of the acquisition will not be material to our 2020 for financials. This is a key development in our unit growth strategy.

Jubran Tanious: Is it provides a beachhead from which to grow in an important new geography like the southeast home to some of the fastest growing states in the country.

Jubran Tanious: As we have previously discussed, supply is one of the gating factors when opening a new store or entering a new region, such as the South, in addition to the real estate itself. Two Peaches stores also bring an attractive and critical base of supply. Leveraging our centralized processing centers and their long-haul product delivery, we have a proven ability to feed stores with off-site processing that allows us to enter new regions faster and more nimbly compared to starting from scratch.

Jubran Tanious: As we have previously discussed supply is one of the gating factors when opening a new store or entering a new region such as the southeast.

Jubran Tanious: In addition to the real estate itself.

Jubran Tanious: The two pizza stores also bring an attractive and critical base of supply.

Jubran Tanious: Leveraging our centralized processing centers and their long haul product delivery, we have a proven ability to feed stores with off site processing.

Jubran Tanious: That allows us to enter new regions faster and more nimbly compared to starting from scratch.

Jubran Tanious: As part of our transition and integration, we will initially transition two of the stores to operate in the same manner as our existing Savers Value Village stores by supplementing their local supply from our centralized processing center in Hyattsville, Maryland. That will allow us to very quickly elevate the selection and overall value proposition of the two peaches without the longer lead times required to build this capability locally. Over time, we will convert the remaining five stores to the Savers Value Village model and transition the off-site processing support to the local area to optimize transportation costs and overall business costs.

Jubran Tanious: As part of our transition and integration.

Jubran Tanious: We will initially transitioned to the stores to operate in the same manner as our existing favors value village stores.

Jubran Tanious: By supplementing their local supply from our centralized processing center in Hyattsville, Maryland.

Jubran Tanious: That will allow us to very quickly elevate the selection and overall value proposition to the two features customer without the longer lead times required with building this capability locally.

Jubran Tanious: Overtime, we will convert the remaining five stores to the savers value village bottle <unk>.

Jubran Tanious: And transition the off site processing support to the local area to optimize transportation costs and overall cost of goods.

Jubran Tanious: We expect the maturity curve on these locations to more or less match the five year curve we see with our traditional new store openings. Finally, as a reminder, we are making continued investments in new centralized processing centers, off-site production facilities housed in smaller warehouses, and the Automated Book Processing Unit. We currently operate five centralized processing centers, with the latest having opened in Minneapolis late last year. We plan to open our sixth in California either later this year or early in 2025 to further support growth in the western region.

Jubran Tanious: We expect the maturity curve on these locations tomorrow less match, the five year curve, we see with our traditional new store openings.

Jubran Tanious: Finally, as a reminder, we are making continued investments in new centralized processing centers off site production facilities housing smaller warehouses and.

Jubran Tanious: And automated book processing units, we currently operate five centralized processing centers.

Jubran Tanious: With the latest having opened in Minneapolis late last year.

Jubran Tanious: We plan to open our sixth in California, either later this year or early in 2025 to further support growth in the Western region.

Jubran Tanious: We also completed eight new automated book processing deployments and opened four off-site production facilities in 2023. This is a great illustration of our continued investment in future growth in retail and supply. Now I'll turn the call back to Mark. Thanks, Jubran.

Jubran Tanious: Also completed eight new automated book processing deployments and opened for off site production facilities in 2023.

Mark: This is a great illustration of our continued investment in future growth in retail and supply now.

Jubran Tanious: Now I'll turn the call back to Mark.

Mark T. Walsh: Thanks, Jubran. Returning to the first quarter, the broader macro environment, weather, and shopper trends created some challenges. Like many other retailers, we faced external factors and headwinds in Q1 that impacted our financial results. Severe weather in January resulted in a number of store closures and traffic disruptions early in the quarter, impacting Q1 sales by approximately 50 basis points.

Mark: Thank you, Brian returning to the first quarter, the broader macro environment, whether in shopper trends created some challenges like many other retailers, we faced external factors and headwinds in Q1 that impacted our financial results.

Mark T. Walsh: Severe weather in January resulted in a number of store closures and traffic disruptions early in the quarter impacting Q1 sales by approximately 50 basis points.

Mark T. Walsh: In addition, we experienced unfavorable holiday shifts in Canada at the beginning and the end of our fiscal quarter associated with New Year's and Good Friday, impacting Canada's Q1 sales by approximately 90 basis points. While our U.S. business was in line with our revised expectations, our Canadian business did not perform as we expected. This is a challenging time in Canada for many retailers, and the macro headwinds have gotten stronger since the end of last year.

Mark T. Walsh: In addition, we experienced unfavorable holiday shifts in Canada at the beginning in the end of our fiscal quarter associated with new year's and good Friday impacting Canada Q1 sales by approximately 90 basis points.

Mark T. Walsh: Our U S business was in line with our revised expectations, our Canadian business did not perform as we expected. This is a challenging time in Canada for many retailers and the macro headwinds have gotten stronger since the end of last year.

Mark T. Walsh: The softness we experienced in Q1 was driven mostly by a pronounced slowdown in mid to late, primarily driven by fewer visits from non-loyalty members. Importantly, our non-wealthy member customer segment skews younger and on the lower end of our household income. This demographic tends to be more affected when the economy takes a hit.

Mark T. Walsh: The softness we experienced in Q1 was driven mostly by a pronounced slowdown in mid to late March primarily driven by fewer visits are non loyalty members.

Mark T. Walsh: Shortly our non loyalty member customer segment skews younger and on the lower end of our household income scale.

Mark T. Walsh: This demographic tends to be more effective when the economy takes a downturn, they're shopping less often as typically happens when people are stretched for cash and are uncertain about the future.

Mark T. Walsh: They're shopping less often, as typically happens when people are stretched for cash and are uncertain about the future. By comparison, sales from our core loyalty members, who make up 70% of our sales base, were more resilient in the month of March in Canada. In fact, we continue to add loyalty members at a healthy pace in the Canadian market, growing 12.9% year-over-year in quarter one. Moreover, our customer data shows that loyalty members remain firmly committed to our brand with high shopper satisfaction and low expenses, particularly amongst our best and Highest Spenders, who represent nearly half of our customers.

Mark T. Walsh: In comparison sales from our core loyalty members, who make up 70% of our sales space were more resilient in the month of March in Canada. In fact, we continue to add loyalty members at a healthy pace in the Canadian market growing 12, 9% year over year and quarter. One. Moreover, our.

Mark T. Walsh: Customer data shows that loyalty members remain firmly committed to our brand with high shopper satisfaction and low attrition, particularly amongst our best.

Mark T. Walsh: And highest spenders, who represent nearly half of our sales.

Mark T. Walsh: Given our operating model, where we generate our supply locally and where our cost of goods is principally labor, we believe Savers Value Village is uniquely positioned to perform amidst these headwinds. Our operating model provides nimbleness to manage our production, and production labor can be adjusted to be more in line with consumer demand, thereby limiting pressure on our EBITDA margin. We will be aggressively testing ways to increase shopper trip frequency and reengage customers who may not have shopped with us recently. These efforts, which include increasing marketing in certain Canadian markets.

Mark T. Walsh: Given our operating model, where we generate our supply locally and where our cost of goods is principally labor. We believe chevron's value village is uniquely positioned to perform amidst these headwinds our operating model provides nimbleness and manage our production and production labor can be adjusted to be more in line with.

Mark T. Walsh: <unk> demand, thereby limiting pressure on our EBITDA margins.

Mark T. Walsh: We will be aggressively testing ways to increase shopper trip frequency and re engage customers who may not have shopped with US recently these efforts, which include increasing marketing and certain Canadian markets.

Mark T. Walsh: Focusing production on certain categories which we know drive frequency and purchase, and delivering targeted promotions have already begun. In this environment, consumers are focused on quality and value. Savers Value Village delivers a unique value proposition to these consumers, offering quality items at the right price.

Mark T. Walsh: Focusing production on certain categories, which we know drive frequency of purchases and delivering targeted promotions have already begun.

Mark T. Walsh: In this environment consumers are focused on quality and value <unk> value village delivers a unique value proposition to these consumers offering quality items at the right price.

Mark T. Walsh: When it comes to the consumer, our customer data in North America continues to remain very positive. Our customer satisfaction scores remain high. Our merchandise selection continues to resonate with shoppers, and customers' intent to shop levels remain very high.

Mark T. Walsh: When it comes to the consumer our customer data in North America continues to remain very positive.

Mark T. Walsh: Customer satisfaction scores remain high our merchandise selection continues to resonate with shoppers and customers' intent to shop levels remain very strong.

Mark T. Walsh: We believe our brand is exceptionally positioned to meet the needs of today's consumers. Before I move on to our detailed financial results, I'd like to take a moment to address the CFO transition we announced today. We are thrilled to welcome Michael Mayer as our new CFO, effective Monday, replacing Jay Stasz.

Mark T. Walsh: We believe our brand is exceptionally positioned to meet the needs of today's consumers.

Mark T. Walsh: Before I move on to our detailed financial results I'd like to take a moment to address the CFO transition we announced today.

Mark T. Walsh: I want to thank Jay for his many contributions to Savers in helping us successfully launch our IPO, and we wish him all the best. Michael is a seasoned finance leader with more than 25 years of retail and consumer experience, most recently as the interim CFO of Nordstrom. He is a perfect fit as we position Savers Value Village to capitalize on our accelerating growth opportunities. We're really excited to have him on board.

Speaker Change: We are thrilled to welcome Michael Mayer as our new CFO effective Monday, replacing J status.

Mark T. Walsh: I want to thank Jay for his many contributions to savers and helping US successfully launch our IPO and we wish him all the best.

Mark T. Walsh: Michael is a seasoned finance leader with more than 25 years of retail and consumer experience. Most recently as the interim CFO of Nordstrom.

Mark T. Walsh: He is a perfect fit as we positioned sandridge value village to capitalize on our accelerating growth opportunities. We're really excited to have him on board. Michael is looking forward to joining us on future calls, but for today I will.

Mark T. Walsh: Michael is looking forward to joining us on future calls, but for today, I'll take you through our first quarter financials in a little more detail. Let's start with sales. Net sales increased 2.5% to $354 million. Our net sales growth was driven by new store openings and a comparable same-store sales increase of 0.3. As a reminder, we were up against our highest.

