Savers Value Village (SVV) Q3 2025: U.S. Sales Jump 10.5% as Store Openings Drive Margin Inflection

October 30, 2025 | By EarningsIQ Research

SVV’s U.S. business delivered double-digit sales growth and strong comp gains, driving the company’s first year-over-year profit growth in both segments since 2023. While Canadian macro headwinds persisted, operational discipline and new store maturation set up an inflection in total company profitability into 2026. Management’s capital allocation is increasingly weighted to U.S. expansion, signaling a clear strategic pivot as secular thrift adoption accelerates.

Summary

• U.S. Expansion Accelerates: Majority of growth capital will target U.S. store openings as secular thrift adoption drives robust demand.
• Profitability Inflection Point: Both U.S. and Canadian segments posted year-over-year profit growth for the first time since 2023.
• Canadian Macro Pressure Persists: Management expects limited near-term upside in Canada, with focus on cost control and productivity.

Performance Analysis

Savers Value Village posted a total net sales increase of 8.1% to $427 million, with the U.S. segment leading at 10.5% growth and 7.1% comparable sales, both driven by higher transaction counts and average baskets. The Canadian segment showed sequential improvement, with net sales up 5.1% and comps rising 3.9%, though results landed at the lower end of expectations due to persistent macroeconomic weakness, especially in key regions like Southwest Ontario.

New store performance is a material driver of both top-line growth and margin pressure, as ramping locations initially dilute margins but are expected to contribute positively as they mature. Gross margin improved by 100 basis points over the first half but remained below last year’s level, primarily due to new store ramp and deliberate production adjustments in Canada. SG&A rose 19% on store growth and included a $4 million impairment for six planned store closures, with management expecting these closures to be EBITDA accretive in 2026. Debt refinancing will reduce interest expense by $17 million annually, bolstering future cash flow.

• U.S. Store Base Drives Results: Mature stores contributed the bulk of U.S. comp growth, with new stores yet to enter the comp base.
• Margin Dynamics Mixed: Gross margin improved sequentially, but wage inflation and Canadian processing costs pressured overall margin rates.
• Capital Structure Strengthened: Debt refinancing and new share repurchase authorization add flexibility for future growth and deleveraging.

Overall, SVV’s operational focus and capital discipline are setting up a return to enterprise profit growth, with management reiterating confidence in achieving annual profit improvement in 2026. Cash flow remains robust, supporting both organic growth and shareholder returns.

Executive Commentary

Strategic Positioning

1. U.S.-Centric Growth Strategy

SVV is decisively shifting its growth capital to the U.S., with 75 to 80 percent of new investment allocated to this market in 2026 and beyond. This follows robust U.S. demand, favorable demographic shifts, and substantial geographic white space. Store growth remains the highest return use of capital, with new markets like North Carolina and Tennessee slated for entry in 2026. Management emphasized that secular thrift adoption is still in the early innings, supporting a long runway for expansion.

2. Canadian Market Realities

Canada’s economic backdrop remains a drag, with unemployment above 7 percent in key regions and inflation pressuring lower-income consumers. SVV is focused on “controlling the controllables” by optimizing selection, pricing, and labor efficiency. Management is planning for sustained macro pressure, with conservative assumptions for low single-digit comp growth and an aggressive posture on cost containment to protect profitability.

3. Operational Discipline and Store Portfolio Management

Productivity initiatives and targeted closures are key levers. Six underperforming stores (including three “two Peaches” conversions) will close, with nearby stores expected to absorb much of the volume. This move is expected to be EBITDA accretive by 2026. Meanwhile, investments in centralized processing centers and automation are ongoing, with management signaling continued focus on labor efficiency and process innovation.

4. Capital Allocation and Shareholder Returns

Debt refinancing and a new $50 million share repurchase authorization reflect SVV’s improving balance sheet and confidence in future cash flows. The company is targeting a net leverage ratio below two times, balancing organic growth, debt reduction, and opportunistic buybacks. This disciplined approach supports both growth and capital returns.

Key Considerations

SVV’s Q3 results highlight the company’s ability to grow profitably in the U.S. while navigating Canadian headwinds, with a clear pivot toward U.S.-led expansion and operational efficiency as central themes for 2026.

Key Considerations:

• Secular Thrift Tailwind: Younger and higher-income U.S. cohorts are growing, reinforcing long-term demand for value-based retail.
• Margin Recovery Hinges on Store Maturation: New store ramping is dilutive short-term but expected to drive future margin expansion as locations mature.
• Canadian Macro Remains a Limiting Factor: Persistent unemployment and inflation cap near-term upside, demanding tight cost control and productivity gains.
• Capital Flexibility: Debt refinancing and expanded revolver capacity position SVV to fund growth and manage risk.
• Store Closures as Portfolio Optimization: Swift action on underperformers signals discipline and a focus on enterprise-level profitability.

Risks

Canadian macroeconomic weakness remains a structural headwind, with elevated unemployment and inflation challenging consumer spending and segment profitability. Margin recovery depends on efficient store ramp and cost management, especially as wage inflation and processing costs persist. Execution risk around new market entries and potential cannibalization from store closures also warrant attention. While U.S. growth is robust, any slowdown in consumer trade-down behavior or secular thrift adoption could impact the long-term thesis.

Forward Outlook

For Q4 2025, SVV guided to:

• Continued strong U.S. comp trends, with Canadian comps expected to be roughly flat.
• Gross margin improvement as new stores mature and Canadian processing stabilizes.

For full-year 2025, management tightened guidance:

• Net sales of $1.67–$1.68 billion
• Comparable store sales growth of 4.0–4.5%
• Adjusted EBITDA of $252–$257 million
• 25 new store openings

Management emphasized:

• U.S. store growth and comp strength remain the primary drivers of 2026 profit inflection.
• Canadian segment will be managed for cost efficiency, with conservative growth assumptions.

Takeaways

SVV’s Q3 marks a turning point, with U.S. momentum and disciplined execution driving a return to profit growth. The company’s strategic focus on U.S. expansion, operational efficiency, and prudent capital allocation positions it well for long-term value creation, though Canadian macro risks remain a drag.

• U.S. Store Growth Drives Enterprise Upside: Strong comps and new store performance underpin the company’s pivot toward U.S.-centric capital deployment.
• Margin Inflection Linked to Store Maturity: As new locations ramp, margin pressure should ease, supporting management’s outlook for EBITDA growth in 2026.
• Canadian Macro Remains a Watchpoint: Investors should monitor cost discipline and productivity initiatives as the key to mitigating ongoing Canadian weakness.

Conclusion

Savers Value Village’s Q3 results confirm a strategic inflection, with U.S. growth and store maturation set to drive margin expansion and profit recovery into 2026. While Canadian headwinds persist, the company’s operational discipline and capital flexibility provide a solid foundation for long-term growth and shareholder value creation.

Industry Read-Through

SVV’s double-digit U.S. growth and rising affluent customer mix highlight the continued secular shift toward value and thrift retail, even as broader apparel and discount retailers face uneven consumer demand. The company’s disciplined approach to new market entry, portfolio optimization, and automation investment offers a playbook for peers navigating margin pressure and macro uncertainty. For the broader retail sector, SVV’s results reinforce the resilience of the value segment and the importance of operational agility in volatile environments.

SVV Consumer Discretionary Retail Thrift Store Expansion Margin Inflection Capital Allocation