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What changed in Savers Value Village, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Savers Value Village, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+426 added−651 removedSource: 10-K (2025-02-21) vs 10-K (2024-03-08)

Top changes in Savers Value Village, Inc.'s 2025 10-K

426 paragraphs added · 651 removed · 328 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

88 edited+14 added−128 removed23 unchanged
Biggest changeOur subsidiaries are registered professional fundraisers where such registration is required. We source our merchandise primarily through three distinct and strategic methods: (i) on-site donations, (ii) delivered supply and (iii) GreenDrop locations, all of which we purchase directly from our NPPs. We pay a market-competitive contractual rate to purchase items received as OSDs or as part of delivered supply.
Biggest changeWe source our merchandise primarily through three distinct and strategic procurement models: (i) on-site donations (“OSDs”), (ii) GreenDrop locations and (iii) delivered supply. Increasing the proportion of OSDs and GreenDrop as a percentage of total supply is desirable as donations from these sources are usually of higher quality and collectively have a lower cost than product sourced through other channels.
Foreign Corrupt Practices Act (“FCPA”) and other similar anti-bribery and anti-kickback laws and regulations generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The U.S.
The U.S. Foreign Corrupt Practices Act (“FCPA”) and other similar anti-bribery and anti-kickback laws and regulations generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The U.S.
Our personalized email communication and targeted offers are designed to increase engagement and drive purchase frequency of our growing loyalty program member base. • Conducting brand marketing: We will continue to utilize our brand marketing spend to improve our brand awareness, bolstered by the broader adoption of thrift shopping overall to drive new customer acquisition.
Our personalized email communication and targeted offers are designed to increase engagement and drive purchase frequency among our growing loyalty program member base. • Conducting brand marketing: We will continue to utilize our brand marketing spend to improve brand awareness, bolstered by the broader adoption of thrift shopping overall to drive new customer acquisition.
We believe our significant scale advantage allows us to deliver extreme value and a superior shopping experience to customers, while generating strong cash flow that can be reinvested in our business. We have innovated and integrated the three highly-complex parts of thrift operations—supply and processing, retail and sales to wholesale markets—through significant operational expertise and investments.
We believe our significant scale advantage allows us to deliver compelling value and a superior shopping experience to customers, while generating strong cash flow that can be reinvested in our business. We have innovated and integrated the three highly complex parts of thrift operations—supply and processing, retail, and sales to wholesale markets—through significant operational expertise and investments.
This list includes roughly 10,000 companies, organizations, and individuals around the world with whom the vast majority of dealings with U.S. persons (including companies and companies outside the United States owned by U.S. persons) are prohibited. Our policies and our vendor compliance agreements mandate compliance with applicable laws, including these laws and regulations.
This list includes roughly 10,000 companies, organizations, and individuals around the world with whom the vast majority of dealings with U.S. persons (including companies and companies outside the U.S. owned by U.S. persons) are prohibited. Our policies and our vendor compliance agreements mandate compliance with applicable laws, including these laws and regulations.
Our culture of innovation and data orientation has been critical to driving operational efficiencies, and we will continue to lead in terms of innovating the thrift business model. Selectively pursue other growth opportunities In addition to our organic growth initiatives, we will also take an opportunistic yet disciplined approach toward potential inorganic growth opportunities.
Our culture of innovation and data orientation has been critical to driving operational efficiencies, and we will continue to lead in terms of innovating the thrift business model. 8 Table of Contents Selectively pursue other growth opportunities In addition to our organic growth initiatives, we will also take an opportunistic yet disciplined approach toward potential inorganic growth opportunities.
Savers intends to also use the following channels as a means of disclosing information about Savers, its services and other matters and for complying with its disclosure obligations under Regulation FD: Savers Investor Relations Webpage (www.ir.savers.com) Savers X: https://twitter.com/SaversVVillage Savers LinkedIn: https://www.linkedin.com/company/saversvaluevillage Savers Instagram: https://www.instagram.com/savers_thrift/ Savers Meta: https://www.facebook.com/savers The information Savers posts through these channels may be deemed material.
Savers intends to also use the following channels as a means of disclosing information about Savers, its services and other matters and for complying with its disclosure obligations under Regulation FD: 13 Table of Contents Savers Investor Relations Webpage (www.ir.savers.com) Savers X: https://x.com/SaversVVillage Savers LinkedIn: https://www.linkedin.com/company/saversvaluevillage Savers Instagram: https://www.instagram.com/savers_thrift/ Savers Meta: https://www.facebook.com/savers The information Savers posts through these channels may be deemed material.
As a result of our attractive financial profile, we have significant flexibility with respect to capital allocation, giving us the ability to drive long-term shareholder and stakeholder value through various operating and financial strategies. 14 Table of Contents Highly experienced and strategic leadership Our strategic vision and culture are directed by a leadership team that combines deep industry expertise and advanced operational capabilities to continuously innovate our business.
As a result of our attractive financial profile, we have significant flexibility with respect to capital allocation, giving us t he ability to drive long-term shareholder and stakeholder value through various operating and financial strategies. 10 Table of Contents Highly experienced and strategic leadership Our strategic vision and culture are directed by a leadership team that combines deep industry expertise and advanced operational capabilities to continuously innovate our business.
Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation, carpet padding), further reducing wa ste.
Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation, carpet padding), further reducing waste.
We believe that a unique perspective is critical to solving complex problems and inspiring a new generation of consumers to think secondhand first. As of December 30, 2023, 58% of the management roles in our stores and corporate operations were held by team members identifying as female, and 57% of our U.S. workforce was represented by diverse backgrounds and ethnicities.
We believe that a unique perspective is critical to solving complex problems and inspiring a new generation of consumers to think secondhand first. As of December 28, 2024, 57% of the management roles in our stores and corporate operations were held by team members identifying as female, and 61% of our U.S. workforce was represented by diverse backgrounds and ethnicities.
Given the high volumes processed in our stores, effective pro cess management is critical to ensuring each step is done properly and in coordination with the other steps.
Given the high volumes processed in our stores, effective process management is critical to ensuring each step is done properly and in coordination with the other steps.
Item 1. Business Company Overview Our mission To champion reuse and inspire a future where secondhand is second nature. From the thrill of the hunt to the joy of decluttering, we help communities harness the power of pre-loved stuff to keep reusable items around for years to come.
Our mission Our mission is to champion reuse and inspire a future where secondhand is second nature. From the thrill of the hunt to the joy of decluttering, we help communities harness the power of pre-loved stuff to keep reusable items around for years to come.
We continue to expand offsite processing capacity and have re-allocated and prioritized CPC and warehouse processing capacity to support new store growth; the majority of new stores planned for 2024 will be serviced by an offsite processing facility and would not have been possible without offsite processing.
We continue to expand offsite processing capacity and have re-allocated and prioritized CPC and warehouse processing capacity to support new store growth; the majority of new stores opened in 2024 and planned for 2025 will be serviced by an offsite processing facility and would not have been feasible without offsite processing.
We own federally registered trademarks related to our brands, including SAVERS ® , VALUE VILLAGE ® , UNIQUE ® , UNIQUE THRIFT STORE ® , 2ND AVE ® ., 2ND AVE VALUE STORES ® in the United States, VALUE VILLAGE ® and VILLAGE DES VALEURS MD in Canada, and SAVERS ® in Australia.
We own federally registered trademarks related to our brands, including SAVERS ® , VALUE VILLAGE ® , UNIQUE ® , UNIQUE THRIFT STORE ® , 2ND AVE ® ., 2ND AVE VALUE STORES ® in the U.S., VALUE VILLAGE ® and VILLAGE DES VALEURS MD in Canada, and SAVERS ® in Australia.
Our business model is rooted in ESG principles, with a mission to positively impact our stakeholders—thrifters, NPPs and their donors, our team members and our stockholders. As a leader and pioneer of the for-profit thrift category, we seek to positively impact the environment by reducing waste and extending the life of reusable goods.
Our business model is rooted in sustainability and contributing to the communities we serve, with a mission to positively impact our stakeholders—thrifters, NPPs and their donors, our team members and our stockholders. As a leader and pioneer of the for-profit thrift category, we seek to positively impact the environment by reducing waste and extending the life of reusable goods.
We have invested in renovations to modernize our stores; new technologies to optimize store operations; and alternative store formats supported by our offsite processing strategy. • Expanding engagement with our loyalty program members : We are investing in email and text messaging as a cost-effective means of reaching our existing customers.
We have invested in renovations to modernize our stores; new technologies to optimize store operations; and alternative store formats supported by our offsite processing strategy. • Expanding engagement with our loyalty program members : We are investing in email and text messaging as a cost-effective means of reaching our existing customers and we continue to focus on collecting valid emails for our loyalty program members.
Our most engaged customers are members of the Super Savers Club ® loyalty program. As of December 30, 2023 , we have 5.3 million active members enrolled in our U.S. and Canadian loyalty programs who have made a purchase within the last 12 months, compared to 4.8 million active loyalty members as of December 31, 2022.
Our most engaged customers are members of our Super Savers Club ® loyalty program. As of December 28, 2024, we have 5.9 million active members enrolled in our U.S. and Canadian loyalty programs who have made a purchase within the last 12 months, compared to 5.3 million active loyalty members as of December 30, 2023.
We are committed to an engaged workforce that sees a path to promotion and host our own in-house “university” where we offer a wide array of both mandatory and elective online technical and management training programs. During fiscal year 2023, more than 72% of open salaried management positions in the United States and Canada were filled by internal promotions.
We are committed to an engaged workforce that sees a path to promotion and host our own in-house “university” where we offer a wide array of both mandatory and elective online technical and management training programs. During fiscal year 2024, more than 62% of open salaried management positions were filled by internal promotions.
In addition, we own federal trademarks for certain business programs, like FUNDRIVE ® and ALTEREGO ® in the United States and Canada and SUPER SAVERS CLUB ® and GREENDROP ® in the United States (both pending in Canada).
In addition, we own federal trademarks for certain business programs, like FUNDRIVE ® and ALTEREGO ® in the U.S. and Canada and SUPER SAVERS CLUB ® and GREENDROP ® in the U.S. (both pending in Canada).
Our trademark registrations have various expiration dates. However, assuming that the trademark registrations are properly renewed, they have a perpetual duration. We also own several domain names, unregistered copyrights in our website content and in our Donation Manager route and schedule management software that we license for use by and on behalf of our non-profit partners.
However, assuming that the trademark registrations are properly renewed, they have a perpetual duration. We also own several domain names, unregistered copyrights in our website content and in our Donation Manager route and schedule management software that we license for use by and on behalf of our non-profit partners. We pursue infringement of our trademarks and copyrights when appropriate.
This has created a compelling business model which is differentiated against online competition and traditional retail, based on our treasure-hunt experience and low AUR. Further, our business has demonstrated resilience through economic cycl es. Such advantages of our business model provide compelling value to customers, drive attractive profitability for the business, and underpin positive comparable store sales growth.
This has created a compelling business model which is differentiated against online competition and traditional retail, based on our treasure-hunt experience and low AUR. Such advantages of our business model provide compelling value to customers, drive attractive profitability for the business, and underpin comparable store sales growth.
Our REactions surveys take the pulse of our customers on a weekly basis regarding the shopping experience and environment. This information is proactively shared with our leadership team and cascaded to store managers, who are measured on their ability to improve operations.
Further, we have a continuous feedback loop to which we conduct surveys to take the pulse of our customers on a weekly basis regarding the shopping experience and environment. This information is proactively shared with our leadership team and cascaded to store managers, who are measured on their ability to improve operations.
Continue to implement strategic initiatives to drive efficiency and expand margin, and to unlock new store potential Compared to our traditional retail competitors, we have multiple levers within our control that have been critical in driving our profitability and Free Cash Flow.
Continue to implement strategic initiatives to drive efficiency and expand margin, and to unlock new store potential We have multiple levers within our control that have been critical in driving our profitability.
During fiscal year 2023 , more than 35,000 items were merchandised per store every week. Our sales floor inventory is also regularly rotated and refreshed, with inventory turns of roughly 17 times a year, providing our customers with an extensive, ever-changing selection at tremendous value.
In fiscal year 2024, nearly 34,000 items were merchandised per store every week. Our sales floor inventory is also regularly rotated and refreshed, with inventory turns of more than 15 times a year, providing our customers with an extensive, ever-changing selection at tremendous value.
The vast majority of all of our retail stores have a dedicated space that handles the processing of soft and hard goods that provide the inventory to be sold on our retail sales floors. In fiscal year 2023 , we processed 984 million pounds of secondhand goods.
Processing The majority of our retail stores have a dedicated space that handles the processing of soft and hard goods that provide the inventory to be sold on our retail sales floors. In fiscal year 2024 , we processed 1.0 billion pounds of secondhand goods.
We also pursue and maintain federal registrations for certain slogans that we use, including THRIFT PROUD ® in the United States (pending in Canada) and RETHINK REUSE ® and I GIVE A SH!RT ® in the United States, as well as service marks such as our stylized recycling symbol comprised of folded store tags.
We also pursue and maintain federal registrations for certain slogans that we use, including THRIFT PROUD ® in the U.S., Canada and Australia and RETHINK REUSE ® and I GIVE A SH!RT ® in the U.S., as well as service marks such as our stylized recycling symbol comprised of folded store tags. Our trademark registrations have various expiration dates.
Our team members are primarily full-time employees (68% of our workforce) as of December 30, 2023 and approximately 89% of our workforce is compensated on an hourly basis.
Our team members are primarily full-time employees (67% of our workforce) as of December 28, 2024 and approximately 89% of our workforce is compensated on an hourly basis.