Mark T. Walsh: Take you through our first quarter financials in a little more detail, let's start with sales net sales increased two 5% to $354 million or net sales growth was driven by new store openings and a comparable same store sales increase of <unk>, 3%.

Mark T. Walsh: As a reminder, we were up against our highest <unk>.

Mark T. Walsh: Dame Store Comparison of the Year in Q. In last year's first quarter, comparable store sales increased 9% in Canada and 5.6% in the U.S. and 7.2% on a consolidated basis. In the United States, net sales increased 4.7% to $192.6 million. Comparable store sales increased 2.3%, driven by both an increase in transactions and an average best. In Canada, net sales were flat at $134 million.

Mark T. Walsh: Same store comparison of the year in Q1.

Mark T. Walsh: In last year's first quarter comparable store sales increased 9% in Canada, and five 6% in the U S and seven.

Mark T. Walsh: Seven 2% on a consolidated basis.

Mark T. Walsh: In the United States net sales increased four 7% to $192 6 million comparable store sales increased two 3% driven by both an increase in transactions and average basket in Canada net sales were flat at $134 million comparable stores.

Mark T. Walsh: Comparable store sales declined 2.6%, driven primarily by declines in transactions from non-loyalty markets. Cost of merchandise sold as a percentage of net sales increased 260 basis points. 44.7%, with the increase driven by higher material, labor, benefits, and freight costs. The increase in material costs as a percentage of net sales goes in line with expectations and is driven by the ramp-up of the two new centralized processing centers that were opened in the second half of last year and the higher mix of processing coming from those facilities.

Mark T. Walsh: Sales declined two 6% driven primarily by declines in transactions from non loyalty members.

Mark T. Walsh: Cost of merchandise sold as a percentage of net sales increased 260 basis points to 44, 7% with the increase driven by higher material labor benefits and freight costs. The increase in material costs as a percentage of net sales was in line with expectations and driven by the ramp of <unk>.

Mark T. Walsh: The two new centralized processing centers that were opened in the second half of last year and the higher mix of processing coming from those facilities.

Mark T. Walsh: The increase in labor as a percentage of sales was driven by two things; higher labor rates, which again were expected. And secondly, declines in labor productivity, which was unexpected and was driven by the deceleration in Canadian sales in the month of March.

Mark T. Walsh: The increase in labor as a percentage of sales was driven by two things higher labor rates, which again were expected.

Mark T. Walsh: Secondly declines in labor productivity, which was unexpected and was driven by the deceleration in Canadian sales in the month of March.

Mark T. Walsh: While we do look to align production with sales trends, the drop off in March Canadian sales made it difficult to properly align production levels late in the quarter. Since May 1st, we have better aligned production levels to consumer demand; an increase in benefits expenses as a percentage of sales resulted from a higher than expected health care claims late in the Pounds Process and Donation Mix. We processed 238 million pounds in a quarter and generated a sales yield of $1.40. This compares with 240 million pounds processed and a sales yield of $1.39 in the first quarter last year. On-site and Green Drop donations represented 71.9% of pounds processed in the quarter versus 68.3% in last year's first.

Mark T. Walsh: We do look to align production with sales trends the drop off in March Canadian sales I mean, it's difficult to properly align production levels late in the quarter.

Mark T. Walsh: Since may 1st we had better align production levels to consumer demand.

Mark T. Walsh: The increase in benefits expenses as a percentage of sales resulted from a higher than expected healthcare claims late in the quarter bounce.

Mark T. Walsh: Pounds processed in donation mix, we processed 238 million pounds in the quarter and generated a sales yield of $1 41.

Mark T. Walsh: This compares with 240 million pounds processed in our sales yield of $1 39 in the first quarter last year.

Mark T. Walsh: Onsite in Green dropped donations represented 71.

Mark T. Walsh: 9% of pounds processed in the quarter versus 68, 3% in last year's first quarter.

Mark T. Walsh: Our on-site donations were, again, very strong in the first quarter, and we remain pleased with the quality of our... Salaries, wages, and benefits expense was $84 million compared to $93 million in the first quarter last year. These figures included $18 million of IPO-related stock-based compensation in this year's first quarter and $24 million of special one-time bonuses in last year. Excluding these items, salaries, wages, and benefits as a percentage of net sales declined 120 basis points to 18.6%. The decline was primarily driven by lower incentive compensation.

Mark T. Walsh: Our onsite donations were again very strong in the first quarter and we remain pleased with the quality of our inventory.

Mark T. Walsh: Salaries wages and benefits expense was $84 million compared to $93 million in the first quarter last year. These figures included $18 million.

Mark T. Walsh: Of IPO related stock based compensation in this year's first quarter and $24 million of special onetime bonuses in last year's first quarter. Excluding these items salaries wages and benefits as a percentage of net sales declined 120 basis points to 18, 6% the decline.

Mark T. Walsh: Primarily driven by lower incentive compensation.

Mark T. Walsh: Selling general and administrative expenses as a percentage of net sales decreased 30 basis points to 22%, primarily driven by lower maintenance and utility costs. Appreciation and amortization increased 26.4% to $18.3 million, while interest expense decreased 34.3% to $16.1 million. Net income in adjusted EBITDA, the gap net loss for the first quarter was $500,000.

Mark T. Walsh: Selling general and administrative expenses as a percentage of net sales decreased 30 basis points to 22%, primarily driven by lower maintenance and utility costs.

Mark T. Walsh: Depreciation and amortization increased 26, 4% to $18 3 million, while interest expense decreased 34, 3% to $16 $1 million.

Mark T. Walsh: Net income and adjusted EBITDA to GAAP net loss for the first quarter was $500000.

Mark T. Walsh: With just-to-debt income increasing 32% to $13.9 million or $0.08 per diluted share compared to $10.5 million or $0.07 per diluted share in last year's first quarter. Adjusted EBITDA increased 2.1% to $60.3 million, and our adjusted EBITDA margin was relatively flat compared to last year's first quarter at 17%. Turning to the balance sheet, we ended the first quarter with $102 million in cash and cash equivalents. At the end of the first quarter, our total borrowings outstanding were $765.8 million.

Mark T. Walsh: Adjusted net income increased 32% to $13 9 million or.

Mark T. Walsh: Or <unk> <unk> per diluted share compared to $10 5 million or <unk> <unk> per.

Mark T. Walsh: Per diluted share in last year's first quarter.

Mark T. Walsh: Adjusted EBITDA increased two 1% to $63 million and our adjusted EBITDA margin was relatively flat with last year's first quarter at 17%.

Mark T. Walsh: Turning to the balance sheet, we ended the first quarter with $102 million of cash and cash equivalents at the end of the first quarter. Our total borrowings outstanding were 765.

Mark T. Walsh: $8 million.

Mark T. Walsh: And our net leverage based on a trailing 12-month adjusted EBITDA was $2.1 billion. We've taken a number of steps to strengthen our balance sheet over the past several years. In late January, we amended our Senior Secured Credit Agreement. The amended agreement, combined with a corresponding upgrade of our debt rating by Moody's, reduced our borrowing rate spread by 175 basis points. S&P subsequently upgraded our credit rating as well. In early March, we paid down $49.5 million of principal on our Senior Secured Notice.

Mark T. Walsh: And our net leverage based on a trailing 12 month adjusted EBITDA was two one times.

Mark T. Walsh: And finally, in April, subsequent to the first quarter, we terminated our interest rate and cross-currency swaps and realized net proceeds of $38 million, adding to our cash position and further strengthening our balance sheet after the end of the year. As mentioned, we acquired Two Peaches LLC on May 6, 2024, and seven stores will be included in our United States store base beginning in the second quarter. As discussed earlier, we are increasing our investment in these growth opportunities and do not expect a material contribution in year one from these. As Jubran discussed, this acquisition represents an important step forward in our strategy to open.

Mark T. Walsh: We've taken a number of steps to strengthen our balance sheet over the past several months.

Mark T. Walsh: Late January we amended our senior secured credit agreement the amended agreement combined with a corresponding upgrade of our debt rating by Moody's lower our borrowing rate spread by 175 basis points S&P subsequently upgraded our credit rating as well in April.

Mark T. Walsh: In early March we paid down $49 5 million of principal on our senior secured notes.

Mark T. Walsh: And finally in April subsequent to the first quarter, we terminated our interest rate and cross currency swaps and realized net proceeds of $38 million.

Mark T. Walsh: Adding to our cash position and further strengthening our balance sheet.

Mark T. Walsh: After the end of the first quarter.

Mark T. Walsh: As mentioned, we acquired two peaches LLC on May 6th 2024.

Mark T. Walsh: Seven stores will be included in our United States store base, beginning in the second quarter.

Mark T. Walsh: As discussed earlier, we are increasing our investment in these growth opportunities and do not expect material contribution year. One from these stores as Djabran discussed this acquisition represents an important step forward in our strategy to open new markets let.

Mark T. Walsh: Let me wrap up the financial section with a few comments on how we are thinking about business for the rest of the year and our guidance. On the sales side, we are reiterating our full year 2024 outlook at $1.57 to $1.59 billion. Given the performance of our new U.S. stores and with the inclusion of $7 million from two peaches, we currently expect to be at or above the midpoint of the total sales guidance.

Speaker Change: Let me wrap up the financial section with a few comments on how we are thinking about business for the rest of the year and our guidance figures.

Mark T. Walsh: On the sales side, we are reiterating our full year 2024 outlook at 1.57% to 159 billion.

Mark T. Walsh: Given the performance of our new U S stores and.

Mark T. Walsh: And with the inclusion of $7 million from two peaches, we currently expect to be at or above the mid point of the total sales guidance range.

Mark T. Walsh: We are also reiterating our full year comparable store sales increase in the range of 2% to 3%.

Mark T. Walsh: We are also reiterating our full-year comparable store sales increase in a range of two to three. Absent a macro improvement in Canada, we believe we are more likely to come at the lower end of our comp store sales growth range of two to three for the year, with Canadian Comps, Diluting Consolidated Comp, on a two-year stack basis. Comparable store sales will be 7.5% in the first quarter, and we are modeling between 6 and 6.5% for the remaining quarters.

Mark T. Walsh: Absent a macro improvement in Canada. We believe we are more likely to come in at the lower end of our comp store sales growth range of two to three for the year with Canadian comps diluting consolidated comp performance.

Mark T. Walsh: On a two year stack basis comparable store sales will be seven 5% in the first quarter and we are modeling between six and six 5% for the remaining quarters.

Mark T. Walsh: As a reminder, our same store sales comparisons get easier as the year progresses, and total net sales should benefit in the back half of the year from new store openings and the two peaches acquired. As mentioned earlier, we cut production levels in Canada in early May to align with demand, and this should help profitability in the coming. The combination of improving net sales growth and production leverage should drive higher flow through to the bottom line as the year progresses.

Mark T. Walsh: As a reminder, our same store sales comparisons get easier as the year progresses.

Mark T. Walsh: And total net sales should benefit in the back half of the year for new store openings and the two peaches acquired stores.

Mark T. Walsh: As mentioned earlier, we cut production levels in Canada in early may to align with demand trends and this should help profitability in the coming quarters. The combination of improving net sales growth and production leverage should drive higher flow through to the bottom line as the year progresses.

Mark T. Walsh: Given the negative year-one contribution from Two Peaches, increased marketing efforts to stimulate Canadian sales, increased investments in our team and processes, ahead of accelerated new store openings in the back half of the year and beyond, and the effects of top line pressure in the Canadian comps, we are guiding our full year adjusted EBITDA to a range of $330 to $340 million, which at the midpoint of our total net sales guidance would be an adjusted EBITDA With the higher sales and flow-through outlook in the second half of the year, we would expect adjusted EBITDA to decrease slightly on a year-over-year basis in the first half, and an increase in the mid to high single-digit percentage range on a year-over-year basis in the second.

Mark T. Walsh: Given the negative year, one contribution from two pieces increased marketing efforts to stimulate Canadian sales increased investments in our team and processes.

Mark T. Walsh: Head of accelerated new store openings in the back half of the year and beyond and the effects of topline pressure in the Canadian comps, we are guiding our full year adjusted EBITDA to a range of $330 million to $340 million, which at the mid point of our total net sales guidance would be an adjusted EBITDA margin.

Mark T. Walsh: Of 21 to 21, 6%.

Mark T. Walsh: With the higher sales and flow through outlook in the second half of the year, we would expect adjusted EBITDA to <unk>.

Mark T. Walsh: Decreased slightly on a year over year basis in the first half an increase in the mid to high single digit percentage range on a year over year basis in the second half.

Mark T. Walsh: In conclusion, the Savers Value Village long-term growth algorithm continues to solidify, with significant self-generated cash flows being deployed to open new stores, opportunistically acquire, innovate to drive a steady and cost-effective flow of supply to new and existing stores and markets, and invest in technology that provides our organization with the data to execute at the highest level. I hope you take away that our growth trajectory continues to accelerate, and it's highlighted by 29 new stores in 2024, consisting of 22 new store openings and seven via the two pieces transaction for new offsite production.

Mark T. Walsh: In conclusion, the Sabres value village long term growth algorithm continues to solidify.

Mark T. Walsh: Our significant self generated cash flow is being deployed to open new stores opportunistically acquire innovate to drive a steady and cost effective flow of supply to new and existing stores and markets and invest in technology that provides our organization with the data to execute at the <unk>.

Mark T. Walsh: Highest levels.

Mark T. Walsh: I Hope you took away that our growth trajectory continues to accelerate and it's highlighted by 29, new stores in 2020 for assisting a 22, new store openings and seven via the two pieces transaction.

Mark T. Walsh: For new off site production facilities, a new automated book processing deployments.

Mark T. Walsh: A, You automate book processing, double-digit growth in our loyalty member program, strong overall shopper satisfaction, and we expect to be approximately 1.5 times net leverage by the end of the year. And all of this while delivering value with an average unit retail around $5. Again, I'd like to thank all of our team members, who I truly believe are the best, passionate people in the world. We would now like to open the call to questions.

Mark T. Walsh: <unk> digit growth in our loyalty member program.

Mark T. Walsh: Strong overall shopper satisfaction and we expect it to be approximately one five times net leverage by the end of the year and all of this while delivering value with an average unit retail at around $5 again I'd like to thank all of our team members, who I truly believe we're the best most path.

Mark T. Walsh: That people in the industry, we would now like to open the call for questions operator.

Operator: We will now begin the question and answer session. Should you have a question, please press star, followed by one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star, followed by two. If you're using a speakerphone, please lift the handset before pressing any key. Your first question comes from the line of Matthew Boss from J.P. Morgan. Your line is open.

Mark T. Walsh: We will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone filing you will hear your pounds that you had has been raised should you wish to decline for Nick calling process. Please press star followed by the Q, if you're using a speaker phone. Please.

Operator: Fifth the handset before pressing anarchy.

Operator: Your first question comes from the line of Matthew Boss from Jpmorgan. Your line is open.

Matthew Robert Boss: Great, thanks. So, Mark, maybe to kick off, could you speak to the health of your U.S. business, maybe elaborate on U.S. traffic or basket trends as the first quarter progressed, any change in trends so far in the second quarter, and any change at all in the trajectory of U.S. business for this year, as you speak?

Operator: Thanks.

Matthew Robert Boss: So mark maybe to kick off could you speak to the health of your U S business.

Matthew Robert Boss: Maybe elaborate on U S traffic or basket trends as the first quarter progressed any change in trends so far in the second quarter and any change at all in the trajectory of U S business for this year as you see it.

Mark T. Walsh: No, we're really excited about the trajectory in the U.S., the first quarter, positive. I think the takeaway for us, that 2.3% comp, was a mix of transactions, a little bit of price. We liked the two-year stack. And as we see us moving into the second quarter, we're seeing the same trend.

Mark: No. We're really excited about the trajectory in the U S.

Mark T. Walsh: The first quarter.

Mark T. Walsh: Positive I think the takeaway for us too.

Mark T. Walsh: Two 3%.

Mark T. Walsh: Comp it was a mix of transactions will get a price we.

Mark T. Walsh: Like the two year stack.

Mark T. Walsh: And as we see us moving into the second quarter.

Mark T. Walsh: Where we're seeing the same trends. So we feel we feel really good about what's happening in the U S. Drift continues to grow we added another eight 5% to our loyalty program shopper satisfaction.

Mark T. Walsh: So, we feel really good about what's happening in the U.S. Thrift continues to grow. We added another 8.5% to our loyalty program. Shopper satisfaction is around 87%. And I think the most exciting piece of all of this is that our new stores are performing at or above our expectations. That is just super exciting. So, we continue to see that the thrift experience is responding, our brand is responding, the way we're merchandising our

Mark T. Walsh: Is around 87%.

Mark T. Walsh: And I think the most exciting piece of all of this is our new stores are performing at or above our expectations that that is just super exciting. So we continue to see that thrift experience resonating our brand resonating where we're merchandising our stuff is resonating.

Mark T. Walsh: And I think the question always is trade down. We continue to see acceptance in all household demographics, so higher household demographics as well as lower income, trade down secular acceptance, however you want to describe it.

Mark T. Walsh: And I think the question always is that trade down we continue to see acceptance and all household demographics, a higher household demographics as well as the lower income trade down secular acceptance. However, you want to describe it we feel really good about our trajectory in the U S.

Mark T. Walsh: We feel really good about our trajectory in the U.S. And I must say, you know, Jubran architected the Two Peaches acquisition. This is a great step forward for us in terms of expanding our footprint in the U.S. If you just look at the U.S. footprint, we're actually going to grow our U.S. footprint by 12% this year, which is really exciting and really a good step forward for us.

Mark T. Walsh: I must say Djabran architect our tech Architected. The <unk> acquisition. This is a great step forward for us in terms of expansion expanding our footprint in the U S. If you just look at the U S footprint, we're actually going to grow our U S footprint by 12% this year, which is really exciting enrolling a step forward for us.

Matthew Robert Boss: Great color. And then on gross margin, could you just help break down the drivers of gross margin contraction that we saw in the first quarter? And how best to think about the cadence of gross margin in the second quarter versus the back half of the year?

Speaker Change: That's great color and then on gross margin could you just help breakdown the drivers of gross margin contraction that we saw in the first quarter and how best to think about the cadence of gross margin in the second quarter versus back half of the year, Yes, that's great question Matt.

Mark T. Walsh: Yep, that's a great question, Matt. I'm going to, and I'm going to go ahead and deploy Jubran halfway through the commentary to give you some additional color.

Matthew Robert Boss: To.

Jubran Tanious: Employees, you, Brian halfway through the the commentary to give you some additional color so look contextually.

Mark T. Walsh: So look contextually... First quarter has always been our lowest gross margin rate quarter. This year, we would have forecasted around 57 and a half percent. Building from that starting point, really two things conspired to lower our budgeted margin. First, as we mentioned in the prepared remarks, in mid to late March, we had a series of very large benefit claims that were really very different from our experience curve. We would not have forecasted these, and we don't expect those to replicate. Second, and really the real crux of the matter is production labor. Heading into more.

Jubran Tanious: First quarter has always been our lowest gross margin rate quarter. This year, we would have forecasted at around 57 and a half.

Mark T. Walsh: Percent building from that starting point really two things conspire to lower our budgeted margin first as we mentioned on the in the prepared remarks in mid to late March we had a series of very large benefit claims that were really very different than our experience curve and we would we would not a forecast of these and we don't expect those to sure.

Mark T. Walsh: Replicate.

Mark T. Walsh: Second and really the real crux of the matter is production labor heading into March after our February after what was an improving February we saw the two year stack we use that.

Mark T. Walsh: After our February, after what was an improving February, we saw the two-year stack. We used that after removing all the weather disruptions and the holiday shift noise. We kept production levels at or near our budgeted target. Unfortunately, in mid-March, trends decelerated, and we found that our production hours were misaligned with our units. Look, it's not an on and off switch.

Mark T. Walsh: After after removing all the weather weather disruptions in the holiday shift noise, we kept production levels at or near our budgeted.

Mark T. Walsh: Budgeted targets.

Mark T. Walsh: Unfortunately in mid March trends decelerated.