Government Regulation We are subject to labor and employment laws, laws related to the collection of sales taxes and other tax matters, laws governing advertising and marketing including via text messaging and email and operation of customer loyalty programs, privacy laws, safety regulations, including consumer product safety regulations, and other laws including consumer protection regulations that regulate retailers and/or govern the promotion and sale of merchandise and the operation of stores and warehouse facilities, certain secondhand dealer ordinances, regulations related to clothing donation bins, environmental and waste regulations and laws, laws related to commercial and professional fundraiser registration and disclosure, regulations regarding telephone and mail solicitations, laws governing international trade and customs, laws governing weights and measures and laws related to transportation and trucking.
Government Regulation We are subject to labor and employment laws, laws related to the collection of sales taxes and other tax matters, laws governing advertising and marketing including via text messaging and email and operation of customer loyalty programs, privacy laws, safety regulations, including consumer product safety regulations, and other laws including consumer protection regulations that regulate retailers and/or govern the promotion and sale of merchandise and the operation of stores and warehouse facilities, certain secondhand dealer ordinances, regulations related to clothing donation bins, environmental and waste regulations and laws, laws related to commercial and professional fundraiser registration and disclosure, regulations regarding telephone and mail solicitations, laws governing international trade and customs, laws governing weights and measures and laws related to transportation and trucking. 12 Table of Contents We sell to overseas customers a majority of the secondhand goods that do not sell at our retail locations, and source a minimal amount of new goods from overseas markets.
We pursue infringement of our trademarks and copyrights when appropriate. We rely on trademark and copyright laws, trade-secret protection and confidentiality, license and other agreements with our NPPs, our vendors, employees and others to protect our intellectual property. Exclusive rights are held for CPC technology in the United States and Canada until December 2025.
We rely on trademark and copyright laws, trade-secret protection and confidentiality, license and other agreements with our NPPs, our vendors, employees and others to protect our intellectual property. Exclusive rights are held for CPC technology in the U.S. and Canada until December 2025.
As of December 30, 2023, approximately 28% of our workforce in the United States and Canada is aged 20 to 30, with 27% aged 51 or older. During the same period, the average tenure of our store team members was 3.7 years, and our field multi-unit leaders, directors and executive population averaged 13.4 years of tenure.
As of December 28, 2024, approximately 31% of our workforce is aged 20 to 30, with 27% aged 51 or older. During the same period, the average tenure of our store team members was 3.8 years, and our field multi-unit leaders, directors and executive population averaged 14.8 years of tenure.
We have developed a proven strategy to continuously improve our supply model. In order to maximize supply quality, we periodically assess sales yield, which we define as retail sales generated per pound processed on a currency neutral and comparable store basis, from each supply source to make informed decisions on supplier selection.
In order to maximize supply quality, we periodically assess sales yield, which we define as retail sales generated per pound processed on a currency neutral and comparable store basis, from each supply source to make informed decisions on supplier selection. This approach ultimately improves both our revenue and profitability.
Benefiting from secular tailwinds, we expect to further drive comparable store sales growth with the following strategies: • Quality product offerings: We will continue to procure ample supply of quality items to delight our customers.
Benefiting from secular tailwinds, we expect to drive comparable store sales growth with the following strategies: • Quality product offerings: We offer a dynamic, ever-changing selection of items, with an AUR of approximately $5. We will continue to procure an ample supply of quality secondhand items to delight our customers.
Our roster of influencers has enabled us to create a steady stream of on-brand, owned content that we can use and repurpose through other marketing methods, such as paid digital amplification efforts to reach our audiences at scale.
To further strengthen brand awareness, particularly in the U.S., we are partnering with authentic, relatable influencers with highly engaged audiences. Our roster of influencers has enabled us to create a steady stream of on-brand, owned content that we can use and repurpose through other marketing methods, such as paid digital amplification efforts to reach our audiences at scale.
This approach ultimately improves both our revenue and profitability. We have been strategically focused on increasing our OSDs, particularly in increasing convenience and proximity to potential donors. OSDs not only drive profitability but also enhance the consistency and reliability of supply to each of our stores.
We have been strategically focused on increasing our OSDs, particularly in increasing convenience and proximity to potential donors. OSDs not only drive profitability but also enhance the consistency and reliability of supply to each of our stores. We expect our focus on increasing OSDs will contribute to further improvement and growth in our supply.
Our acquisition criteria include a significant regional presence; access to a robust flow of quality supply; strong brand awareness; and a complementary cultural fit for our company. 16 Table of Contents For example, in November 2021, we completed the acquisition of 2nd Ave., which added 12 stores in the Northeastern and Mid-Atlantic regions of the United States, representing a complementary store footprint for our existing store network and offering new store expansion opportunities.
Our acquisition criteria include a significant regional presence, access to a robust flow of quality supply, strong brand awareness, and a complementary cultural fit for our company. For example, in November 2021, we completed the acquisition of 2nd Ave., which added 12 stores in the Northeastern and Mid-Atlantic regions of the U.S. and the GreenDrop system.
The information we post through these channels is not a part of this Annual Report or any other document we file with the SEC, and the inclusion of our website addresses and X, LinkedIn, Instagram and Meta accounts are as inactive textual references only. 28 Table of Contents We have a code of ethics for senior financial officers, pursuant to Section 406 of the Sarbanes-Oxley Act.
The information we post through these channels is not a part of this Annual Report or any other document we file with the SEC, and the inclusion of our website addresses and X, LinkedIn, Instagram and Meta accounts are as inactive textual references only.
We have also delivered steady and consistent gross product margin expansion over the last several years, from 46.4% for fiscal year 2015 to 58.7% for fiscal year 2023 . We define gross product margin as net sales minus cost of merchandise sold, exclusive of depreciation and amortization, divided by net sales.
We have also delivered gross product margin expansion over the same period, from 50.7% for fiscal year 2019 to 56.4% for fiscal year 2024. We define gross product margin as net sales minus cost of merchandise sold, exclusive of depreciation and amortization, divided by net sales.
The CPC system is an offsite, semi-automated processing facility that mechanizes the flow of clothing, accessories and shoes through an integrated series of conveyor belts, robotics, sensors, and other technology.
The CPC system is an offsite, semi-automated processing facility that mechanizes the flow of clothing, accessories and shoes through an integrated series of conveyor belts, robotics, sensors, and other technology. We have prioritized offsite processing capacity toward new store growth that would not be feasible without offsite processing.
Our user and influencer-generated content strategy builds authenticity by celebrating the real, genuine shoppers who have shaped our brand image through social media, online, email, paid digital and in-store signage, among other avenues. New Store Openings. We foresee a total addressable market potential of approximat ely 2,200 sto res.
Our user and influencer-generated content strategy builds authenticity by celebrating the real, genuine shoppers who have shaped our brand image through social media, online, email, paid digital and in-store signage, among other avenues.
These stores can have a more flexible layout and size; in more densely populated areas specifically, offsite processing enables in-fill opportunities in alternative store formats without the need for a full-scale processing facility in the back-of-store.
In more densely populated areas, offsite processing enables in-fill opportunities in alternative store formats without the need for a full-scale processing facility in the store.
As of December 30, 2023, we had 155 stores in the United States, 159 stores in Canada and 12 stores in Australia. We operate under six distinct store banners—Savers, Value Village, Value Village Boutique, Village des Valeurs, Unique and 2nd Ave.
As of December 28, 2024, we had 172 stores in the U.S., 165 stores in Canada and 14 stores in Australia. We operate under six distinct store banners: Savers, Value Village, Value Village Boutique, Village des Valeurs, Unique and 2nd Ave.
Copies of the code are available free of charge by writing to Secretary, Savers Value Village, Inc., 11400 S.E. 6th Street, Suite 125, Bellevue, WA 98004.
We have a code of ethics for senior financial officers, pursuant to Section 406 of the Sarbanes-Oxley Act. Copies of the code are available free of charge by writing to Secretary, Savers Value Village, Inc., 11400 S.E. 6th Street, Suite 125, Bellevue, WA 98004.
We target opening approximately 25 or more new stores annually from 2025 through 2027. • In-fill opportunities: We will continue to identify attractive locations in our existing markets by leveraging our brand awareness and operational capabilities, and where we have the advantage of both attractive supply and demand.
We plan to open 25 to 30 new stores in 2025, and expect to open a similar number of stores in future years. • In-fill opportunities: We will continue to identify attractive locations in our existing markets by leveraging our brand awareness and operational capabilities, and where we have the advantage of both attractive supply and demand.
We have a particularly active presence on social media platforms, including Facebook, Instagram and Pinterest, to connect with our customers, and we also partner with a number of social media “influencers” who generate further awareness of our brands through sponsored content.
Customers in the U.S. and Canada also have the option to sign up online or via text message. We have a particularly active presence on social media platforms, including Facebook, Instagram and Pinterest, enabling connections with our customers, and we also partner with a number of social media influencers who generate further awareness of our brands through sponsored content.
In recent years, we accelerated our efforts around fostering an environment in which all team members feel heard and valued. 27 Table of Contents We believe the enthusiasm of our more than 22,000 team members is one of the significant contributors to our Company’s success, as highly engaged team members will provide better service to our customers, which is critical to customer satisfaction, the satisfaction of our NPPs and their donors, and the overall profitability of our stores.
We believe the enthusiasm of our approximately 22,700 team members is one of the significant contributors to our Company’s success, as highly engaged team members will provide better service to our customers, which is critical to customer satisfaction, the satisfaction of our NPPs and their donors, and the overall profitability of our stores.
We have utilized multiple levers that are unique to our business model to drive margin improvements, especially the growth of OSDs as part of our supply mix and sales yield improvement.
We have utilized multiple levers that are unique to our business model to drive margin improvements, especially the growth of OSDs as part of our supply mix and sales yield improvement. OSDs and GreenDrop accounted for 76.3% of our total pounds processed during fiscal year 2024, compared to 53.0% of our total pounds processed in 2019.
Our store experience directly reflects our mission to make secondhand second nature. We deliver a well merchandised environment that maximizes customer engagement and supports a core tenet for any thrifter—the treasure hunt. Our stores offer a wide selection of quality items across clothing, home goods, books and other items at convenient locations.
We deliver a well merchandised environment that maximizes customer engagement and supports a core tenet for any thrifter—the treasure hunt. The average store has approximately 20,100 square feet of retail space and offers a wide selection of quality items across clothing, home goods, books and other items at convenient locations.
We also offer in-store self-service sign-ups at our self-checkout kiosks, which makes the process more efficient by eliminating the need for sign-up assistance from a team member. Customers in the U.S. and Canada also have the option to sign up online or via text message.
The majority of our customers join our loyalty programs during the checkout process in our stores. We also offer in-store self-service sign-ups at our self-checkout kiosks, which makes the process more efficient by eliminating the need for sign-up assistance from a team member.
We drive traffic, acquire new customers and donors to our NPPs at our Community Donation Centers and promote brand awareness through an efficient, cost-effective mix of customer engagement (word-of-mouth), paid and organic marketing.
Marketing and Brand Awareness We have highly recognizable brands in Canada. In the U.S., we have an opportunity to continue building brand awareness across our four brands. We drive traffic, acquire new customers and donors to our NPPs and promote brand awareness through an efficient, cost-effective mix of customer engagement (word-of-mouth), paid and organic marketing.
Our team member engagement is considered best-in-class, as measured by an external consultant, comparing our results to other companies in the retail sector. Team member engagement is crucial to customer satisfaction and the satisfaction of our NPPs and their donors. We also invest in the training, development and advancement of our team members.
Our team member engagement is considered best-in-class, as measured by an external consultant, comparing our results to other companies in the retail sector.
Our members earn points or store credit, which further enhances the value shopping experience. Members in both the United States and Canada receive exclusive coupons and offers via email, as well as a special birthday coupon.
Active members drove 72.4% of retail sales during fiscal year 2024, compared to 70.3% during fiscal year 2023. Our members earn points or store credit, which further enhances the value shopping experience. Members in both the U.S. and Canada receive exclusive coupons and offers via email, as well as a special birthday coupon.
We are committed to redefining secondhand shopping by providing one-of-a-kind, low-priced merchandise ranging from quality clothing to home goods in an exciting treasure-hunt shopping environment.
Who we are We are committed to redefining secondhand shopping by providing one-of-a-kind, low-priced merchandise ranging from quality clothing to home goods in an exciting treasure-hunt shopping environment. We purchase secondhand textiles (e.g., clothing, bedding and bath items), shoes, accessories, housewares, books and other goods from our non-profit partners (“NPPs”).
Unmatched value proposition driving exceptional customer engagement We offer quality items at one of the deepest values across all of our product categories and an exciting, engaging treasure hunt experience in a contemporary in-store atmosphere, which underpins strong customer loyalty. Our most engaged customers are members of our Super Savers Club ® loyalty program.
As interest in the secondhand market continues to grow, we will have the opportunity to elevate and define the thrift experience for decades to come. 9 Table of Contents Unmatched value proposition driving exceptional customer engagement We offer quality items at one of the deepest values across all of our product categories and an exciting, engaging treasure hunt experience in a contemporary in-store atmosphere, which underpins strong customer loyalty.
We expect our focus on increasing OSDs will contribute to further improvement and growth in our supply. Culture of innovation and operational excellence Our culture of innovation underpins our key decisions and the way we run our business. We continue to be an industry leader with innovation to improve the customer experience, while enhancing operational efficiency.
Culture of innovation and operational excellence Our culture of innovation underpins our key decisions and the way we run our business. We continue to be an industry leader with innovation to improve the customer experience, while enhancing operational efficiency. We have continuously improved our thrift operations across sourcing, processing and retailing.
These in-fill opportunities will include both traditional and alternative format stores. • Adjacent store opportunities: We also will pursue opportunities to expand our regional footprint in adjacent areas where we can leverage our operational capabilities and regional market knowledge. • Greenfield store opportunities: We are currently underpenetrated in multiple important regional markets, including the South and West regions of the United States and in Central Canada. 15 Table of Contents Driven by our disciplined real estate selection approach, we expect to deliver attractive return on investment and store-level profitability.
Our alternative store format is designed to capitalize on high real estate availability in in-fill markets through smaller formats. • Adjacent store opportunities: We also will pursue opportunities to expand our regional footprint in adjacent areas where we can leverage our operational capabilities and regional market knowledge. 7 Table of Contents • Greenfield market opportunities: We are currently underpenetrated in multiple important regional markets, including the South and West regions of the U.S.
Consistent with initial projections, each ABP system is projected to deliver $250,000 per year in incremental contribution.
Also, as of December 28, 2024, 5 CPCs and 18 ABP systems are in full operation. Consistent with initial projections, each ABP system is projected to deliver $250,000 per year in incremental contribution.
We encourage team member involvement to support local causes and our stores are empowered to support local relief efforts and community nonprofits. For example, our stores have worked with local charitable organizations to provide items or discounts to individuals impacted by natural disasters such as fires and floods, teachers for their classrooms, victims of house fires, and other community requests.
For example, our stores have worked with local charitable organizations to provide items or discounts to individuals impacted by natural disasters such as fires and floods, teachers for their classrooms, victims of house fires, and other community requests. In partnership with Veterans Emergency Transition Service Canada, our stores provide move-in kits to help homeless veterans settle into new homes.
Competition We operate within the large, fragmented and fast-growing secondhand market, which is a subset of the broader retail market. We experience competition in these markets with respect to our retail offerings and our product supply. Retail Competition. We compete for customer spend with value retailers, including off-price and other thrift operators.
We experience competition in these markets with respect to our retail offerings and our product supply. Retail competition We compete for customer spend with value retailers, including off-price retailers and other thrift operators. The non-profit thrift sector is largely decentralized, with local chapters managing stores in their respective markets.
We are currentl y implementing our offsite processing strategy, which allows us to process goods at a larger-scale facil ity, such as a CPC, and distribute the goods to multiple stores in a local market.
We are actively implementing our offsite processing strategy which allows us to process goods at larger-scale facilities and distribute goods to multiple stores in a local market. The processing of donations under this strategy can occur at offsite warehouse facilities, stores with surplus processing capacity or at CPCs.
With 326 retail stores under the Savers, Value Village, Value Village Boutique, Village des Valeurs, Unique and 2nd Ave. b anners, we are ten times larger than the next largest for-profit thrift operator.
A leader in the industry with a powerful business model We are the largest for-profit thrift operator in the U.S. and Canada based on number of stores. With 351 retail stores under the Savers, Value Village, Value Village Boutique, Village des Valeurs, Unique and 2nd Ave. banners, we are nearly 10 times larger than the next largest for-profit thrift operator.
We are proud of our highly skilled and diverse Board of Directors, which includes three key standing committees: the Audit Committee, the Compensation Committee and the Nominating, Governance, and Sustainability Committee. Board-level oversight of ESG strategy and disclosure is a crucial component of our corporate governance.
We are proud of our highly skilled and diverse Board of Directors, which includes three key standing committees: the Audit Committee, the Compensation Committee, and the Nominating, Governance, and Sustainability Committee. Trademarks and Other Intellectual Property We believe that our brands significantly contribute to the success of our business.
Drive consistent comparable store sales growth Our goal is to drive consistent growth in comparable store sales by maintaining a superior value proposition to our customers and continuing to offer a compelling selection of quality secondhand items.
Driven by our disciplined real estate selection approach, we expect to deliver attractive return on investment and store-level profitability. Drive comparable store sales growth Our goal is to drive comparable store sales growth by continuing to hone and refine our superior value proposition and differentiated in-store shopping experience, and by continuing to offer a compelling selection of quality secondhand items.
OSDs are the largest part of our supply mix, accounting for 65.2% of our total pounds processed for fiscal year 2023 . On-Site Donations: OSDs are donations of items made by individuals to our NPPs at our stores’ Community Donation Centers.
OSDs and GreenDrop are collectively the largest part of our supply mix and accounted for 76.3% and 73.6% of total pounds processed for fiscal years 2024 and 2023, respectively. 5 Table of Contents • OSDs: Donations of items by individuals to our NPPs, made at Community Donation Centers (“CDCs”) located at our stores.
As the secondhand movement continues to thrive and grow, we face increasing competition for secondhand goods from other thrift stores, consignment retailers, on-line thrift retailers and on-line marketplaces. 26 Table of Contents Trademarks and Other Intellectual Property We believe that our brands significantly contribute to the success of our business.
As the secondhand movement continues to thrive and grow, we face increasing competition for secondhand goods from other thrift stores, consignment retailers, on-line thrift retailers and on-line marketplaces. Competitive Strengths We believe the following strengths differentiate us from our competitors and serve as the foundation for our current and future growth.
Items that are not sold to our retail customers are marketed to wholesale customers who reuse or repurpose the items they purchase from us. We believe our hyper-local and socially responsible procurement model, industry-leading and innovative operations, differentiated value proposition and deep relationships with our customers distinguish us from other secondhand and value-based retailers.
We believe our hyper-local and socially responsible procurement model, industry-leading and innovative operations, differentiated value proposition and deep relationships with our customers distinguish us from other secondhand and value-based retailers. We offer a dynamic, ever-changing selection of items, with an average unit retail price (“AUR”) of approximately $5.
Our local sourcing strategy reduces transportation costs and emissions typically associated with the production and distribution of new merchandise. We are a for-profit company that champions reuse. While purchases made by our customers in our stores do not directly benefit any NPP, we pay our NPPs a contracted rate for all OSDs and delivered product.
This also aids in creating a broad and diverse selection for our customers, fosters a sense of community, and reduces transportation costs and emissions typically associated with the production and distribution of new merchandise. While purchases made by our customers in our stores do not directly benefit any NPP, we pay a market-competitive contractual rate to purchase donated items.
In support of our efforts to extend the life of reusable goods and recover a portion of the cost of acquiring our supply of secondhand items, we sell the majority of textile items unsold at retail to our wholesale customers, predominately comprised of textile graders and small business owners, who supply local communities across the globe with gently-used, affordable items like clothing, housewares, toys and shoes.
Wholesale, Reuse and Repurpose In support of our efforts to extend the life of reusable goods and recover a portion of the cost of acquiring our supply of secondhand items, we sell the majority of textile items that are unsuited for or unsold at retail stores to our wholesale customers who reuse and repurpose the items we sell to them across 4 continents and 12 countries.
In partnership with Veterans Emergency Transition Service (VETS) Canada, our stores provide move-in kits to help homeless veterans settle into new homes. Kits typically include kitchenware, bed and bath accessories, and other essential items. We have sponsored and engaged our corporate workforce in local charitable events such as nonprofit lunch and dinner galas and other community events.
Kits typically include kitchenware, bed and bath accessories, and other essential items. We have also sponsored and engaged our corporate workforce in local charitable events such as nonprofit lunch and dinner galas and other community events. Our Charitable Giving Committee establishes our corporate giving philosophy, policies, and makes grants from our Donor Advised Funds.
Our deliberate strategy of increasing the penetration of OSDs as a percentage of total supply has had a significant impact on the quality of our supply, further increasing sales yield and ultimately our gross product margin.
O ur strategy of increasing the penetration of OSDs as a percentage of total supply has had a significant impact on the quality of our supply, benefiting sales yield and ultimately our gross product margin. In addition, a company-wide self-checkout initiative was completed in the second quarter of 2023 achieving an annual average contribution of $91,000 per store in 2023.
For instance, our data analysis has improved our sales yield, which we define as retail sales generated per pound processed on a currency neutral and comparable store basis, which has been a primary driver of comparable store profitability.
For instance, over time, our data analysis has improved our sales yield (defined as retail sales generated per pound processed on a currency neutral and comparable store basis), which has grown at a 6.2% compound annual growth rate (“CAGR”) from fiscal year 2019 to fiscal year 2024.
With more than 22,000 t eam members, we operate a total of 326 stores under the Savers ® , Value Village ® , Value Village Boutique ™ , Village des Valeurs ™ , Unique ® and 2nd Ave. ® banners.
With approximately 22,700 team members, we operate a total of 351 stores under the Savers ® , Value Village ® , Value Village Boutique ™ , Village des Valeurs ™ , Unique ® and 2nd Ave. ® banners. As of December 28, 2024, we had 172 stores in the U.S., 165 stores in Canada and 14 stores in Australia.
Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation and carpet padding), further reducing waste. 8 Table of Contents ESG impact Environmental: Our business model is designed to maximize the life of reusable goods, and we found a reuse for over 3.2 billion pounds of secondhand items from 2019 to 2023.
Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation, carpet padding), further reducing wa ste. Social Our business model is predicated on sourcing our supply from non-profit organizations in the communities where we do business.
The typical processing room has approximately 30 team members, each of whom is trained in a specific area with many who are cross trained to support adjacent roles as needed. 19 Table of Contents Receiving Upon receipt, most of our supply is separated into either soft goods, hard goods or books and then weighed in aggregate.
The typical processing room has approximately 30 team members, each of whom is trained in a specific area and many of whom are cross-trained to support adjacent roles. 6 Table of Contents Retail Our store experience directly reflects our mission to make secondhand second nature.
Third-party credential: Third-party credential goods are purchased in small amounts on an as-needed basis from regional for-profit collectors, generally consisting of bin operators and other for-profit resellers. We leverage an analytical platform to measure the sales yield and product margin of an individual stream of supply in our stores.
These drives are one-time and event-based, with contractual agreements based on each distinct donation drive itself. • Third-party credential: Third-party credential goods are purchased in small amounts on an as-needed basis from regional for-profit collectors, generally consisting of bin operators and other for-profit resellers.
GreenDrop collections: Donations of items made by individuals to our NPPs at convenient and well-signed brick and mortar and trailer locations in neighborhoods surrounding a store location. On behalf of our NPPs, we solicit, collect, and deliver items to our stores and CPCs.
Each store is specifically designated as an OSD location for a particular NPP, such that all donations received at the CDC are credited to that NPP. • GreenDrop locations: Attended donation stations that collect donations of items made by individuals to our NPPs at convenient and well-signed brick and mortar and trailer locations in neighborhoods surrounding a store.
We offer a dynamic, ever-changing selection of items, with an average unit retail price (“AUR”) of approximately $5. We have a highly engaged customer base, with over 5.3 million active loyalty program members in the United States and Canada who shopped with us as of December 30, 2023 , driving 70.3% of point-of-sale transaction value during fiscal year 2023 .
We have a highly engaged customer base, with over 5.9 million active loyalty program members in the U.S. and Canada who shopped with us during fiscal year 2024, driving 72.4% of retail sales for the year.
Exclusive rights to the CPC technology in Australia extend to October 2024 and, under the terms of the agreement, if a purchase agreement is contracted for an Australia CPC before October 2024, will extend until at least 2027. Exclusive rights to the ABP technology in the United States, Canada and Australia currently extends to December 2029.
Exclusive rights to the CPC technology in Australia extended to October 2024; no purchase agreement for an Australia CPC was entered before the October 2024 deadline, so those rights lapsed as to Australia. Exclusive rights to the ABP technology in the U.S., Canada and Australia currently extends to December 2029.
It significantly improves upon our traditional process by (i) improving labor efficiencies, and (ii) enabling grader specialization and pricing precision. The ABP system is an integrated set of technologies that efficiently identify, price and sort books based on their critical attributes (e.g., genre, author, market price).
In addition, we continue to deploy Automated Book Processing (“ABP”) systems at our offsite processing facilities and in stores. The ABP system is an integrated set of technologies that efficiently identify, price and sort books based on their critical attributes (e.g., genre, author, market price).
How We Plan to Grow Strategically grow our store base Our goal is to expand our position as the leading for-profit thrift operator by expanding our store footprint. We have identified approximately 2,200 potential new locations across the United States and Canada. We opened 12 new stores during fiscal year 2023, and target opening approximately 22 new stores in 2024.
How We Plan to Grow Strategically grow our store base Our goal is to strengthen our position as the leading for-profit thrift operator by expanding our store footprint.
The thrift retail industry is made possible by the availability of quality secondhand items.
The for-profit thrift sector is typically characterized by smaller chains of 10 to less than 40 retail locations each. Supply competition The retail thrift industry is made possible by the availability of quality secondhand items.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Our Business and Industry • The success of our business model depends on our ability to source quality secondhand items at attractive prices. • The sourcing and other logistics of processing of secondhand items, especially from local communities, can be subject to fluctuating costs and can have other risks that could negatively impact our business. • Our growth and performance depend on the efforts of our store and processing center team members and may be negatively affected by the labor market and employee relations. • Our ability to grow may be negatively affected by perceptions of thrift, trends in consumer discretionary spending, our operational ability to manage growth and the availability of new store locations. • Our extensive operations domestically and internationally are subject to global economic conditions, require us to manage different retail and wholesale environments and subject us to exchange rate risks. • Highly disruptive events such as natural disasters, pandemics such as COVID-19, geo-political events or social unrest can negatively impact our logistics network and our sales. • Our success and growth is affected by our operational efficiency, including how successfully we implement our CPC and ABP technologies, and our ability to manage acquisitions. • Our reputation and brands may be adversely affected by actions of wholesale customers and our ability to maintain and report on our sustainability commitments. • Competition in the secondhand market and from sellers of new items may adversely impact our revenue, profitability, market share, and partnerships.