Mark T. Walsh: And we found that our production hours were misaligned with our unit demand look.

Mark T. Walsh: It's not an on off switch, we can't just turn production on and off but the beauty of our model is our ability to quickly adjust in this case a couple of weeks our approach to get back to the balance of production hours to demand to Brian in the country leaders have moved very quickly and I'm really excited to say that the team has got a great plan in place through the balance of <unk>.

Mark T. Walsh: We can't just turn production on and off. But the beauty of the model is our ability to quickly adjust it, in this case, for a couple of weeks, our approach to get back to the balance of production hours to demand. Jubran and the country leaders have moved very quickly, and I'm really excited to say that the team's got a great plan in place for the balance of May. But I'd like to give Jubran the chance to take you through a little more of the details to get a perspective about how we went about making these changes.

Jubran Tanious: I'd like to give you Brian the chance to take you through a little more of the detail to get a perspective about how we went about making these changes yes.

Jubran Tanious: Yeah, thanks, Mark. Hey, Matt.

Jubran Tanious: Yes, Thanks, Mark Hey, Matt.

Jubran Tanious: Absolutely.

Jubran Tanious: Plenty of weather in Q1, but on a two year stacked basis, we like what we saw in the first two periods.

Jubran Tanious: Yeah, absolutely. We had plenty of weather in Q1, but on a two-year stack basis, we like what we saw in the first two periods. And so we continued that. I mean, after all, we don't want to be under feeding selection to the customer when we believe demand is going to be there. And starting in mid to late March, it wasn't. The macro was real. It didn't play out the way that we had thought.

Jubran Tanious: And so we continue that I mean after all we don't want to be under feeding selection to the customer when we believe demand was.

Jubran Tanious: It was going to be there and starting in mid to late March.

Jubran Tanious: Wasn't the macro was real it didn't play out the way that we thought pretty sudden change and so as Mark said, we need to recalibrate as well and therein lies the durability resiliency flexibility whenever you want to call. It of this business.

Jubran Tanious: Pretty sudden change. And so, as Mark said, we need to recalibrate as well. And therein lies the durability, resiliency, flexibility, whatever you want to call it, of this business. Because again, in our stores, turning everything over in the store every three to four weeks. The merchant is the operator.

Jubran Tanious: Because again in our stores, we're turning everything over and the store every three to four weeks. The merchant is the operators. So it really is kind of a perfect case study of the model. So here's how we would do it.

Jubran Tanious: So it really is, kind of a perfect case study of the model. So here's how we would do it. We have a very good plan in place. The first thing to know is that we do not take a broad brush approach to this. We look at each store individually. And that's important.

Jubran Tanious: We have a very good plan in place.

Jubran Tanious: The first thing to know is that we do not take a broad brush approach to this.

Jubran Tanious: We look at each store.

Jubran Tanious: As you think about Canada, there are handfuls of stores that are in great shape and frankly require no intervention. And then there are other stores that are overprocessing, as we see the trend continue into P4 by a fair amount, and then everything in between. So it really isn't a one-size-fits-all. You know, once we get below the store level, we are really surgical with how the processing cutbacks go, both at the department and then at the category level.

Jubran Tanious: Individually and that's important as you think about Canada. There are a handful of stores that are in great shape and frankly require no intervention.

Jubran Tanious: Then there are other stores that are over processing is it.

Jubran Tanious: We see the trend continue into Q4 by a fair amount and then everything in between so it really isn't a one size fits all.

Jubran Tanious: So, for example, at the department level, it really is women's and kids where the biggest opportunity lies. And within women's, categories like long-sleeve knit, pre-fold, and dresses present some of the biggest opportunities, right? These are some of the relatively low sell-through categories where we can trim, and we can remove labor costs associated with it. Because again, labor costs follow not just pounds processed but also items put out. And so again, as you think about, well, then how do stores actually remove that labor? It's a combination. It's not a one-size-fits-all solution either.

Jubran Tanious: Once we get below the store level, we really are surgical with how the processing cutbacks go.

Jubran Tanious: So the department and then at the category level. So for example at.

Jubran Tanious: At the department level.

Jubran Tanious: It really is a women's and kids, where the biggest opportunity lies and within women's categories like long sleeve knits Caprice dresses presents some of the biggest opportunities right. These are some of the relatively low sell through categories, where we can trim.

Jubran Tanious: And we can remove labor cost associated with it because again labor cost follows not just pounds processed but also items put out.

Jubran Tanious: And so again as you think about well then how new stores actually remove that labor. It's a combination it's not a one size fits all either some of it through natural attrition.

Jubran Tanious: Some of it's through natural attrition. Some of it's through scheduling changes, so on and so forth. So, I feel very good about the plan going forward. I think, as Mark mentioned, as we start to get more into the midpoint of the year in the back half, we start to enjoy some scale leverage. So the moves that we put in place are going to pay off for us as we move forward. So feel very good about the plan. I am proud of the team for, what I think, what was a very smart surgical approach.

Jubran Tanious: Some of it's through scheduling change.

Jubran Tanious: And so forth so.

Jubran Tanious: <unk>.

Jubran Tanious: Feel very good about the plan going forward I think as Mark mentioned as we start to get more into the mid point of the year in the back half we start to enjoy some scale leverage so the moves that we've put in place.

Jubran Tanious: Are going to pay off for us as we move forward. So I feel very good about the plan.

Jubran Tanious: Out of the team for I think what is a very smart surgical approach.

Mark T. Walsh: And Matt, we'll finish. I'll just add one more comment. With the easier comparisons in the second half and that more conservative production approach, we're confident in our back half marching range for the year, for 2024. It's a great color. Best of luck.

Jubran Tanious: We will fight we will finish that we'll I'll just.

Mark T. Walsh: And one more comment with easier compares in the second half and that conservative more conservative production approach, we're confident in our back half margin range for the for the year for 2024.

Matthew Robert Boss: Great color. Best of luck.

Mark T. Walsh: That's great color best of luck.

Operator: Your next question comes from the line of Randy Konik from Jeffries. Your line is open.

Matthew Robert Boss: Our next question comes from the line of Randy <unk> from Jefferies. Your line is open.

Randal J. Konik: Hey guys, good afternoon. Thanks for taking my questions. I guess first, maybe what would be helpful, Mark or Jubran, maybe give us some historical perspective on the Canadian market in thinking through, you know, how you've seen this movie before in the numbers and how we should be thinking about, you know, how Canada performs, generally speaking, with this type of macro environment over the next, let's say, couple of years or so. Just give us your thoughts; that would be super helpful. Thanks, guys.

Operator: Okay.

Randal J. Konik: Hey, guys. Good afternoon. Thanks for taking my questions I guess first maybe will be helpful Mark or Djabran, maybe give us some historical perspective on the Canadian market in thinking through.

Randal J. Konik: <unk> seen this movie before in the numbers and how we should be thinking about how Canada performs generally speaking.

Randal J. Konik: And with this type of macro environment over the next let's say couple of couple of years or so and just give us your thoughts there would be super helpful. Thanks, guys.

Mark T. Walsh: I think what I would say what's really different about our position in the Canadian market versus our position in the United States market is our starting point. So, with 95% brand awareness, and we estimate that we are shopped by one in three Canadian households. So when you think about that, we're really woven into the fabric of the Canadian landscape. So as we think about that,

Speaker Change: I think what I would say, what's really different about.

Mark T. Walsh: Our position.

Mark T. Walsh: The Canadian market for a short position in the United States market as our starting point Randy.

Mark T. Walsh: So with 95% brand awareness and we estimate that where.

Mark T. Walsh: We were shocked by one and three Canadian households, So when you think about that were really woven into the fabric.

Mark T. Walsh: Of the Canadian landscape.

Mark T. Walsh: So as we think about that.

Mark T. Walsh: You know, that this is, and that non-loyalty member is the one that's really the one that's struggling. So our loyalty, our loyalty members are certainly, uh, still coming in, still shopping, still feel good about where those trends are with those loyalty members. We have very low attrition rates, and they still represent 70% of our overall sales base. And a couple of other points, shopper satisfaction in Canada is 85%. So again, we're really good about where we are competitively within that Canadian concept. These are things I'm not sure we've seen in Canada, at least not since I've been here.

Mark T. Walsh: This is in that non loyalty member that non loyalty member is the one that's really the one that's struggling so our loyalty our loyalty members are certainly.

Mark T. Walsh:

Mark T. Walsh: Still coming in still shopping still feel good about where those trends are with those loyalty members, who have very low attrition rates they still represent 70%.

Mark T. Walsh: Our overall sales base and a couple of other points sharper satisfaction in Canada is 85%.

Mark T. Walsh: So again feel really good about where we are competitively within that Canadian construct.

Mark T. Walsh: These are things I'm not sure we've seen in Canada at least not since I've been here.

Mark T. Walsh: You've got rising rising unemployment ticked over 6% last month, you've got an overhang of housing, affordability, and availability, and then obviously, some inflationary pressures. We think we're very, very well suited with our value proposition to continue to gain share. And if you think about our two-year stack in Canada, just in the first quarter at 6.4, we believe with a 6.4 two-year stack that we've actually gained some share. So I think, again, the value proposition, our depth of awareness, and our approach to our marketing is going to help us as the Canadian economy goes through this difficult time period.

Mark T. Walsh: You've got rising at rising unemployment ticked over 6% last months, you've got overhang of housing affordable affordability and availability and then obviously some inflationary pressures, we think we're very very well suited.

Mark T. Walsh: With our value proposition to continue to gain share and if you think about our two year stack in Canada just in the first quarter at $6. Four we believe with a 642 year stack that we've actually.

Mark T. Walsh: Gain some share so I think again the value proposition our Def.

Mark T. Walsh: <unk> awareness.

Mark T. Walsh: And our approach to our marketing is going to help us as the Canadian economy goes through this difficult time prior periods right.

Jubran Tanious: Great. And then maybe just give us some perspective on where we are with the various initiatives as it relates to the central processing centers and book processing initiatives, just as it relates to improving long-term productivity and margin enhancement potential. Just give us your thoughts there. Thanks, guys. Yeah, hey.

Speaker Change: Great and then maybe just give us some perspective on where we are with the various initiatives as it relates to the central processing centers and book processing initiatives, just as it relates to improving long term productivity.