Biggest changeRisks Related to Our Business and Industry • The success of our business model depends on our ability to source quality secondhand items at attractive prices. • The sourcing and other logistics of processing secondhand items, especially from local communities, can be subject to fluctuating costs and can have other risks that could negatively impact our business. • Our growth and performance depend on the efforts of our store and processing center team members and may be negatively affected by the labor market and employee relations. • Our extensive operations domestically and internationally are subject to global economic conditions, require us to manage different retail and wholesale environments and subject us to exchange rate risks. • Our ability to grow may be negatively affected by perceptions of thrift, trends in consumer discretionary spending, our operational ability to manage growth and the availability of new store locations. • Highly disruptive events such as natural disasters, global health crises and pandemics, geo-political events or workplace violence can negatively impact our logistics network and our sales. • Our success and growth is affected by our operational efficiency, including how successfully we implement our offsite processing strategy, our use of technology, and our ability to manage acquisitions. • Our reputation and brands may be adversely affected by actions of wholesale customers and our ability to maintain and report on our sustainability commitments. • Competition in the secondhand market and from sellers of new items may adversely impact our revenue, profitability, market share, and partnerships.
For example, we spent significant time and resources and incurred a significant amount of debt to finance the 2nd Ave. Acquisition and integrate its operations into our business.
For example, we spent significant time and resources and incurred a significant amount of debt to finance the acquisition of 2nd Ave. and integrate its operations into our business.
Further, our competitive position is affected by the price at which we offer secondhand items; the speed and cost at which we can process and make available secondhand items to our customers; and the selection of items that we provide in stores. As our market continues to evolve and we expect new market entrants and for competition to intensify.
Further, our competitive position is affected by the price at which we offer secondhand items; the speed and cost at which we can process and make available secondhand items to our customers; and the selection of items that we provide in stores. As our market continues to evolve, we expect new market entrants and for competition to intensify.
We rely on software, technologies and services sourced or licensed from third parties to operate critical functions of our business, including payment processing services, certain aspects of CPC automation and customer relationship and management services, We also use services such as Microsoft for our business emails, file storage on internal communications.
We rely on software, technologies and services sourced or licensed from third parties to operate critical functions of our business, including payment processing services, certain aspects of CPC automation and customer relationship and management services, We also use services such as Microsoft for our business emails, file storage and internal communications.
These actions include, subject to certain exceptions: • merging or consolidating with or into any other entity, or transferring all or substantially all of our assets, taken as a whole, to another entity, or undertaking any transaction that would constitute a “Change of Control” as defined in our debt agreements; • acquiring or disposing of assets, in a single transaction or a series of related transactions, or entering into joint ventures, in each case with a value in excess of $50.0 million; • incurring indebtedness in a single transaction or a series of related transactions in an aggregate principal amount in excess of $100.0 million; • issuing our or our subsidiaries’ equity other than pursuant to an equity compensation plan approved by our stockholders or a majority of the directors designated by the Ares Funds; • appointing and removing our chief executive officer; • entering into any transactions, agreements, arrangements or payments with any other person who owns greater than or equal to 10% of our common stock then outstanding that are material or involve aggregate payments or receipts in excess of $500,000; • amending, modifying or waiving any provision of our organizational documents in a manner that adversely affects the Ares Funds; • commencing any liquidation, dissolution or voluntary bankruptcy, administration, recapitalization or reorganization; • increasing or decreasing the size of our board of directors; and • entering into of any agreement to do any of the foregoing.
These actions include, subject to certain exceptions: • merging or consolidating with or into any other entity, or transferring all or substantially all of our assets, taken as a whole, to another entity, or undertaking any transaction that would constitute a “Change of Control” as defined in our debt agreements; • acquiring or disposing of assets, in a single transaction or a series of related transactions, or entering into joint ventures, in each case with a value in excess of $50.0 million; • incurring indebtedness in a single transaction or a series of related transactions in an aggregate principal amount in excess of $100.0 million; • issuing our or our subsidiaries’ equity other than pursuant to an equity compensation plan approved by our stockholders or a majority of the directors designated by the Ares Funds; • appointing and removing our chief executive officer; • entering into any transactions, agreements, arrangements or payments with any other person who owns greater than or equal to 10% of our common stock then outstanding that are material or involve aggregate payments or receipts in excess of $500,000; • amending, modifying or waiving any provision of our organizational documents in a manner that adversely affects the Ares Funds; • commencing any liquidation, dissolution or voluntary bankruptcy, administration, recapitalization or reorganization; • increasing or decreasing the size of our board of directors; and • entering into any agreement to do any of the foregoing.
Under the NYSE rules, a controlled company may elect not to comply with certain corporate governance requirements, including the requirements that: • a majority of the board of directors consist of independent directors; • the nominating, corporate governance and sustainability committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and • the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
Under the NYSE rules, a controlled company may elect not to comply with certain corporate governance requirements, including the requirements that: • a majority of the board of directors consist of independent directors; • the nominating, governance and sustainability committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and • the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
However, our investments in marketing may not effectively reach potential and existing customers, which could negatively affect our results of operations. Moreover, consumer preferences may change, and customers may not purchase through our stores as frequently or spend as much with us as historically has been the case.
Our investments in marketing may not effectively reach potential and existing customers, which could negatively affect our results of operations. Moreover, consumer preferences may change, and customers may not purchase through our stores as frequently or spend as much with us as historically has been the case.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures about Market Risk—Interest Rate Risk.” We enter into interest rate swaps that hedge against changes in interest rates under the Senior Secured Credit Facilities.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures about Market Risk—Interest Rate Risk.” We may enter into interest rate swaps that hedge against changes in interest rates under the Senior Secured Credit Facilities.
As a result, general economic and other conditions could have a material and adverse effect on our business, results of operation and financial condition. If we fail to manage our rapid growth effectively and execute our business plan, our business, results of operations and financial condition could be harmed.
As a result, general economic and other conditions could have a material and adverse effect on our business, results of operation and financial condition. If we fail to manage our growth effectively and execute our business plan, our business, results of operations and financial condition could be harmed.
The CPC and ABP technologies widen our competitive and operational advantage, and we plan to aggressively expand both across many of the markets in which we operate in the next several years.
The CPC and ABP technologies widen our competitive and operational advantage, and we plan to expand both across many of the markets in which we operate in the next several years.
Examples of regulated items include those with certain animal product components (ivory, fur, snakeskin, etc.), jewelry, aquatic toys, children’s items. Regulation can, in some jurisdictions, also require mandatory reporting and/or carry serious penalties for non-compliance. The laws and regulations for the resale of secondhand goods are complex, vary from jurisdiction to jurisdiction and change often.
Examples of regulated items include those with certain animal product components (ivory, fur, snakeskin, etc.), jewelry, aquatic toys, children’s items, and hazardous or dangerous items. Regulation can, in some jurisdictions, also require mandatory reporting and/or carry serious penalties for non-compliance. The laws and regulations for the resale of secondhand goods are complex, vary from jurisdiction to jurisdiction and change often.
We may not be able to remediate the identified material weaknesses, and additional material weaknesses or significant deficiencies in our internal control over financial reporting may be identified in the future.
We may not be able to remediate the identified material weakness, and additional material weaknesses or significant deficiencies in our internal control over financial reporting may be identified in the future.
In addition to the material weaknesses in our internal control over financial reporting that we have identified, we may discover weaknesses in our disclosure controls and procedures and internal control over financial reporting in the future.
In addition to the material weakness in our internal control over financial reporting that we have identified, we may discover weaknesses in our disclosure controls and procedures and internal control over financial reporting in the future.
Due to the competitive nature of the real estate market, we may be unable to renew our existing on satisfactory terms or at all.
Due to the competitive nature of the real estate market, we may be unable to renew our existing leases on satisfactory terms or at all.
In addition, the Ares Funds, a term we use to describe certain funds, investment vehicles or accounts managed or advised by the Private Equity Group of Ares Management Corporation (who own a majority of our common stock), have demand and “piggy-back” registration rights with respect to our common stock, which give them the right to require us to file registration statements for public resale of their common stock or to include 48 Table of Contents such shares in registration statements that we may file for us or other stockholders.
In addition, the Ares Funds, a term we use to describe certain funds, investment vehicles or accounts managed or advised by the Private Equity Group of Ares Management Corporation (who own a majority of our common stock), have demand and “piggy-back” registration rights with respect to our common stock, which give them the right to require us to file registration statements for public resale of their common stock or to include such shares in registration statements that we may file for us or other stockholders.
These claims, lawsuits and proceedings could include labor and employment, wage and hour, commercial, consumer protection, regulatory, antitrust, alleged securities law violations or other investor claims, intellectual property infringement and other matters. The number and significance of these potential claims and disputes may increase as our business expands.
These claims, lawsuits and proceedings could include labor and employment, wage and hour, commercial, premises liability, consumer protection, regulatory, antitrust, alleged securities law violations or other investor claims, intellectual property infringement and other matters. The number and significance of these potential claims and disputes may increase as our business expands.
The Revolving Credit Facility will mature on April 26, 2026.Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would have a material adverse effect on our financial condition and results of operations.
The Revolving Credit Facility will mature on April 26, 2027. Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would have a material adverse effect on our financial condition and results of operations.
The market price of our common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our revenues or other operating results; • variations between our actual operating results and the expectations of securities analysts, investors and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors; • limited “public float” (due in part to our status as a controlled company) in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock; • additional shares of common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales, including if existing stockholders sell shares into the market; • announcements by us or our competitors of significant products or features, innovations, acquisitions, strategic partnerships, joint ventures, capital commitments, divestitures or other dispositions; • loss of relationships with significant suppliers or customers; • changes in operating performance and stock market valuations of companies in our industry, including our competitors; • difficulties in integrating any new acquisitions we may make; 47 Table of Contents • loss of services from members of management or employees or difficulty in recruiting additional employees; • worsening of economic conditions in the United States or Canada and reduction in demand for our products; • price and volume fluctuations in the overall stock market, including as a result of general economic trends; • the existence of the share repurchase program and any repurchases made or not made under such program, or the modification, suspension or termination of the program; • lawsuits threatened or filed against us, or events that negatively impact our reputation; and • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies.
The market price of our common stock has been volatile and may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our revenues or other operating results; • variations between our actual operating results and the expectations of securities analysts, investors and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors; • limited “public float” (due in part to our status as a controlled company) in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock; • additional shares of common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales, including if existing stockholders sell shares into the market; • announcements by us or our competitors of significant products or features, innovations, acquisitions, strategic partnerships, joint ventures, capital commitments, divestitures or other dispositions; • loss of relationships with significant suppliers or customers; • changes in operating performance and stock market valuations of companies in our industry, including our competitors; • difficulties in integrating any new acquisitions we may make; • loss of services from members of management or employees or difficulty in recruiting additional employees; • worsening of economic conditions in the U.S. or Canada and reduction in demand for our products; • price and volume fluctuations in the overall stock market, including as a result of general economic trends; • the existence of the share repurchase program and any repurchases made or not made under such program, or the modification, suspension or termination of the program; 34 Table of Contents • lawsuits threatened or filed against us, or events that negatively impact our reputation; and • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies.
We believe our success and revenue growth depends on a number of factors, including, but not limited to, many of the risks discussed in this section. 33 Table of Contents If we are unable to execute on our strategy while effectively managing our risks, our revenue growth may be harmed.
We believe our success and revenue growth depends on a number of factors, including, but not limited to, many of the risks discussed in this section. 18 Table of Contents If we are unable to execute on our strategy while effectively managing our risks, our revenue growth may be harmed.
In addition, our 51 Table of Contents certificate of incorporation provides that, to the fullest extent permitted by law, no officer or director of ours who is also an officer, director, employee, agent, stockholder, member, partner or affiliate of the Ares Funds or their affiliates will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs, or communicates information regarding, a corporate opportunity to the Ares Funds or their affiliates, instead of to us.
In addition, our certificate of incorporation provides that, to the fullest extent permitted by law, no officer or director of ours who is also an officer, director, employee, agent, stockholder, member, partner or affiliate of the Ares Funds or their affiliates will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs, or communicates information regarding, a corporate opportunity to the Ares Funds or their affiliates, instead of to us.
Additionally, because many of our customers desire a treasure hunt experience, a decline in the amount of desirable items displayed could have a negative effect on their shopping experience and result in a decline in store visits and purchase volumes, and could also negatively affect our ability to attract new customers.
Furthermore, because many of our customers desire a treasure hunt experience, a decline in the amount of desirable items displayed could have a negative effect on their shopping experience and result in a decline in store visits and purchase volumes, and could also negatively affect our ability to attract new customers.
If our steps are insufficient to successfully remediate the material weaknesses and otherwise establish and maintain an effective system of internal control over financial reporting, the reliability of our financial reporting, investor confidence in us and the value of our common stock could be materially and adversely affected.
If our steps are insufficient to successfully remediate the material weakness and otherwise establish and maintain an effective system of internal control over financial reporting, the reliability of our financial reporting, investor confidence in us and the value of our common stock could be materially and adversely affected.
Risks Relating to Information Technology, Intellectual Property, Data Security and Privacy • We could be, and have in the past been, subject to cyber-attacks or data breaches, which may cause significant business disruption and require us to incur additional costs and suffer reputational harm. • We process significant amounts of personal information and data and operate in multiple countries and jurisdictions, many of which are implementing new or updating existing privacy and information security requirements.
Risks Relating to Information Technology, Intellectual Property, Data Security and Privacy • We could be, and have in the past been, subject to cyber-attacks or data breaches, which may cause significant business disruption and require us to incur additional costs and suffer reputational harm. 14 Table of Contents • We process significant amounts of personal information and data and operate in multiple countries and jurisdictions, many of which are implementing new or updating existing privacy and information security requirements.
As a result of disclosure of information in filings required of a public company, our business and financial condition are more visible, which may result in an increased risk of threatened or actual litigation, including by competitors and other third parties.
As a result of disclosure of information in filings required of a public company, our business and financial condition are more visible to the public, which may result in an increased risk of threatened or actual litigation, including by competitors and other third parties.
These laws, regulations and standards are subject to varying 52 Table of Contents interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” The Term Loan Facility and the Notes will mature on April 26, 2028.
We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” 32 Table of Contents The Term Loan Facility and the Notes will mature on April 26, 2028.
From time to time, there may be changes in the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can materially 43 Table of Contents impact how we record and report our financial condition and results of operations. In some instances, we could be required to apply a new or revised standard retrospectively.
From time to time, there may be changes in the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can materially impact how we record and report our financial condition and results of operations. In some instances, we could be required to apply a new or revised standard retrospectively.
There are also financial, regulatory and other risks associated with international operations, including currency exchange fluctuations, potentially adverse tax and transfer pricing considerations, limitations on the repatriation and investment of funds outside of the country where earned, trade regulations, the risk of sudden policy or regulatory changes, the risk of political, economic and civil instability and labor unrest and uncertainties 34 Table of Contents regarding interpretation, application and enforceability of laws and agreements.
There are also financial, regulatory and other risks associated with international operations, including currency exchange fluctuations, potentially adverse tax and transfer pricing considerations, limitations on the repatriation and investment of funds outside of the country where earned, tariffs or trade regulations, the risk of sudden policy or regulatory changes, the risk of political, economic and civil instability and labor unrest and uncertainties regarding interpretation, application and enforceability of laws and agreements.
We must also staff our CPCs with qualified workers because our CPC operations are complex and highly dependent on numerous employees and personnel working as a team.
We must also continue to staff our CPCs with qualified workers because our CPC operations are complex and highly dependent on numerous employees and personnel working as a team.
The Senior Secured Credit Facilities provide for additional uncommitted incremental loans of up to the greater of $136 million and 100% of EBITDA for the most recent four fiscal 45 Table of Contents quarters, plus certain other amounts, with additional incremental loans available if certain leverage ratios are maintained.
The Senior Secured Credit Facilities provide for additional uncommitted incremental loans of up to the greater of $136 million and 100% of EBITDA for the most recent four fiscal quarters, plus certain other amounts, with additional incremental loans available if certain leverage ratios are maintained.
If we are unable to detect, quarantine and properly deal with dangerous items or contaminants at the time items are initially received, our team members could be harmed or some or all of the other secondhand items in such facilities could be contaminated.
If we are unable to detect, quarantine and properly deal with dangerous items or contaminants at the time items are initially received or if we are unable to maintain the health and safety of our facilities, our team members could be harmed or some or all of the other secondhand items in such facilities could be contaminated.
The performance of our competitors as well as changes in their pricing and promotional policies, marketing activities, new location openings, merchandising and operational strategies could negatively impact our ability to compete and to grow our revenue, and our sales and profitability may suffer. 37 Table of Contents Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages such as greater brand name recognition and longer operating histories; larger fulfillment infrastructures; greater technical capabilities; internet-based marketplaces; broader supply; established relationships with a larger existing customer and/or NPP and donor base; better access to merchandise; superior or more desirable secondhand items for sale or resale; greater customer service resources; greater financial, marketing, institutional and other resources; greater resources to make acquisitions; lower labor and development costs; larger and more mature intellectual property portfolios; and better access to capital markets than we do.
The performance of our competitors as well as changes in their pricing and promotional policies, marketing activities, new location openings, merchandising and operational strategies could negatively impact our ability to compete and to grow our revenue, and our sales and profitability may suffer. 23 Table of Contents Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages such as greater brand name recognition and longer operating histories; larger fulfillment infrastructures; greater technical capabilities; internet-based marketplaces; broader supply; established relationships with a larger existing customer and/or NPP and donor base; better access to merchandise; superior or more desirable secondhand items for sale or resale; perceived pricing advantages due to the disparate application of sales tax to different entities; greater customer service resources; greater financial, marketing, institutional and other resources; greater resources to make acquisitions; lower labor and development costs; larger and more mature intellectual property portfolios; and better access to capital markets than we do.
We are also subject to Canada’s anti-spam legislation (“CASL”) when sending commercial electronic messages and can be held liable for violations. In Australia, the Privacy Act 1988 and the Australian Privacy Principles (“APPs”) regulate the handling of personal information, gives the Australian Information Commissioner the power to conduct investigations, and contains civil penalties for breach.
We are also subject to Canada’s anti-spam legislation (“CASL”) when sending commercial electronic messages and can be held liable for violations. In Australia, the Privacy Act 1988 and the Australian Privacy Principles (“APPs”) regulate the handling of personal information, giving the Australian Information Commissioner the power to conduct investigations, and imposing civil penalties for breach.
We intend to invest substantial resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from business operations to compliance activities.
We intend to continue investing substantial resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from business operations to compliance activities.
In addition, our social media presence may expose us to reputational damage if others post negative 32 Table of Contents information concerning our business, our customers, NPPs or their donors, regardless of whether such information is accurate.
In addition, our social media presence may expose us to reputational damage if others post negative information concerning our business, our customers, NPPs or their donors, regardless of whether such information is accurate.
Further, any other events that cause closures, reductions or delays in operations can slow or temporarily halt our operations and could cause us to incur significant costs to relocate or otherwise re-establish these functions, reduce customer sales or our ability to sell items, or increase our insurance costs.
Further, any of the events described herein or other events that cause closures, reductions or delays in operations can slow or temporarily halt our operations and could cause us to incur significant costs to relocate or otherwise re-establish these functions, reduce customer sales or our ability to sell items, or increase our insurance costs.
These events could also cause reputational harm, decreased consumer confidence and spending and/or increased volatility in the United States, Canada and global financial markets and economies. Any of these developments could have a material and adverse effect on our business, financial condition and results of operations.
These events could also cause reputational harm, decreased consumer confidence and spending and/or increased volatility in the U.S., Canada and global financial markets and economies. Any of these developments could have a material and adverse effect on our business, financial condition and results of operations.
In addition, economic uncertainties, governmental orders, the recent COVID-19 pandemic and other similar events or other challenges could negatively impact the ability or desire of NPPs to continue supplying secondhand items on terms or in quantities desirable to us or their donors’ ability or willingness to make OSDs.
In addition, economic uncertainties, governmental orders and other similar events or other challenges could negatively impact the ability or desire of NPPs to continue supplying secondhand items on terms or in quantities desirable to us or their donors’ ability or willingness to make OSDs.
Any such action 39 Table of Contents would be expensive to defend, likely would damage our reputation and market position, could result in substantial liability and could adversely affect our business and results of operations.
Any such action would be expensive to defend, likely would damage our reputation and market position, could result in substantial liability and could adversely affect our business and results of operations.
We cannot guarantee that we have or will continue to be in full compliance with these 44 Table of Contents rules, and our further growth or international expansion, or changes to the applicable laws and regulations, could increase our future legal exposure and compliance-related costs.
We cannot guarantee that we have or will continue to be in full compliance with these rules, and our further growth or international expansion, or changes to the applicable laws and regulations, could increase our future legal exposure and compliance-related costs.
We intend to utilize these exemptions as long as we remain a controlled company. As a result, we will not have a majority of independent directors; our nominating, corporate governance and sustainability committee and compensation committee will not consist entirely of independent directors or be required to ratify other independence obligations.
We may utilize these exemptions as long as we remain a controlled company. As a result, we may not have a majority of independent directors; our nominating, governance and sustainability committee and compensation committee may not consist entirely of independent directors or be required to ratify other independence obligations.
The exclusive-forum provisions also provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will be the exclusive forum for any complaint asserting a cause of action arising under the Securities Act.
The exclusive-forum provisions also provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the U.S. will be the exclusive forum for any complaint asserting a cause of action arising under the Securities Act.
In addition, an event of default under the Senior Secured Credit Facilities would permit the lenders under the 46 Table of Contents Revolving Credit Facility to terminate all commitments to extend further credit under such facility.
In addition, an event of default under the Senior Secured Credit Facilities would permit the lenders under the Revolving Credit Facility to terminate all commitments to extend further credit under such facility.
Our substantial indebtedness could have important consequences to the holders of our common stock, including the following: • making it more difficult for us to satisfy our obligations with respect to our other debt; • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; • requiring us to dedicate a substantial portion of our cash flows to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes; • increasing our vulnerability to general adverse economic and industry conditions; • exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the Senior Secured Credit Facilities, are at variable rates of interest; • limiting our flexibility in planning for and reacting to changes in the industry in which we compete; • placing us at a disadvantage compared to other, less leveraged competitors; and • increasing our cost of borrowing.
Subsequent to the redemption, the Company had total borrowings of $716.8 million outstanding. 31 Table of Contents Our substantial indebtedness could have important consequences to the holders of our common stock, including the following: • making it more difficult for us to satisfy our obligations with respect to our other debt; • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; • requiring us to dedicate a substantial portion of our cash flows to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes; • increasing our vulnerability to general adverse economic and industry conditions; • exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the Senior Secured Credit Facilities, are at variable rates of interest; • limiting our flexibility in planning for and reacting to changes in the industry in which we compete; • placing us at a disadvantage compared to other, less leveraged competitors; and • increasing our cost of borrowing.
For example, most Canadian mortgages require multiple term renewals until they are paid in full, and the recent inflationary pressure and interest rate increases means increased financial pressure on Canadian homeowners that may affect their spending.
For example, most Canadian mortgages require multiple term renewals until they are paid in full, and the recent inflationary pressure and elevated interest rates means increased financial pressure on Canadian homeowners that may affect their spending.
The failure by us, our employees or third parties acting at our direction 42 Table of Contents to comply with these laws and regulations may negatively affect our brands, reputation, adversely impact our relationships with our NPPs and subject us to penalties and fines.
The failure by us, our employees or third parties acting at our direction to comply with these laws and regulations may negatively affect our brands, reputation, adversely impact our relationships with our NPPs and subject us to penalties and fines.
As interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed has remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.
If interest rates increase in the future, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed has remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.
Conditions in our market could also change rapidly and significantly as a result of technological advancements, partnering by our competitors or continuing market consolidation or strategic changes we or our competitors make in response to macro-economic or other events, and it is uncertain how our market will evolve.
Conditions in our market could also change rapidly and significantly as a result of technological advancements (including artificial intelligence and machine learning), partnering by our competitors or continuing market consolidation or strategic changes we or our competitors make in response to macro-economic or other events, and it is uncertain how our market will evolve.
Any disruptions to those facilities or our logistics network, headquarters or any properties used by NPPs in connection with the supply of secondhand items to us could disrupt our business and overall operations.
Our stores and processing facilities are critical to our operations. Any disruptions to those facilities or our logistics network, headquarters or any properties used by NPPs in connection with the supply of secondhand items to us could disrupt our business and overall operations.
If any of the third-party software or services we utilize, or the functional equivalents thereof, were unavailable for extended periods due to outages or interruptions or because they are no longer available on commercially reasonable terms, our business would experience significant operational disruptions.
If any of the third-party software or services we utilize, or the functional equivalents thereof, were unavailable due to outages or interruptions or because they are no longer available on commercially reasonable terms, our business could experience significant operational disruptions.
In addition, we announced on November 9, 2023 the authorization of a share repurchase program of up to $50.0 million of the Company’s common stock. Under the program, Savers may purchase shares from time to time in compliance with applicable securities laws, that may include Securities Act Rule 10b-18. The program is currently set to expire on November 8, 2025.
In addition, we announced on November 9, 2023 the authorization of a share repurchase program of up to $50.0 million of the Company’s common stock. Under the program, Savers may purchase shares from time to time in compliance with applicable securities laws, that may include Securities Act Rule 10b-18.
Based on amounts outstanding as of o n December 30, 2023, e ach 100 basis point change in interest rates would result i n a $3.2 million change in annual interest expense on our indebtedness under the Senior Secured Credit Facilities.
Based on amounts outstanding as of December 28, 2024, e ach 100 basis point change in interest rates would result i n a $3.2 million change in annual interest expense on our indebtedness under the Senior Secured Credit Facilities.
In future periods, we may not be able to sustain or increase revenue growth rates consistent with recent history, or at all.
In future periods, we may not be able to sustain or increase net sales growth rates consistent with recent history, or at all.
We compete with vendors of new and secondhand items, including branded goods stores, local, national and global department stores, consignment and thrift stores (including non-profit operators), specialty retailers, direct-to-consumer, retailers, discount chains, independent retail stores, resale players focused on niche or single categories, as well as internet-based secondhand retailers and other technology-enabled marketplaces.
We compete with vendors of new and secondhand items, including branded goods stores, local, national and global department stores, consignment and thrift stores (including non-profit operators), specialty retailers, direct-to-consumer, retailers (including fast fashion, value fashion and off-price retailers), independent retail stores, resale players focused on niche or single categories, as well as internet-based secondhand retailers and other technology-enabled marketplaces.
General Risks • We depend on our executive officers and other key employees. • Being a public company may strain our resources, and our management has limited experience managing a public company. A description of the risks and uncertainties associated with our business is set forth below.
General Risks • We depend on our executive officers and other key employees. • Being a public company may strain our resources. A description of the risks and uncertainties associated with our business is set forth below.
Federal Trade Commission (the “FTC”), the U.S. Fish and Wildlife Service, and under the Canadian Wild Animal and Plant Protection and Regulation of International and Interprovincial Trade Act, and the Convention on International Trade in Endangered Species of Wild Fauna and Flora with respect to our Australian operations.