Jubran Tanious: And margin enhancement potential just give us your thoughts there thanks guys.

Jubran Tanious: Yeah, hey Randy, Jubran, I can take that one. Well, first of all, we feel very good about CPC. So we currently have five CPCs. The latest one that we opened is in Minnesota.

Speaker Change: Yes, Hey, Randy Brian I can take that one.

Speaker Change: Well first of all we feel we feel very good about CPC. So we currently have.

Speaker Change: Five cpc's the.

Jubran Tanious: The latest one that we opened is in Minnesota.

Jubran Tanious: You know, as we have opened these, our experience set has grown, and we're able to ramp them faster. And one of the very cool things about the capability that it's unlocked is if we think about our most recent CPC, the Minneapolis facility. We're actually using that to support what we call long haul stores. So it services some stores in the Twin Cities, but it's also supporting stores that are more remote, four, five, six-hour drives in terms of Sioux Falls, Fargo, places where the labor market still continues to be very challenged. And yet, we're able to bring all of the selection and value to those customers because of the presence of the CPC. So we're already doing this.

Speaker Change: As we as we have opened these our experience set has grown and we're able to ramp them faster.

Jubran Tanious: And one of the very cool things about.

Jubran Tanious: The capability that it has unlocked is if we think about our most recent CPC the Minneapolis facility.

Jubran Tanious: We're actually using that to support what we call long haul stores. So it services some stores in the twin cities, but it's also supporting stores that are more remote.

Jubran Tanious: Four or five six hour drives in terms of Sioux Falls Fargo Places, where the labor market still continues to be very challenged and yet we're able to bring all of the selection and value to those customers because of the presence of the CPC.

Jubran Tanious: So we're already doing this and as you think about.

Jubran Tanious: And as you think about Peaches Acquisition, that's what gives us the confidence to be able to quickly and nimbly bring selection and value to that customer as well because we're already doing it. We do have plans to open a sixth CPC in the Los Angeles market. We'll be opening either later this year or possibly early 2025.

Jubran Tanious: The <unk> acquisition, that's what gives us the confidence to be able to quickly and nimbly bring selection and value to that customer as well because we're already doing it we do have plans to open six CPC in the Los Angeles market will be either later this year, possibly early 2025.

Jubran Tanious: ABPs Again, we're far along the experience curve on ABPs, and by the time we end this year, we will have 12 facilities in the U.S., and seven locations in Canada. [inaudible] They're fabulous. Really pleased with the investment thesis on those and the return on invested capital. So all in all, very pleased.

Jubran Tanious: Adp's.

Jubran Tanious: Again, we are far along the experience curve on <unk> and by the time. We end. This year, we will have 12 facilities in the U S.

Jubran Tanious: And seven locations in Canada.

Jubran Tanious: And.

Jubran Tanious: Theyre doing fabulous.

Jubran Tanious: Please.

Jubran Tanious: With the investment thesis on those and the return on invested capital.

Jubran Tanious: So all in all very pleased we continue to make those investments like.

Jubran Tanious: We continue to make those investments like Mark talked about. And then the only other one I would add is the offsite warehouse. And I think we talked about this on a previous call where, one of the unlocks that we've had from CPC is the ability to open new stores that don't necessarily check every physical attribute that we would need from a traditional perspective, right? The double dock doors, things that we've talked about in the past.

Jubran Tanious: Mark talked about and then the only other one I would add is the Offsite warehouse and I think we talked about this on a previous call were.

Jubran Tanious: One of the unlocks that.

Jubran Tanious: We've had from CPC is the ability to open new stores that.

Jubran Tanious: That don't necessarily check every physical attribute that we would need from a traditional perspective right. The double dock doors things that we've talked about in the past.

Jubran Tanious: Well, Offsite Warehouse is kind of a light version of CPC where we're still able to use it to make new stores happen that couldn't otherwise. So there are markets where that is very applicable. Long Island, as an example. We have expansion plans for Long Island. If you think about the real estate and the availability of large warehouse space in Long Island, it's very limited. That's where an off-site production warehouse comes into play, and we're going to be opening one there that helps make new store growth on the island happen. Did I answer your question, Randy? Yes, that was super helpful.

Jubran Tanious: Well Offsite warehouse is kind of a light version.

Jubran Tanious: Of CPC, where we're able to still.

Jubran Tanious: Use it to make new stores happen that couldnt, otherwise so there are markets where that is very applicable.

Jubran Tanious: Long Island as an example.

Jubran Tanious: We have it.

Jubran Tanious: Expansion plans in long island.

Jubran Tanious: You think about the real estate and the availability of large warehouse space on long Island is very limited.

Jubran Tanious: That's where an off site.

Jubran Tanious: <unk> warehouse comes into play and we're going to be opening one there that helps make new store growth on the island happen So did.

Jubran Tanious: Did I answer your question Randy.

Randal J. Konik: Yes, that was super helpful. Thank you so much. I really appreciate it, guys.

Randy: Yes, Scott was super helpful. Thank you so much really appreciate it guys.

Randal J. Konik: Thanks.

Operator: Your next question comes from the line of Brooke Roach from Goldman Sachs. Your line is open.

Randal J. Konik: Your next question comes from the line of Brooke Roach from Goldman Sachs. Your line is open.

Operator: Okay.

Brooke Siler Roach: in our question. You've provided a lot of context on some of the actions that you're taking to drive a re-acceleration in Canada customer engagement so far. I was hoping you could elaborate on the early reads of what you've seen as you've begun to implement these changes. Has that driven a re-acceleration in comp where those changes in marketing, loyalty, discounts, and promotions have been affected? And specifically, what Canadian comp are you embedding in 2Q and for the full year in your guide?

Operator: Our question.

Operator: You've provided a lot of context on some of the actions that you're taking to drive a reacceleration in the Canada customer engagements so far.

Brooke Siler Roach: Was hoping you could elaborate on the early reads of what you've seen as you've begun to implement these changes has that driven a reacceleration in comp where those changes in marketing loyalty discounts and promotions have been affected and specifically what Canadian comp are you embedding in QQ and for the full year within your guide.

Brooke Siler Roach: Yeah.

Mark T. Walsh: I think as we think about, let's start with the second part of that question first, as we as we mentioned in the prepared remarks, we're targeting, a two-year stack of around 6.6% overall, with Canada being lower and the United States being a bit higher.

Brooke Siler Roach: I think as we think about let's start with the second part of that question.

Mark T. Walsh: First we're targeting as we as we mentioned in the prepared remarks, we're targeting a two year stack.

Mark T. Walsh: Of around six 6% overall.

Mark T. Walsh: Okay.

Mark T. Walsh: And Canada being lower in the United States being a bit higher.

Mark T. Walsh: And on the on the it's too early, Brooke on the marketing efforts we have taken. We've got four or five distinct efforts. Heavying up on the wind on the wind back program, we're implementing some connected TV. In a distinct market to drive traffic, we're ramping up some promotional activities to drive category performance. And we're certainly increasing our share of digital voice in several designated markets to see if we can drive foot traffic.

Mark T. Walsh: It's too early broke on the.

Mark T. Walsh: Our marketing efforts, we have taken we've got four or five distinct efforts.

Mark T. Walsh: Having up on wind on the win back program, we're implementing some connected television and a distinct market to drive traffic.

Mark T. Walsh: We're ramping up some promotional activities to drive category performance and we're we're certainly increasing our share of digital voice.

Mark T. Walsh: In several designated market to see if we can drive foot traffic those initiatives have just gotten started and I think over the next three months, we'll have a much better read on the impact as we move forward.

Mark T. Walsh: Those initiatives have just gotten started, and I think over the next three months, we'll have a much better read on the impact as we move forward. So, probably on the next call, I'll be able to update the group on those efforts.

Mark T. Walsh: So.

Mark T. Walsh: Probably in the next call I'll be able to update the group on those those efforts.

Speaker Change: Great. Thanks, and then maybe a more comprehensive update on your 22, new store opening plans for the year.

Mark T. Walsh: How do you anticipate these new store openings to split by geography, and how should we expect the cadence of those stores to split by quarter.

Speaker Change: Yeah, Hey Brook.

Mark T. Walsh: Good question so.

Brooke Siler Roach: Great, thanks. And then maybe a more comprehensive update on your 22 new store opening plans for the year. How do you anticipate these new store openings to split by geography, and how should we expect the cadence of those stores to split by quarter?

Mark T. Walsh: We plan on opening.

Brooke Siler Roach: By the time, we finish second quarter, we will have opened for.

Jubran Tanious: Yeah, hey, Brooke, questions. So we plan on opening, by the time we finish the second quarter, we will have opened four of the 22 locations. Three of those are in the U.S., and one in Australia. By the end of the third quarter, we will have opened an additional 11. Four of those are in the US, six are in Canada, and one is in Australia. And then in the fourth quarter, we have the remaining seven, of which five are in the U.S., who are in Canada. So of the 22, that puts 12 of them in the US.

Speaker Change: Of the 22 locations.

Jubran Tanious: Three of those are in the U S. One in Australia.

Jubran Tanious: By the end of the third quarter, we will have opened an additional 11.

Jubran Tanious: Four of those are in the U S. Six are in Canada, one in Australia.

Jubran Tanious: And then in the fourth quarter, we have the remaining seven of which five are in the U S. Two are in Canada.

Jubran Tanious: So of the 22.

Jubran Tanious: That puts 12 of them.

Jubran Tanious: And again, overall, I'm very pleased with how the stores have gone on performing in line with expectations. U.S. stores off to a fabulous start. And, you know, one of the things that we talked about on a previous call was the Cape, where we are back end loaded this year. And a lot of that is a function of the real estate muscle that we've been building up. So, once we get into 2025, I can share that we already have 13 in the hopper, seven of those in Q1, which is still forming. The concrete hasn't set on that yet.

Jubran Tanious: In the U S and again overall.

Jubran Tanious: Very pleased with how the stores have gone performing in line with expectations.

Jubran Tanious: U S stores off to a fabulous start.

Jubran Tanious: And one of the things that we talked about on our previous call was the cadence.

Jubran Tanious: Where we are back end loaded this year and a lot of that is a function of the real estate muscle that we've been building up so.