Fish and Wildlife Service, and under the Canadian Wild Animal and Plant Protection and Regulation of International and Interprovincial Trade Act, and the Convention on International Trade in Endangered Species of Wild Fauna and Flora with respect to our Australian operations.
Spaces that meet our physical requirements in well-positioned geographic locations are becoming increasingly scarce, and lease terms offered by landlords are increasingly competitive, particularly in geographic locations with access to the large, qualified talent pools required for us to run our logistics infrastructure.
Spaces that meet our physical requirements in well-positioned geographic locations continue to be limited, and lease terms offered by landlords are competitive, particularly in geographic locations with access to the large, qualified talent pools required for us to run our logistics infrastructure.
As of December 30, 2023, there were no advances on the Revolving Credit facility, there were $1.2 million of letters of credit outstanding and $73.8 million was available to borrow. The inability to borrow under the Revolving Credit Facility may adversely affect our liquidity, financial position and results of operations.
As of December 28, 2024, there were no advances on the Revolving Credit facility, there were $1.2 million of letters of credit outstanding and $123.8 million was available to borrow. The inability to borrow under the Revolving Credit Facility may adversely affect our liquidity, financial position and results of operations.
Under the Senior Secured Credit Facilities, we have the Term Loan Facility and the Revolving Credit Facility. As of December 30, 2023, we had no advances on the Revolving Credit Facility, there were $1.2 million of letters of credit outstanding and $73.8 million was available to borrow.
Under the Senior Secured Credit Facilities, we have the Term Loan Facility and the Revolving Credit Facility. As of December 28, 2024, we had no advances on the Revolving Credit Facility, there were $1.2 million of letters of credit outstanding and $123.8 million was available to borrow.
In addition, if we are unable to continue to meet these 41 Table of Contents requirements, we may not be able to remain listed on the NYSE.
In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE.
The U.S. government may enact further significant changes to the taxation of business entities, including, among other changes, an increase in the U.S. taxation of international business operations. The likelihood of these changes being enacted or implemented is unclear.
The U.S. government may enact further significant changes to the taxation of business entities (and certain provisions of the Tax Act may expire), including, among other changes, an increase in the U.S. taxation of international business operations. The likelihood of these changes being enacted or implemented is unclear.
Recently, we have incurred higher wage rates for our employees and we expect that our labor costs, including wages and employee benefits, will continue to increase. In recent years, inflation has risen worldwide and the United States and Canada have experienced historically high levels of inflation.
Over the past few years, we have incurred higher wage rates for our employees and we expect that our labor costs, including wages and employee benefits, will continue to increase. In recent years, inflation has risen worldwide and the U.S. and Canada have experienced historically high levels of inflation.
Furthermore, the growth of our business depends on our ability to secure additional locations for our CPCs to serve our stores. Most of our planned store locations will require processing facilities on-site, necessitating specific size, layout and other physical attributes that may not be available widely in the local area.
Furthermore, the growth of our business depends on our ability to secure additional locations for our CPCs and other offsite processing facilities to serve our stores. We estimate that approximately half of our planned store locations may require processing facilities on-site that necessitate specific size, layout and other physical attributes that may not be available widely in the local area.
Such requirements are constantly evolving, and we expect that there will continue to be new proposed requirements relating to privacy, data protection and information security in the United States, Canada and other jurisdictions, or changes in the interpretation of existing privacy requirements.
Such requirements are constantly evolving, and we expect that there will continue to be new proposed requirements relating to privacy, data protection and information security in the U.S., Canada and Australia, or changes in the interpretation of existing privacy requirements.
The Ares Funds continue to control our Company, including having the right to designate nominees for election to our board of directors, and may have interests that conflict with our interests and those of other stockholders. The Ares Funds beneficially owned 83.9% of our common stock as of December 30, 2023.
The Ares Funds continue to control our Company, including having the right to designate nominees for election to our board of directors, and may have interests that conflict with our interests and those of other stockholders. The Ares Funds beneficially owned 84.6% of our common stock as of December 28, 2024.
In particular, our certificate of incorporation and bylaws: • establish a classified board of directors so that not all members are elected at one time; • permit our board of directors to establish the number of directors and fill any vacancies (including vacancies resulting from an expansion in the size of our board of directors), except in the case of the vacancy of an Ares Funds-designated director (in which case the Ares Funds will be able to fill the vacancy); • establish limitations on the removal of directors; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • provide that our board of directors is expressly authorized to make, alter or repeal our bylaws; • restrict the forum for certain litigation against us to Delaware; • provide that stockholders may not act by written consent following the time when the Ares Funds cease to beneficially own at least a majority of the shares of our outstanding common stock, which time we refer to as the Trigger Date, which would require stockholder action to be taken at an annual or special meeting of our stockholders; • prohibit stockholders from calling special meetings following the Trigger Date, which would delay the ability of our stockholders to force consideration of a proposal or to take action, including with respect to the removal of directors; and 50 Table of Contents • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
In particular, our certificate of incorporation and bylaws: • establish a classified board of directors so that not all members are elected at one time; • permit our board of directors to establish the number of directors and fill any vacancies (including vacancies resulting from an expansion in the size of our board of directors), except in the case of the vacancy of an Ares Funds-designated director (in which case the Ares Funds will be able to fill the vacancy); • establish limitations on the removal of directors; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • provide that our board of directors is expressly authorized to make, alter or repeal our bylaws; • restrict the forum for certain litigation against us to Delaware; • provide that stockholders may not act by written consent following the time when the Ares Funds cease to beneficially own at least a majority of the shares of our outstanding common stock, which time we refer to as the Trigger Date, which would require stockholder action to be taken at an annual or special meeting of our stockholders; • prohibit stockholders from calling special meetings following the Trigger Date, which would delay the ability of our stockholders to force consideration of a proposal or to take action, including with respect to the removal of directors; and • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us. 37 Table of Contents Section 203 of the Delaware General Corporation Law, or the DGCL, prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person, individually or together with any other interested stockholder, who owns or within the last three years has owned 15% of our voting stock, unless the business combination is approved in a prescribed manner.
Risks Relating to Legal, Regulatory, Accounting and Tax Matters • We have material weaknesses and may be unable to establish or maintain an effective system of internal control over financial reporting or maintain effective disclosure controls and procedures. • We will incur increased expenses due to being a public company and may be exposed to a greater risk of litigation or claims, and we are obligated to indemnify our directors and officers for certain claims. • An actual or alleged failure to comply with the laws, rules and regulations that we are subject to could negatively affect our growth or increase our costs. 29 Table of Contents • We may incur losses due to the payment methods we accept, including credit cards. • Our financial condition and operating results may be negatively affected by inaccurate estimates or judgments, changes in tax legislation and limited ability to utilize our net operating loss carryforwards.
Risks Relating to Legal, Regulatory, Accounting and Tax Matters • We have a material weakness and may be unable to establish or maintain an effective system of internal control over financial reporting or maintain effective disclosure controls and procedures. • An actual or alleged failure to comply with the laws, rules and regulations that we are subject to could negatively affect our growth or increase our costs. • We may incur losses due to the payment methods we accept, including credit cards. • We may be exposed to a greater risk of litigation or claims as our business grows. • Our financial condition and operating results may be negatively affected by inaccurate estimates or judgments, changes in tax legislation and limited ability to utilize our net operating loss carryforwards.
We have significant foreign operations, particularly in Canada, that subject us to additional operating risks and certain exchange rate risks, which we may not be able to fully hedge. As of December 30, 2023, we operated 159 stores in Canada and 12 stores in Australia.
We have significant foreign operations, particularly in Canada, that subject us to additional operating risks and certain exchange rate risks, which we may not be able to fully hedge. As of December 28, 2024, we operated 165 stores in Canada and 14 stores in Australia.
As of December 30, 2023, our total indebtedness was $816.8 million, including $321.8 million aggregate principal amount outstanding under our Senior Secured Credit Facilities and $495.0 million aggregate principal amount of Senior Secured Notes (“Notes”) un der the indenture dated as of February 6, 2023, by and among Evergreen AcqCo 1 LP, TVI, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee (the “Indenture”).
As of December 28, 2024, our total indebtedness was $761.3 million, including $315.8 million aggregate principal amount outstanding under our Senior Secured Credit Facilities and $445.5 million aggregate principal amount of Senior Secured Notes (“Notes”) un der the indenture dated as of February 6, 2023, by and among Evergreen AcqCo 1 LP, TVI, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee (the “Indenture”).
In each case, we would be required to develop such software ourselves or seek similar software licenses or services from other parties and reshape our business and operations to function with such new software or services.
In each case, we may be required to expend significant resources to remediate such outages; develop such software ourselves; or seek similar software licenses or services from other parties and reshape our business and operations to function with such new software or services.
Additionally, economic conditions in particular regions may also be affected by natural disasters, such as earthquakes, hurricanes and wildfires; unforeseen public health crises, such as the COVID-19 pandemic; political crises, such as terrorist attacks, war, such as the ongoing Russia-Ukraine conflict and the conflict in Israel, and other incidents of political or social instability or other catastrophic events in the United States, Canada or internationally.
Additionally, economic conditions in particular regions may also be affected by natural disasters, such as earthquakes, hurricanes and wildfires; unforeseen public health crises; political crises, such as terrorist attacks; war, such as the ongoing Russia-Ukraine conflict and conflicts in the Middle East; and other incidents of political or social instability or other catastrophic events in the U.S., Canada or internationally.
An insurer may also deny coverage as to a future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could harm our business, results of operations, financial condition and reputation.
The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could harm our business, results of operations, financial condition and reputation.
For example, the concentration of ownership held by the Ares Funds could delay, defer or prevent a change in control of our company or impede a merger, takeover or other business combination which may 49 Table of Contents otherwise be favorable for us.
The interests of the Ares Funds could conflict with or differ from our interests or the interests of our other stockholders. For example, the concentration of ownership held by the Ares Funds could delay, defer or prevent a change in control of our company or impede a merger, takeover or other business combination which may otherwise be favorable for us.
If we 35 Table of Contents are no longer able to rely on such third parties, we could be required to seek other third-party licenses; redesign aspects of our operations to function without such technologies or services; or develop such technologies ourselves, any of which would result in increased costs and could result in operational delays.
If we are no longer able to rely on such third parties, we could be required to seek other third-party licenses; redesign aspects of our operations to function without such technologies or services; or develop such technologies ourselves, any of which would result in increased costs and could result in operational disruption. 21 Table of Contents Labor-related matters, including labor disputes, may adversely affect our operations.
These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or employees, which may discourage lawsuits against us and our directors, officers and employees, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or employees, which may discourage lawsuits against us and our directors, officers and employees, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. 38 Table of Contents Our certificate of incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities.
As of September 22, 2023, Québec’s privacy act took effect, which includes transparency and data impact assessments requirements and also imposes severe financial penalties for certain offenses like unlawful use of personal information and failure to report confidentiality incidents. We may incur additional costs and expenses related to compliance with these laws.
Québec’s privacy act includes transparency and privacy impact assessment requirements and also imposes financial penalties for certain offenses like unlawful use of personal information and failure to report data breach incidents. We may incur additional costs and expenses related to compliance with these laws.
Labor-related matters, including labor disputes, may adversely affect our operations. To the extent a significant portion of our employee base would choose to unionize, or attempts to unionize, our labor and other related costs could increase.
To the extent a significant portion of our employee base would choose to unionize, or attempts to unionize, our labor and other related costs could increase.
Our store leases are generally for extended terms with a typical initial term of 10 years and existing leases have an average remaining term of approximately 6.95 years as of December 30, 2023 .
Our store leases are generally for extended terms with a typical initial term of 10 years and existing leases have an average remaining term of approximately 7.67 years as of December 28, 2024 .
This could, as a result, adversely affect our business, revenue, growth, results of operations and financial condition. Risks Relating to Information Technology, Intellectual Property, Data Security and Privacy Compromises of our data security, including cyberattacks or data breaches, could cause us to incur unexpected expenses and may materially harm our reputation and results of operations.
Risks Relating to Information Technology, Intellectual Property, Data Security and Privacy Compromises of our data security, including cyberattacks or data breaches, could cause us to incur unexpected expenses and may materially harm our reputation and results of operations.
Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our Form 10-K that will be filed with the SEC.
Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that are included in this Annual Report on Form 10-K.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur goal is to maintain a proactive stance in eliminating potential entry points for cyber threats. 53 Table of Contents As part of our commitment to maintaining a robust security posture, we engage in annual external penetration testing conducted by reputable third-party security firms.
Biggest changeOur goal is to maintain a proactive stance in eliminating potential entry points for cyber threats. 40 Table of Contents As part of our commitment to maintaining a robust security posture, we engage in annual external penetration testing conducted by reputable third-party security firms.
The CCO reports directly to the CEO, is a member of the Enterprise Risk Committee and also oversees the Company’s risk department. Our CCO has navigated the Company through multiple complex situations and also led the Company’s response in its 2020 ransomware attack discussed above. 54 Table of Contents
The CCO reports directly to the CEO, is a member of the Enterprise Risk Committee and also oversees the Company’s risk department. Our CCO has navigated the Company through multiple complex situations and also led the Company’s response in its 2020 ransomware attack discussed above. 41 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFinancial Statements and Supplementary Data.” As of December 30, 2023, we had 155 U.S. retail stores located in 29 states, as set forth below: Alaska 4 Maryland 12 Oregon 1 Arkansas 1 Minnesota 10 Pennsylvania 3 Arizona 8 Missouri 4 Rhode Island 4 California 15 North Dakota 1 South Dakota 1 Connecticut 4 New Hampshire 4 Texas 3 Hawaii 2 New Jersey 3 Utah 8 Idaho 2 New Mexico 4 Virginia 5 Illinois 8 Nevada 6 Washington 14 Kansas 3 New York 7 Wisconsin 1 Massachusetts 14 Ohio 3 As of December 30, 2023, we operated 159 Canada retail stores located in 10 provinces, as set forth below: Alberta 20 British Columbia 23 Manitoba 6 New Brunswick 3 Newfoundland 1 Nova Scotia 7 Ontario 74 Prince Edward Island 1 Quebec 19 Saskatchewan 5 As of December 30, 2023, we operated 12 retail stores in Australia, with 9 located in Victoria and 3 located in South Australia.
Biggest changeFinancial Statements and Supplementary Data.” 42 Table of Contents As of December 28, 2024, we had 172 U.S. retail stores located in 30 states, as set forth below: Alaska 4 Massachusetts 14 Ohio 3 Arkansas 1 Maryland 12 Oregon 1 Arizona 7 Minnesota 10 Pennsylvania 5 California 18 Missouri 4 Rhode Island 4 Connecticut 4 North Dakota 1 South Dakota 1 Georgia 7 New Hampshire 4 Texas 3 Hawaii 2 New Jersey 5 Utah 8 Idaho 2 New Mexico 5 Virginia 5 Illinois 9 Nevada 6 Washington 15 Kansas 3 New York 8 Wisconsin 1 As of December 28, 2024, we operated 165 Canada retail stores located in 10 provinces, as set forth below: Alberta 21 British Columbia 24 Manitoba 6 New Brunswick 3 Newfoundland 1 Nova Scotia 7 Ontario 76 Prince Edward Island 1 Quebec 21 Saskatchewan 5 As of December 28, 2024, we operated 14 retail stores in Australia, with 9 located in Victoria, 3 located in South Australia and 2 in New South Wales.
For more information regarding our leases, see Note 2, Summary of Significant Accounting Policies and Note 9, Leases, of the Notes to Consolidated Financial Statements included in “Part II, Item 8.
As of December 28, 2024, we operate d 351 retail stores in the U.S., Canada and Australia. For more information regarding our (i) segments, see Note 11. Segments, and (ii) leases, see Note 2. Summary of Significant Accounting Policies and Note 9. Leases , of the Notes to Consolidated Financial Statements included in “Part II, Item 8.
Removed
Item 2. Properties All of our stores are occupied under operating leases . As of December 30, 2023, our total consolidated selling square feet was 6.7 million. As of December 30, 2023, we operate d 326 retail stores in the United States, Canada and Australia.
Added
Item 2. Properties All properties, including retail stores, offsite processing facilities, wholesale warehouses, logistics warehouses and corporate offices, are occupied under operating leases. In addition to retail stores, at December 28, 2024, the Company had: • Offsite processing facilities supplying more than one location comprised of six Centralized Processing Centers, three of which serve U.S.
Removed
The following table presents certain information about the properties we lease, other than our stores, as of December 30, 2023: 55 Table of Contents Location Type of Facility Square Feet Lease Expiration Renewal Options Bellevue, WA Corporate Office 14,031 September 2028 One 5-Year Option Meridian, ID Corporate Office 12,312 November 2025 One 5-Year Option Fife, WA Distribution Center 93,146 April 2032 — Mississauga, ON Distribution Center 21,549 May 2033 One 5-Year Option Toronto, ON Distribution Center 94,914 March 2030 Two 5-Year Options Edmonton, AB Centralized Processing Center 46,348 May 2036 Two 5-Year Options Vancouver, BC Centralized Processing Center 57,843 July 2036 Two 5-Year Options Hyattsville, MD Centralized Processing Center 56,244 October 2031 One 5-Year Option Huntington Beach, CA Centralized Processing Center 50,897 November 2032 One 5-Year Option Calgary, AB Centralized Processing Center 48,082 October 2038 Two 5-Year Options Brooklyn Park, MN Centralized Processing Center 52,685 May 2033 Two 5-Year Options
Added
Retail (one of which is not yet in full operation) and three of which serve Canada Retail, and eight warehouses, two of which serve U.S.
Added
Retail (one of which began operations after December 28, 2024), four of which serve Canada Retail (one of which began operations after December 28, 2024) and two of which serve Australia Retail; • Wholesale warehouses (two in the U.S. and one in Canada) used to process, package and distribute goods to our wholesale customers; • Logistics warehouses (all serving U.S.
Added
Retail); and • Corporate offices in Bellevue, WA and Meridian, ID.
Added
The following table presents a split of the Company’s total leased square feet by property type: (in thousands) Leased Square Feet Retail stores 9,514 Offsite processing facilities 473 Wholesale warehouses 245 Logistics warehouses 230 Corporate offices 26 Total 10,488 As of December 28, 2024, our total consolidated selling square feet was 7.1 million.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+2 added−2 removed7 unchanged
Biggest changeUnder the stock repurchase program, we are authorized, at the discretion of management and our Board of Directors, to purchase up to $50.0 million of our common stock on the open market. The program is currently set to expire on November 8, 2025.
Biggest change(b) On November 9, 2023, the Company announced the authorization of a share repurchase program of up to $50.0 million of the Company’s common stock. Under the program, Savers may purchase shares from time to time in compliance with applicable securities laws, that may include Securities Act Rule 10b-18. The program is currently set to expire on November 8, 2025.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities On June 29, 2023, our common stock began trading on the New York Stock Exchange under the ticker symbol “SVV.” Prior to that date, there was no public trading market for our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities On June 29, 2023, our common stock began trading on the New York Stock Exchange under the ticker symbol “SVV.” Prior to that date, there was no public trading m arket for our common stock.
On December 16, 2022, we paid a dividend of $69.4 million to our equityholders using borrowings from our Revolving Credit Facility and cash on hand. We subsequently repaid all amounts borrowed in connection with this dividend. On February 6, 2023, we paid a dividend of $262.2 million to our equityholders using the proceeds from the offering of the Notes.
Dividend Policy On December 16, 2022, we paid a dividend of $69.4 million to our equityholders using borrowings from our Revolving Credit Facility and cash on hand. We subsequently repaid all amounts borrowed in connection with this dividend.
Such dividends were paid to our equityholders as a means to provide our equityholders with a return on their investment. No executive officers or directors received dividend payments.
On February 6, 2023, we paid a dividend of $262.2 million to our equityholders using the proceeds from the offering of the Senior Secured Notes. Such dividends were paid to our equityholders as a means to provide our equityholders with a return on their investment. No executive officers or directors received dividend payments.
The comparisons in the following graph are required by the SEC and are not intended to be a forecast or to be indicative of future common stock performance. 57 Table of Contents June 29, 2023 September 29, 2023 December 29, 2023 Savers Value Village, Inc. $ 100.00 $ 81.49 $ 75.86 S&P 500 Index $ 100.00 $ 97.92 $ 109.36 S&P 500 Retail Select Industry Index $ 100.00 $ 96.21 $ 115.03 Item 6. [ Reserved ] 58 Table of Contents
The comparisons in the following graph are required by the SEC and are not intended to be a forecast or to be indicative of future common stock performance. 6/29/2023 12/29/2023 3/28/2024 6/28/2024 9/27/2024 12/27/2024 Savers Value Village, Inc. $ 100 $ 76 $ 84 $ 53 $ 47 $ 45 S&P 500 Index 100 109 121 126 133 139 S&P 500 Retail Select Industry Index 100 115 126 120 125 131 Item 6. [ Reserved ] 44 Table of Contents
On February 26, 2024, the last reported sale price of our common stock on the NYSE was $19.55 per share . The number of holders of record of common stock on February 26, 2024 was 6 . Dividend Policy On November 22, 2021, we paid a dividend of $75.0 million to our equityholders using cash on hand.
On February 10, 2025, the last reported sale price of our common stock on the NYSE was $11.09 per share. The number of holders of record of common stock on February 10, 2025 was six.
Removed
Recent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser Our stock repurchase program was approved by our Board of Directors in November 2023.
Added
Recent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser The following table sets forth information concerning our purchases of common stock for the periods indicated (in thousands, except share and per share amounts): Period Total Number of Shares Purchased (a) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Publicly Announced Plans September 29, 2024 to October 26, 2024 174,079 $ 9.87 174,079 $ 27,348 October 27, 2024 to November 23, 2024 400,002 9.29 400,002 23,631 November 24, 2024 to December 28, 2024 563,995 9.88 563,236 18,067 Total 1,138,076 9.67 1,137,317 (a) Total number of shares purchased includes 759 shares of restricted stock repurchased in connection with employee tax withholding obligations under employee compensation plans, which are not purchases under any publicly announced plan.
Removed
During fiscal year 2023, we did not repurchase any shares of our common stock pursuant to this stock repurchase program. As of December 30, 2023, $50.0 million remained authorized for repurchase under the program.
Added
There was $18.1 million remaining under the share repurchase program as of December 28, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

81 edited+57 added−167 removed21 unchanged
Biggest changeA reconciliation of GAAP net income and GAAP net income per diluted share to Adjusted net income and Adjusted net income per diluted share is presented in the table below: Fiscal Year (in thousands, except per share amounts) 2023 2022 2021 Net income: Net income $ 53,115 $ 84,720 $ 83,394 Loss on extinguishment of debt (1)(2) 16,626 1,023 47,541 IPO-related stock-based compensation expense (1)(3) 69,108 — — COVID-19 related adjustments (1)(4) — — (21,367) Transaction costs (1)(5) 3,103 4,728 12,604 Dividend-related bonuses (1)(6) 24,097 6,499 — (Gain) loss on foreign currency, net (1) (6,660) 20,737 (1,583) Other adjustments (1)(7) (3,260) 2,698 3,964 Tax effect on adjustments (8) (29,874) (11,348) (15,435) Non-recurring tax (benefit) expense (9) (31,340) — 24,779 Adjusted net income $ 94,915 $ 109,057 $ 133,897 Net income per share - diluted: Net income per diluted share $ 0.34 $ 0.58 $ 0.57 Loss on extinguishment of debt (1)(2) 0.11 0.01 0.33 IPO related stock-based compensation expense (1)(3) 0.44 — — COVID-19 related adjustments (1)(4) — — (0.15) Transaction costs (1)(5) 0.02 0.03 0.09 Dividend-related bonus (1)(6) 0.15 0.04 — (Gain) loss on foreign currency, net (1) (0.04) 0.14 (0.01) Other adjustments (1)(7) (0.02) 0.02 0.03 Tax effect on adjustments (8) (0.19) (0.08) (0.11) Non-recurring tax (benefit) expense (9) (0.20) — 0.17 Adjusted net income per diluted share* $ 0.61 $ 0.75 $ 0.92 *May not foot due to rounding (1) Presented pre-tax. 75 Table of Contents (2) Removes the effects of the loss on debt extinguishment in relation to the partial repayment of outstanding borrowings under the Term Loan Facility on February 6, 2023 and July 5, 2023, the partial redemption of our Senior Secured Notes on July 3, 2023, the repayment of a mortgage loan on January 6, 2022 and repayment of the Company’s prior term loan facility on April 26, 2021.
Biggest changeA reconciliation of GAAP net income and GAAP net income per diluted share to Adjusted net income and Adjusted net income per diluted share is presented in the table below: Fiscal Year (in thousands, except per share amounts) 2024 2023 Net income: Net income $ 29,030 $ 53,115 Loss on extinguishment of debt (1)(2) 4,088 16,626 IPO-related stock-based compensation expense (1)(3) 54,981 69,108 Transaction costs (1)(4) 2,621 3,103 Dividend-related bonus (1)(5) — 24,097 Loss (gain) on foreign currency, net (1) 14,294 (6,660) Executive transition costs (1)(6) 689 — Other adjustments (1)(7) 4,312 (3,260) Tax effect on adjustments (8) (33,447) (29,874) Excess tax benefit from stock-based compensation (2,321) — Non-recurring tax benefit (9) — (31,340) Adjusted net income, as defined through fiscal year 2024 74,247 94,915 Tax effect on adjustments (8) 33,447 29,874 Tax effect on adjustments, as defined beginning fiscal year 2025 (10) (10,810) (15,734) Adjusted net income, as defined beginning fiscal year 2025 $ 96,884 $ 109,055 Net income per share, diluted: Net income per share, diluted $ 0.17 $ 0.34 Loss on extinguishment of debt (1)(2) 0.02 0.11 IPO-related stock-based compensation expense (1)(3) 0.33 0.44 Transaction costs (1)(4) 0.02 0.02 Dividend-related bonus (1)(5) — 0.15 Loss (gain) on foreign currency, net (1) 0.09 (0.04) Executive transition costs (1)(6) — — Other adjustments (1)(7) 0.03 (0.02) Tax effect on adjustments (8) (0.20) (0.19) Excess tax benefit from stock-based compensation (0.01) — Non-recurring tax benefit (9) — (0.20) Adjusted net income per share, diluted, as defined through fiscal year 2024* 0.45 0.61 Tax effect on adjustments (8) 0.20 0.19 Tax effect on adjustments, as defined beginning fiscal year 2025 (10) (0.06) (0.10) Adjusted net income per share, diluted, as defined beginning fiscal year 2025* $ 0.58 $ 0.70 *May not foot due to rounding (1) Presented pre-tax. 56 Table of Contents (2) Removes the effects of the loss on debt extinguishment in relation to the repricing of outstanding borrowings under the Term Loan Facility on January 30, 2024, the partial repayment of outstanding borrowings under the Term Loan Facility on July 5, 2023 and February 6, 2023, and the partial redemption of our Senior Secured Notes on March 4, 2024 and July 3, 2023.
We have provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this Annual Report that are calculated and presented in accordance with GAAP.
We have provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental to, and in addition to, the financial measures presented in this Annual Report that are calculated and presented in accordance with GAAP.