Jubran Tanious: Six in Q2, certainly still forming. And this is all a function of what I would say is now just a mature real estate team where we are at steady state; we expect these store openings to feather across quarters in a much more balanced way. And so, we're really on the front end of that here, starting in the beginning of Q2 and then into Q3. What other data points? We went ahead and took a look back at some of the quote unquote unofficial deal.

Jubran Tanious: Once we get into 2025 I can share we already have 13 in the hopper.

Jubran Tanious: Seven of those in Q1, which is still forming the concrete hasnt set on that yet <unk>.

Jubran Tanious: Six in Q2, certainly still forming.

Jubran Tanious: And this is all a function of what I would say is now just a mature real estate team, where we are at steady state. We expect these store openings to feather across the quarters and a much more balanced way.

Jubran Tanious: And so we're really on the front end of that here starting.

Jubran Tanious: In the beginning of.

Jubran Tanious: Q2 and into Q3.

Jubran Tanious: One other data point.

Jubran Tanious: We went ahead and took a look back at some of the.

Jubran Tanious: Quote unquote unofficial deal is the active deal sort of pre real estate Committee. If you will the hopper of potential deals.

Jubran Tanious: These are the active deals, sort of a pre-real estate committee, if you will, a hopper of potential. And we looked at this on May 1st last year. What did that hopper look like versus, effectively, where do we sit today? And right now, we're sitting at two and a half times the volume of active deals than we did this time last year. You know, again, everything we can see, very pleased, very proud of the team and the momentum and the flywheel that they have built, and just encouraged for not just the remainder of the year but how we're looking into 2025. Yeah. And I just want it to reaffirm.

Jubran Tanious: And we looked at this.

Jubran Tanious: May 1st last year, what did that hopper look like versus effectively where do we sit today.

Jubran Tanious: And right now we're sitting at two five times.

Jubran Tanious: Volume of active deals than we did this time last year. So.

Jubran Tanious: Again.

Jubran Tanious: Everything we can see very pleased very proud of the team and the momentum in the flywheel that they have built.

Jubran Tanious: Just encouraged for not just for remainder of the year, but how we're looking into 2025 and just it's a reinforcing reinforcing and probably redundant point, but we do have 21 of the 22 stores for this year of the leases are signed.

Mark T. Walsh: And just one, it's a reinforcing and probably redundant point, but we do have 21 of the 22 stores for this year. The lease is our sign. We're expanding, absolutely terrific about the momentum we've generated over the last 18 years. Great, thank you so much.

Speaker Change: So we're feeling.

Mark T. Walsh: Absolutely terrific about the momentum we've generated over the last 18 months on real estate.

Brooke Siler Roach: Great. Thank you so much for the color. I'll pass it on.

Speaker Change: Great. Thank you so much for the color I'll pass it on.

Operator: Again, if you wish to have a question, please press star followed by 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by 2. Your next question comes from the line of Peter Keith from Piper, Sandler, Canada. Your line is open.

Brooke Siler Roach: Again.

Speaker Change: If you wish to have a question. Please press star followed by one on your Touchtone. Following you'll hear problems that you had has been raised should you wish to decline from the polling process. Please press star followed by the two.

Operator: Your next question comes from the line of Peter Keith from Piper Sandler Canada.

Peter Jacob Keith: Your line is open.

Peter Jacob Keith: Oh, I'm not in Canada, but good afternoon, everyone. So I wanted to just ask about two peaches. Maybe you could compare and contrast to the 2nd Avenue acquisition, because I recall 2nd Avenue; I think you actually dialed back the sales to work on profitability. It sounds like the 2 pieces are completely different. Maybe the sales are a little low, and you're going to ramp those up. Additionally, are you going to convert those to the Savers brand name? And then lastly, I think you just said $7 million in revenue for maybe 7 months of sales, so it seems like a pretty low dollar amount overall.

Operator: Oh.

Peter Jacob Keith: Not in Canada, but good afternoon, everyone.

Peter Jacob Keith: So I.

Peter Jacob Keith: I wanted to just ask about two peaches.

Peter Jacob Keith: Maybe you could compare and contrast to the second Avenue acquisition.

Peter Jacob Keith: I recall second Avenue, I think we've actually dialed back with sales to work on profitability. It sounds like two pieces is completely different maybe the sales are a little low and youre going to ramp those up.

Peter Jacob Keith: Secondarily our pizza.

Peter Jacob Keith: Are you going to convert those to the <unk> brand name.

Peter Jacob Keith: And then and then lastly that.

Peter Jacob Keith: You said $7 million.

Peter Jacob Keith: Revenue for maybe seven months of sales so it.

Peter Jacob Keith: Seems like a pretty low dollar amount overall.

Mark T. Walsh: Yeah, so I'll answer, I'll let Jubran jump in on most of those questions, but on the name, we quite like the Value Village name, so we're going to keep it in Georgia.

Speaker Change: Yes, so I'll answer I'll, let you Brian jump in on most of those questions, but on the name.

Mark T. Walsh: We quite quite like the value village name. So we're going to we're going to keep it in Georgia.

Mark T. Walsh:

Jubran Tanious: Absolutely, and Yeah, Peter, you're, you're, you're, comparing or comparing contrast to Second Avenue is, It's a great comment because, Yeah, it is kind of the opposite. So what we see when we look at these seven locations is, We see great four-wall potential in these locations. They're in good trade areas. They're in good centers.

Jubran Tanious: Yeah, absolutely and.

Jubran Tanious: Yes, Peter Youre, comparing our your compare and contrast to second Avenue is up.

Jubran Tanious: It's a great comment because.

Jubran Tanious: Yes, it's it is kind of the opposite so what we see when we look at these seven locations is.

Jubran Tanious: We plug them into our real estate modeling, and then what I would tell you is that if we were looking at these as new, organic locations being brought to our real estate committee, they would be approved.

Jubran Tanious:

Jubran Tanious: We see great four wall potential.

Jubran Tanious: In these locations.

Jubran Tanious: They are in good trade areas. They are in good centers.

Jubran Tanious: We plug them into our real estate modeling and what I would tell you is that if we were looking at these as new organic locations being brought to a real estate Committee.

Jubran Tanious: Be approved so.

Jubran Tanious: <unk>.

Jubran Tanious: I think that the challenge, and for a variety of reasons, is that... Given the quality of the real estate and the four-wall potential of these stores, effectively, what we've seen over time is that the customer has been underfed from a selection perspective. So again, given the nimbleness and the flexibility with the high-excel CPC that we talked about, we're able to quickly convert two of those, still leveraging the Value Village banner, and increase basket and transactions as we go.

Jubran Tanious: The challenge and for a variety of reasons is that.

Jubran Tanious: Given the quality of the real estate and the four wall potential of these stores.

Jubran Tanious: Effectively what we've seen over time is our thesis is that the customer has been underfed from a selection.

Jubran Tanious: Our perspective, so again, given the nimbleness give.

Jubran Tanious: The flexibility with the highest score CPC that we've talked about we're able to quickly convert two of those still leveraging the value village banner.

Jubran Tanious: And.

Jubran Tanious: Yeah, we see great potential. And this is an inroad, obviously, to the southeast, and our ability to supply this or supplement supply through the CPC in Maryland is just a big, big win. And one of the things that's super interesting about the process and how Jubran led the process is that we basically looked at the universe of the two Peaches stores and did basically one-to-one analysis on each one of those stores.

Jubran Tanious: Increased basket and transactions as we go we see great we see great potential.

Jubran Tanious: This is an in road, obviously to the southeast and our ability to supply. This supplement supply through the CPC in Maryland is just a big big win and one of the things that's super interesting about what the process and how it is Brian led the processes, we basically looked at the universe of the two.

Jubran Tanious: Peaches stores and did basically one to one analysis on each one of those stores and yes, seven passed muster it and we just said we love the seven we actually we actually did not take three of the stores.

Jubran Tanious: And yes, seven passed Mustard, and we said, "We love these seven." We actually did not take three of the stores because they weren't up to our real estate standards. So we really love the portfolio that we got, and we think this is a great way to get ourselves into the deep South. We're really excited about it.

Jubran Tanious: Because they werent up to a real estate standards. So we really love the portfolio that we got and we think this is a great way to get ourselves into the deep South we're really excited about this.

Jubran Tanious: Yes.

Peter Jacob Keith: Okay, and it was $7 million in revenue for the remaining seven months of the year, is that correct? That's correct. Okay, all right.

Jubran Tanious: Okay.

Jubran Tanious: $7 million of revenue for the remaining seven months of the year is.

Peter Jacob Keith: Is that correct.

Peter Jacob Keith: Correct.

Peter Jacob Keith: Separately, and maybe a little bit to follow up on Brooke's question, I'm just trying to get comfortable with maintaining the comp guidance. So fair enough that you're kind of thinking about the low end, which does, to me, imply like a two and a half percent for the rest of the year. And if I break that down further, I kind of have to model out like a 4% for the US and then flat for Canada. So it kind of implies pretty healthy acceleration in both countries. And maybe that kind of a good framework? And if so, help us get comfortable with that framework.

Peter Jacob Keith: Alright.

Speaker Change: And separately, maybe a little bit follow up on Brooks question, I'm, just trying to get comfortable with maintaining the comp guidance.

Peter Jacob Keith: Fair enough that you're kind of thinking about the low end that does to me imply like a two 5% for the rest of the year.

Peter Jacob Keith: And if I break that down further I kind of have to model out like a 4% for the U S and then flat for Canada.

Peter Jacob Keith: Kind of implies a pretty healthy acceleration in both countries.

Peter Jacob Keith: And maybe is that kind of a good framework and if so help us get comfortable with that framework.

Mark T. Walsh: Well, I think I think one of the things is certainly that the comps get easier as the year progresses. If you recall, our P9 and 10 last year. And as we think about the second half of the year, look, it's about those two years stacked. We're comfortable in that seven, seven and a half range in the U.S. for the two-year stack and five to five and a half in Canada, which ultimately gets you that six and a half two-year stack for the full year at the consolidated end.

Speaker Change: Well I think I think one of the things is certainly the comps get easier as the year progresses.

Mark T. Walsh: [inaudible]

Mark T. Walsh: If you recall our P. Nine to 10 last year and as we think about the second half of the year look at it it's about that those two year stacks.

Mark T. Walsh: And.

Mark T. Walsh: We're comfortable in that 775 range in the U S for the two year stack in five to five and a half in Canada, which ultimately gets you to that 652 year stack for the full year for.

Mark T. Walsh: The consolidated entity.

Peter Jacob Keith: Okay, very good. Thanks so much, guys, and good luck.

Speaker Change: Okay very good thanks, so much guys and good luck.

Operator: Your next question comes from the line of Michael Lasser from UBS. Your line is open.

Peter Jacob Keith: Your next question comes from the line of Michael Lasser from UBS. Your line is open.

Michael Lasser: Good evening. Thank you so much for taking my question. Can you quantify what the impact will be from being slightly more promotional in Canada in an effort to support the comp? And if some of the economic weakness that's currently happening in Canada comes to the U.S., such that your comp weakens here, would you take similar action by being a bit more promotional? And how would you frame the potential impact in that case? Thanks. Well, that's a great question.

Michael Lasser: Thank you so much for taking my question can you quantify what the impact will be from being slightly more promotional in Canada and in <unk>.

Michael Lasser: Effort to support the comp in it.

Michael Lasser: Some of the economic weakness is currently happening in Cana to come to the U S. President your comp we can here would you take similar action by being a bit more promotional and how would you frame the potential impact in that case.

Mark T. Walsh: Well, that's a great question, Michael. So, let me start by saying that we are testing and we're being very, very prescriptive about what we're doing in Canada. We are not doing a countrywide promotional activity approach. We're taking very specific markets and testing different things within those markets to see about the opportunity for growth from a transactional perspective and from a revenue perspective and then what, if any, impact that has on margin. So we're being, I wouldn't say cautious because we're acting quickly, but we're still testing an approach that would make sense economically for us within.

Michael Lasser: Well.

Speaker Change: It's a great question, Michael So let me start with we're testing we're being very very prescriptive about what we're doing in Canada, we are not doing a country wide.

Mark T. Walsh: Promotional activity approach.

Mark T. Walsh: We're taking very specific markets and testing different things within those markets to see about the.

Mark T. Walsh: The opportunity of growth from a transactional perspective and from a revenue perspective, and then what if any impact that has on margin. So we're being I wouldn't say cautious because we're acting quickly, but we're still testing into an approach that would make sense economically for us within that country.

Michael Lasser: And historically, the thrift model has seen or was perceived to see a trade-down benefit during more challenging economic times. Mark, why do you think you're not seeing that in Canada? And could you be seeing some impact of that right now in the U.S. that is providing support to your comps here? Thank you very much.

Mark T. Walsh: Understood.

Mark T. Walsh: Historically, the thrift model has seen or perceived to see a trade down benefit during more challenging economic times, Mark why do you think youre not seeing that in Canada.

Michael Lasser: Could you be seeing some impact of that right now in the U S that are.

Michael Lasser: Providing support to your comps here. Thank you very much.

Mark T. Walsh: Well, I'll start with the U.S. piece first, Michael. What we're excited about is we see increases in all of our demographics. We tend to be skewing now at the higher end of the two cohorts. So there is.

Mark: Well I'll start with the U S.

Michael Lasser: U S piece first Michael what were excited about as we see increases in all of our demographics, we tend to be skewing now at the higher the higher two cohorts. So there is you.

Mark T. Walsh: You could describe it as trade down. We think it's more about people being a little more thoughtful about how they're approaching their purchases, and the thrift experience is fun. It's engaging.

Mark T. Walsh: You could describe it as trade down.

Mark T. Walsh: We think it's more secular though we think it's more about.

Mark T. Walsh: People being a little more thoughtful about how they are approaching their purchases and the thrift experiences fun and it's.

Mark T. Walsh: So I think in the US, it's a bit hard to say it's a trade down. I think we like to think of it more as a secular trend around thrifting and the thrift experience in Canada. Again, we're 95%, we have 95% brand awareness. We're in one of three households, that's our own estimate based on the demographic information we have. Our overall shopper satisfaction scores are 85%, but where we're really, where we're getting hit, or where we're having troubles from a comp perspective is around the non-member.

Mark T. Walsh: It's engaging so I think in the U S.

Mark T. Walsh: It's a bit hard to say, it's trade down I think we like to think of it more as a secular trend around thrift in and the thrift experience in.

Mark T. Walsh: In Canada.

Mark T. Walsh: Again, we're 95% 95% brand awareness.

Mark T. Walsh: We're in one of three households, that's our own estimate.

Mark T. Walsh: Just on the demographic information we have.

Mark T. Walsh: Our overall shopper satisfaction scores are 85%.

Mark T. Walsh: We are.

Mark T. Walsh: We're really where we're getting hit.

Mark T. Walsh: We're having trouble from a comp perspective is around the non member and a nonmember tends to be younger and tends to be of lower income. So I think theyre, just making tradeoffs as their discretionary dollars and it's difficult for those those individuals in that in that window.

Mark T. Walsh: And the non-member tends to be younger and tends to be of lower income. So I think they're just making trade-offs. This is a discretionary dollar, and it's difficult for those individuals in that window. But I do think we're gaining share relative to the marketplace based on what we read and what we see from other folks who are selling textiles and household items. So we feel good about our competitive positioning. I think when you look at our two-year stack in Canada for the first quarter, it's 6.4%.

Mark T. Walsh: I do think we're gaining share relative to the marketplace based on what we read and what we see.

Mark T. Walsh: From other folks who are selling textiles and household items. So we feel good about our competitive positioning I think when you look at our two year stack in Canada in the first quarter at six 4%.

Mark T. Walsh: That says a lot about where we are, and yes, we had a difficult first quarter in 2024, but that comes off of a very difficult compare in Canada in the first quarter last year of 9-11. Thank you very much and good luck.

Mark T. Walsh: That says a lot about where we are and yes, we had a difficult first quarter in 2024 with that it comes off of a very difficult compare.

Mark T. Walsh: In Canada in the first quarter last year of 9%.

Mark T. Walsh: Thank you very much and good luck.

Michael Lasser: Your next question comes from the line of Mark Altschwager from Baird. Your line is open.

Mark T. Walsh: Your next question comes from the line of Mark Smucker from Baird. Your line is open.

Operator: Good afternoon, Thank you for taking my questions.

Mark R. Altschwager: Good afternoon. Thank you for taking my questions.

Mark R. Altschwager: In Canada, it sounds like it's mostly a traffic issue and concentrated with the non loyalty members.

Mark R. Altschwager: On Canada, it sounds like it's mostly a traffic issue and concentrated with the non-loyalty members. Has there been any material change in conversion and basket in Canada? I'm trying to get at the quality of supply or mixes of goods and how much that might be contributing.

Mark R. Altschwager: Has there been any material change in conversion in basket in Canada, I'm trying to get at the quality of supply or mix of goods and how much that might be contributing.

Jubran Tanious: We've seen it's pretty linear in terms of comp and transactions. So there has not been a big change in the basket, so to speak, because basically the comp has followed the transaction flow. Supply, we have not, we have not detected any change in the overall quality of supply. In fact, Canada has enjoyed, particularly in the first half of Q1, on onsite donation growth, which we know generally brings a nice sales yield with it. So. But there was no discernible change in quality to your question.

Mark R. Altschwager: We've seen it's pretty linear in terms of comp and.

Jubran Tanious: Transaction. So there is no there has not been a big change in in basket. So to speak because it's basically the comp has followed the transaction flow.

Jubran Tanious: And Mark on.

Jubran Tanious: Supply, we've not we have not detected any change.

Jubran Tanious: And the overall quality of supply.

Jubran Tanious: In fact, Canada has Joe has enjoyed.

Jubran Tanious: Pretty healthy forward momentum, particularly in the first half of Q1 on onsite donation growth, which we know.

Jubran Tanious: Generally brings a nice sales yield with it so.

Jubran Tanious: But no no discernible change in quality onto your questions.

Mark R. Altschwager: And in addition to the marketing, your planning, I think you mentioned the prepared remarks, you have the opportunity to lean into some specific categories. Maybe just to unpack that a bit more and remind us, how do you go about concentrating your production in certain categories, given that most of the donations are more raw, unsorted goods? Yeah, when it comes to remembering, we

Speaker Change: Thank you and in addition to the marketing you're planning I think you mentioned in the prepared remarks.

Mark R. Altschwager: The opportunity to lean into some specific categories.

Mark R. Altschwager: Maybe just unpack that a bit more remind us.

Mark R. Altschwager: How do you go about concentrating your production in certain categories given that most of the donations are more raw unsorted goods.

Jubran Tanious: Yeah, when it comes to remembering, we have Oh, gosh, give or take 200 categories in our stores. And some of those sell very well, very predictably. Men's jeans is a great example of that.

Mark R. Altschwager: Yes, when it comes to remember, we have Oh, gosh give or take 200 categories in our stores and.

Jubran Tanious: Some of those sell very well very predictably.

Jubran Tanious: Men's jeans is a great example of that.

Jubran Tanious: Some have lower sell-through, you know, in the context of what Mark described and the macro situation in Canada, some of those lower sell-through categories, well, now sell through even lower: women's capris, women's long sleeve knits, as an example. So what our store teams will do is when we want to cut back on. The putting out of certain categories, it's just a function of. You know what, team? We're going to put out everything that we normally would in the first half of the day, and once we get after the lunch break, we're not putting out long sleeve knits anymore.

Jubran Tanious: Some have lower sell through and.

Jubran Tanious: In the context of what Mark described and the macro situation in Canada some of those lower sell through categories.

Jubran Tanious: Well now sell through even lower.

Jubran Tanious: Womens Caprice women's long sleeve knits is an example.

Jubran Tanious: So what our store teams will do is when we want to cut back on the.

Jubran Tanious: <unk> put out of certain categories, it's just a function of.

Jubran Tanious: What team for the.

Jubran Tanious: We're going to put out everything that we normally would in the first half of the day and once we get after the lunch break we're not putting out long sleeve knits anymore. It's.

Jubran Tanious: It's really no more complicated than that. What's important there, Mark, is that we diagnose that properly on a per-store basis, right? Because again, there are some stores that are doing just fine selling women's long sleeve knits. So those are the last stores that we would want to touch in terms of pulling them back and then removing the labor associated with them. So the key is surgical and granular, with something that the team can actually execute, like the example that I just gave.

Jubran Tanious: Really no more complicated than that.

Jubran Tanious: What's important there mark is that we diagnosed that properly on a per store basis right. Because again there are some stores that are doing just fine selling women's long sleepiness. So those are the last stores that we would want to touch in terms of pulling it back and then removing the labor associated with it. So the key is search.

Jubran Tanious: Nicole granular with something that the team can actually execute like the example that I just gave.

Jubran Tanious: Yes.

Speaker Change: Thank you.

Jubran Tanious: Yeah.

Speaker Change: Thanks Mark.

Operator: Your next question comes from the line of Bob Drbul from Guggenheim. Your line is open.

Jubran Tanious: Your next question comes from the line of Bob <unk> from Guggenheim. Your line is open.

Robert Scott Drbul: Hi, good afternoon. I guess I was just wondering if you could spend, you know, some more time just on the on-site donations, you know, the numbers are pretty good these days and sort of, you know, where you see that trending, and I'm just curious if you could give us an update on the Green Dot and just sort of the plans there and how that's going. And then I was also just curious, would the Green Dot initiative be something you could also use in Georgia with the Two Peach acquisition? Thanks.

Robert Scott Drbul: Hi, guys.

Robert Scott Drbul: And then I guess I was just wondering if you could spend some.

Robert Scott Drbul: More time just on the.

Robert Scott Drbul: Onsite donations.

Robert Scott Drbul: The numbers up there pretty good these days and sort of where you see that trending and then just curious if you can give us an update around the green dot and just sort of the plans there and how thats going and then I was also just curious with the green dot initiatives be something you could also use in Georgia.

Robert Scott Drbul: With the <unk> acquisition. Thanks.

Jubran Tanious: Yeah, hey, Bob, on-site donations. I think the Canadian team, and I think all three countries, Frankly, I think the team has never operated at a better level in terms of what we know drives on-site donations, right? We've talked about this before.

Speaker Change: Yeah, Hey, Bob.

Robert Scott Drbul: Yeah.

Jubran Tanious: Onsite donations.

Bob: I think the Canadian team.

Bob: I think all three countries frankly, I think the team has never operated.

Jubran Tanious: At a better level in terms of what we know drives onsite donations right. We've talked about this before convenience is king and then after that the number two reason the number one reason our new donor.

Jubran Tanious: Convenience is king. And then after that, the number two reason, the number one reason a new donor comes to one of our donation centers is that they drove by and saw a sign. Final visibility.

Jubran Tanious: Comes to one of our donation centers.

Jubran Tanious: They drove by and saw side, just just plain old visibility.

Jubran Tanious: The team does a lot of work on donation center refreshes, so on and so forth. The number two reason is advocacy, that a friend, family member, or co-worker told them how convenient, fast, and friendly the donation experience was. Because I would tell you across the landscape, that is not the norm.

Jubran Tanious: But the team does.

Jubran Tanious: A lot of work on donation center refreshes, so on and so forth.

Jubran Tanious: The number two reason is advocacy that a friend or family member co-worker told them.

Jubran Tanious: How convenient fast friendly.

Jubran Tanious: The donation experience was because I would tell you across the landscape that is not the norm that is something that we work hard at.

Jubran Tanious: That is something that we work hard at, and our teams actually have donor satisfaction score scores at the ready where they can see how are the donors that are coming to our donation centers experiencing us in terms of assistance, speed, convenience, and friendliness.

Jubran Tanious: And our teams actually have donor satisfaction store scores at the ready where they can see.

Jubran Tanious: Our the donors that are coming to our donation centers.

Jubran Tanious: Experiencing us in terms of assistance speed convenience friendliness.

Jubran Tanious: So doing that well helps ensure that on-site donations continue to grow into the future. So as far as we're concerned, Bob, there is no reason in the long term for all three countries that we would not expect on-site donations to grow. That may take a dip here or there, but over the long haul, they're going to grow. GreenDrop, you asked about GreenDrop.

Jubran Tanious: So doing that well helps ensure that onsite donations continue to grow into the future.

Jubran Tanious: So as far as we're concerned Bob there's no. There is no reason over the long term in all three countries that we would not expect onsite donations to grow that may take a dip here or there, but over the long haul theyre going to grow.

Jubran Tanious: Green drop you asked about green drop.

Jubran Tanious: GreenDrop is doing well. I think on the last call we talked about that it is an education process for a lot of municipalities on how the staffed GreenDrop model works. But of the new locations that we've opened, they are performing at or better than planned in terms of the quality of the goods, the volume, and the unit cost. So we're pretty excited about that. You know, I think we will, we're on track to open somewhere between 20 and 25 of those this year. You know, taking a step above, Bob, I would tell you from an overall raw material supply situation. We're actually in an oversupply situation right now. It's a pretty good place to be.

Jubran Tanious: Green dropped doing well I think on the last call. We talked about that it is an education process for a lot of municipalities on how the staffed green drop model works.

Jubran Tanious: But the new locations that we've opened.

Jubran Tanious: We are performing at or better than plan in terms of the quality of the goods the volume and the unit cost. So we're pretty excited about that.

Jubran Tanious: Yeah.

Jubran Tanious: I think we will we are on track to open somewhere between 20 and 25 of those this year.

Jubran Tanious: Taking a step above Bob I would tell you from an overall raw material supply situation, where we're at.

Jubran Tanious: Actually in an oversupply situation right now, it's a pretty good place to be.

Jubran Tanious: And it's the normal course of business for us to periodically kind of open the pressure relief valve, sell off some of the excess periodically, which we do. But from an overall supply situation, quality, and amount, we feel very good about that. And I think the last part of your question was about two peaches.

Jubran Tanious: And it's normal course of business for us to periodically kind of open the pressure relief valve.

Jubran Tanious: Sell off some of the excess periodically which we do.

Jubran Tanious: But from an overall supply situation.

Jubran Tanious: <unk> amount, we feel very good about that and I think the last part of your question was two features how do we think about green drop and bringing that to the Atlanta market.

Jubran Tanious: How do we think about Green Drop and bringing that to the Atlanta market? Look, I think first things first. We want to transition these stores. We do like the incumbent supply situation that they have, which is a mix of channels, some home pickup, and some bins. But your thesis is spot on. I think that we would all agree there's an opportunity for us to not just improve and build upon the four-wall performance of the stores but also bring some horsepower and sophistication to the supply acquisition part of the equation as well.

Jubran Tanious: Look I think I think first things first we want to transition. These stores, we do like the incumbent supply situation that they have which is a mix of channels some home pickup some bins.

Jubran Tanious: But your thesis is spot on.

Jubran Tanious: We would all agree there is an opportunity for us to not just improve and build upon the four wall performance of the stores, but to also bring some horsepower and sophistication to the supply acquisition part of the equation as well.

Jubran Tanious: Okay.

Operator: Your next question comes from the line of Mark Petrie from CIBC. Your line is open.

Jubran Tanious: Our next question comes from the line of Mark Petrie from CIBC. Your line is open.

Mark Robert Petrie: Hey, good afternoon, thanks for that just quickly.

Mark Robert Petrie: Any regions outperform or underperform.

Mark Robert Petrie: Did you see any variance across sort of urban or suburban or major markets versus smaller markets.

Mark Robert Petrie: No, we've not seen any particular ones, either regional or urban, suburban.

Mark Robert Petrie: No we have not seen any particular.

Mark Robert Petrie: Either regional or urban suburban trends.

Jubran Tanious: Yeah, pretty consistent, Mark, especially on a two-year stack basis, normalizing the odd weather. Okay, perfect. Thanks, and...

Mark Robert Petrie: Yes, pretty consistent mark, especially on a two year stack basis.

Mark Robert Petrie: Normalizing odd weather, yes.

Mark Robert Petrie: Okay perfect. Thanks Ann.

Mark Robert Petrie: Curious if there's any shift in labor availability in any of your markets, and I guess specifically in Canada, just given, as you acknowledged, the sort of shifting or weakening economy. Yeah, it's a good question, Mark. I mean, I well, what I would say is, you know, what's great for us, and this applies to all three countries, is, you know, going all the way back to January of 2023 until this point in time.

Mark Robert Petrie: Curious if there's any shift the labor availability.

Mark Robert Petrie: In any of your markets and I guess, specifically in Canada, just given the sort of shifting a weakening economy.

Mark Robert Petrie: Yes, it's a good question Mark I mean, well what I would say is what's great for us and this applies to all three countries is going all the way back to January of 2023.

Mark Robert Petrie: Till this point in time we.

Mark Robert Petrie: We have seen our turnover decline sequentially. Again, Mark has talked about this in the past in terms of engagement scores. So we feel good about that. From a vacancy perspective, it's held. It's helped pretty steadily. It varies by market, Mark, but on the whole, at a country level in Canada, labor availability is not holding us back.

Mark Robert Petrie: We have seen our turnover decline sequentially.

Mark Robert Petrie: And again.

Mark Robert Petrie: Mark has talked about this in the past in terms of engagement scores and so we feel good about that from a vacancy perspective, it's held.

Mark Robert Petrie: It's held pretty steadily so.

Mark Robert Petrie: It varies by market Mark but on the whole.

Mark Robert Petrie: On the whole at a country level in Canada labor availability.

Mark Robert Petrie: It's not holding us back in any way.

Speaker Change: Okay I appreciate it thanks for all of Us.

Speaker Change: Thanks Mark.

Jubran Tanious: There are no further questions at this time. I will turn the call over to you, Mr. Walsh.

Mark Robert Petrie: There are no further questions at this time I will turn the call over back to you Mr. Walsh.

Mark T. Walsh: I'd like to thank everyone for their time and interest today at Savers Value Village, and we look forward to speaking with many of you in the days and weeks to come. Thank you so much.

Mark T. Walsh: I'd like to thank everyone for their time and interest today in San Jose village and we look forward to speaking with many of you in the days and weeks to come. Thank you so much.

Operator: Ladies and gentlemen, thank you for participating. You may now disconnect.

Speaker Change: Ladies and gentlemen, thank you for participating you may now disconnect.

Operator: [noise] [noise].