Net cash used in financing activities Net cash used in financing activities was $17.0 million for fiscal year 2023, consisting primarily of $524.9 million of net proceeds from the issuance of our Senior Secured Notes and $305.7 million of net proceeds from our IPO, offset by $547.9 million in principal payments on our long-term debt, the payment of $262.2 million in dividends and a net repayment of $42.0 million on our Revolving Credit Facility.
Net cash used in financing activities was $17.0 million for fiscal year 2023, consisting primarily of $524.9 million of net proceeds from the issuance of our Senior Secured Notes and $305.7 million of net proceeds from our IPO, offset by $547.9 million of principal payments on our long-term debt, the payment of $262.2 million in dividends and a net repayment of $42.0 million on our Revolving Credit Facility.
The vast majority of the clothing and textiles we source are sold to our retail or wholesale customers. We offer a dynamic, ever-changing selection of items, with an average unit retail (“AUR”) price of approximately $5. Our most engaged customers are members of our Super Savers Club ® loyalty program.
The vast majority of the clothing and textiles we source is sold to our retail or wholesale customers. We offer a dynamic, ever-changing selection of items, with an average unit retail (“AUR”) price of approximately $5. Our most engaged customers are members of our Super Savers Club ® loyalty program.
Impairment of goodwill and indefinite-lived intangible assets We assess goodwill and our indefinite-lived intangible assets (our trademarks) for impairment annually, or more frequently if events or changes in circumstances indicate that an asset may be impaired.
Impairment of goodwill and indefinite-lived intangible assets We assess goodwill and our indefinite-lived intangible assets for impairment annually, or more frequently if events or changes in circumstances indicate that an asset may be impaired.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Income, and Consolidated Statements of Cash Flows.
Accordingly, we believe these policies are most critical to aid in fully understanding and evaluating our Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Income, and Consolidated Statements of Cash Flows.
If the carrying value of the reporting unit exceeds the estimated fair value, we will recognize an impairment charge equal to the amount by which the carrying amount exceeds the reporting unit’s fair value up to but not to exceed the total amount of goodwill allocated to the reporting unit.
If the carrying value of the reporting unit exceeds the estimated fair value, the Company will recognize an impairment charge equal to the amount by which the carrying value exceeds the reporting unit’s estimated fair value up to but not to exceed the total amount of goodwill allocated to the reporting unit.
We also present the following non-GAAP financial measures: Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA, Adjusted EBITDA margin, Constant-currency net sales and Free cash flow. In the discussion that follows, we provide definitions and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.
We also present the following non-GAAP financial measures: Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA, Adjusted EBITDA margin and Constant-currency net sales. In the discussion that follows, we provide definitions and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.
(2) Represents non-cash stock-based compensation expense related to stock options and restricted stock units granted to certain of our employees and directors. 76 Table of Contents (3) Represents the difference between cash and straight-line lease expense. (4) Represents lease expense associated with acquired lease intangibles. Prior to the adoption of Topic 842, this expense was included within depreciation and amortization.
(2) Represents non-cash stock-based compensation expense related to stock options and restricted stock units granted to certain of our employees and directors. (3) Represents the difference between cash payments and straight-line lease expense. (4) Represents lease expense associated with acquired lease intangibles. Prior to the adoption of Topic 842, this expense was included within depreciation and amortization.
These non-GAAP financial measures should not be considered superior to, as a substitute for, or an alternative to, and should be considered in conjunction with, the GAAP financial 74 Table of Contents measures presented elsewhere in this Annual Report. These non-GAAP financial measures may differ from, and therefore may not be directly comparable to, similarly-titled measures used by other companies.
These non-GAAP financial measures should not be considered superior to, as a substitute for, or an alternative to, and should be considered in conjunction with, the GAAP financial measures presented elsewhere in this Annual Report. These non-GAAP financial measures may differ from, and therefore may not be directly comparable to, similarly-titled measures used by other companies.
In support of our efforts to extend the life of reusable goods and recover a portion of the cost of acquiring our supply of secondhand items, we sell the majority of textiles, shoes and books unsold at retail to our wholesale customers (predominantly comprised of textile graders and small business owners) who supply local communities across the globe with gently used, affordable items like clothing, housewares, toys and shoes.
In support of our efforts to extend the life of reusable goods and recover a portion of the cost of acquiring our supply of secondhand items, we sell the majority of textile items that are unsuited for or unsold at retail stores to our wholesale customers (predominantly comprised of textile graders and small business owners) who supply local communities across the globe with gently used, affordable items like clothing, housewares, toys and shoes.
Items that are not sold to our retail customers are marketed to wholesale customers, who reuse or repurpose the items they purchase from us. We believe our hyper-local and socially responsible procurement model, industry-leading and innovative operations, differentiated value proposition and deep relationships with our customers distinguish us from other secondhand and value-based retailers .
Items that are unsuited for or unsold at retail stores are marketed to wholesale customers who reuse or repurpose the items they purchase from us. We believe our hyper-local and socially responsible procurement model, industry-leading and innovative operations, differentiated value proposition and deep relationships with our customers distinguish us from other secondhand and value-based retailers.
We define comparable store sales to be sales by stores that have been in operation for all or a portion of two consecutive fiscal years, or, in other words, stores that are starting their third fiscal year of operation.
The Company currently defines comparable store sales to be sales by stores that have been in operation for all or a portion of two consecutive fiscal years, or, in other words, stores that are starting their third fiscal year of operation.
Our primary sources of liquidity and capital are cash generated from operations and proceeds from borrowings, including borrowings on our Revolving Credit Facility. As of December 30, 2023, $73.8 million was available to borrow under the Revolving Credit Facility.
Our primary sources of liquidity and capital are cash generated from operations and proceeds from borrowings, including borrowings on our Revolving Credit Facility. As of December 28, 2024, $123.8 million was available to borrow under the Revolving Credit Facility.
We define Adjusted EBITDA as net income excluding the impact of interest expense, net, income tax (benefit) expense, depreciation and amortization, loss on extinguishment of debt, stock-based compensation expense, non-cash occupancy-related costs, lease intangible asset expense, pre-opening expenses, store closing expenses, executive transition costs, COVID-19 related adjustments, transaction costs, dividend-related bonuses, (gain) loss on foreign currency, and certain other adjustments.
Adjusted EBITDA through fiscal year 2024 is defined as net income excluding the impact of interest expense, net, income tax expense (benefit), depreciation and amortization, loss on extinguishment of debt, stock-based compensation expense, non-cash occupancy-related costs, lease intangible asset expense, pre-opening expenses, store closing expenses, executive transition costs, transaction costs, dividend-related bonuses, loss (gain) on foreign currency, net, and certain other adjustments.
We believe that the 81 Table of Contents assumptions and estimates associated with the impairment assessments of our goodwill and indefinite-lived intangible assets, income taxes and stock-based compensation have the greatest potential impact on our consolidated financial statements.
We believe that the assumptions and estimates associated with the impairment assessments of our goodwill and indefinite-lived intangible assets and income taxes have the greatest potential impact on our consolidated financial statements.
The term foreign currency exchange rates refer to the exchange rates used to translate the Company's operating results for all countries where the functional currency is not the U.S. Dollar into U.S. Dollars. Because the Company is a global company, foreign currency exchange rates used for translation may have a significant effect on its reported results.
The term foreign currency exchange rates refers to the exchange rates used to translate the Company's operating results for all countries where the functional currency is not the USD into USD. Because the Company is a global company, foreign currency exchange rates used for translation may have a significant effect on its reported results.
We believe our existing cash and cash equivalents and cash provided by our operating activities are sufficient to fund our liquidity needs for the next 12 months. We may supplement our liquidity needs with borrowings under our Revolving Credit Facility. See Note 7 to our audited consolidated financial statements for details of our indebtedness.
We believe our existing cash and cash equivalents and cash provided by our operating activities are sufficient to fund our liquidity needs for the next 12 months. See Note 7. Indebtedness to our audited consolidated financial statements for details of our indebtedness.
Overview We are the largest for-profit thrift operator in the United States and Canada and operate a total of 326 s tores under the Savers ® , Value Village ® , Value Village Boutique ™, Village des Valeurs ™ , Unique ® , and 2nd Ave. ® banners.
Overview We are the largest for-profit thrift operator in the United States (“U.S.”) and Canada based on number of stores and operate a total of 351 s tores under the Savers ® , Value Village ® , Value Village Boutique™ , Village des Valeurs™, Unique ® and 2nd Ave. ® banners.
During fiscal years 2023, 2022 and 2021 we processed 984 million, 985 million and 860 million pounds of supply, respectively, of which 73.6%, 72.6% and 72.0% was comprised of supply from OSDs and GreenDrop, respectively. Sales yield We define sales yield as retail sales generated per pound processed on a currency neutral and comparable store basis.
During fiscal years 2024 and 2023, we processed 1.0 billion and 984 million pounds of supply, respectively, of which 76.3% and 73.6% was comprised of supply from OSDs and GreenDrop, respectively. Sales yield We define sales yield as retail sales generated per pound processed on a currency neutral and comparable store basis.
Adjusted net income is defined as net income excluding the impact of loss on extinguishment of debt, IPO-related stock-based compensation expense, COVID-19 related adjustments, transaction costs, dividend-related bonus, (gain) loss on foreign currency, net, certain other adjustments, the tax effect on the above adjustments and non-recurring tax (benefit) expense.
Adjusted net income through fiscal year 2024 is defined as net income excluding the impact of loss on extinguishment of debt, IPO-related stock-based compensation expense, transaction costs, dividend-related bonus, loss (gain) on foreign currency, net , executive transition costs, certain other adjustments, the tax effect on the above adjustments, excess tax benefit from stock-based compensation and non-recurring tax benefit .
This annual impairment test resulted in no impairment charge. Each reporting period, we perform an evaluation of the remaining useful life of our indefinite-lived trade names and trademarks to determine whether events and circumstances continue to support an indefinite life. We consider the life of our indefinite-lived trade names and trademarks to be appropriate.
Each reporting period, we perform an evaluation of the remaining useful life of our indefinite-lived trade names and trademarks to determine whether events and circumstances continue to support an indefinite life. We consider the life of our indefinite-lived trade names and trademarks to be appropriate.
Valuation allowances are established against deferred tax assets if it is more likely than not that they will not be realized. Income tax expense represents the current expense incurred for the period plus or minus the change during the period in net deferred tax assets and liabilities.
A valuation allowance is established against deferred tax assets if it is more likely than not that they will not be realized. Income tax expense represents the current expense incurred for the period plus or minus the change during the period in net deferred tax assets and liabilities. Recent Accounting Pronouncements See Note 2.
Although we do not anticipate paying any cash dividends in the foreseeable future, any future determination relating to dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including restrictions in our current and future debt instruments, our future earnings, capital requirements, financial condition, prospects, and applicable Delaware law, which provides that dividends are only payable out of surplus or current net profits.
Although we do not anticipate paying any cash dividends in the foreseeable future, any future determination relating to dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including restrictions in our current and future debt instruments, our future earnings, capital requirements, financial condition, prospects, and applicable Delaware law, which provides that dividends are only payable out of surplus or current net profits. 59 Table of Contents Our primary short-term requirements for liquidity and capital are to meet general working capital needs, fund capital expenditures and to make interest payments on our debt.
We have included these non-GAAP financial measures as these are key measures used by our management and our board of directors to evaluate our operating performance and the effectiveness of our business strategies, make budgeting decisions, and evaluate compensation decisions. They also best allow comparison of the performance of one period with that of another period.
We have included these non-GAAP financial measures as these are key measures used by our management and our board of directors to evaluate our operating performance and the effectiveness of our business strategies, make budgeting decisions, and evaluate compensation decisions.
(9) Represents a one-time tax benefit of $31.3 million associated with a internal legal entity restructuring in fiscal year 2023 and a one-time tax expense of $24.8 million associated with debt restructuring in fiscal year 2021.
(9) Represents a one-time tax benefit of $31.3 million associated with an internal legal entity restructuring in fiscal year 2023.
During fiscal year 2023, as compared to fiscal year 2022, the U.S. Dollar was stronger relative to the Canadian and Australian dollars which resulted in an unfavorable foreign currency impact on our operating results.
During fiscal year 2024, as compared to fiscal year 2023, the USD was stronger relative to CAD and the Australian dollar (“AUD”) which resulted in an unfavorable foreign currency impact on our operating results.
Other income, net The following table presents other income (expense), net: Fiscal Year (in thousands) 2023 2022 $ Change % Change Other income, net $ 3,688 $ 4,576 $ (888) (19.4) % Other income, net is comprised primarily of miscellaneous income and expenses not directly related to our core operating activities.
Other income, net The following table presents other income, net: Fiscal Year (in thousands) 2024 2023 $ Change % Change Other income, net $ 71 $ 3,688 $ (3,617) (98.1) % Other income, net is comprised primarily of miscellaneous income and expenses not directly related to our core operating activities.
The Company believes disclosure of constant-currency results is helpful to investors because it facilitates period-to-period comparisons of its results by increasing the transparency of its underlying performance by excluding the impact of fluctuating foreign currency exchange rates. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period.
The Company believes disclosure of constant-currency net sales is helpful to investors because it facilitates period-to-period comparisons of its results by increasing the transparency of its underlying performance by excluding the impact of fluctuating foreign currency exchange rates.
Recent Accounting Pronouncements See Note 2 to our audited consolidated financial statements for a description of recently adopted accounting pronouncements and issued accounting pronouncements not yet adopted.
Summary of Significant Accounting Policies to our audited consolidated financial statements for a description of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted.
We believe investors can use this metric to assess our ability to increase comparable store sales over time. During fiscal year 2023, our comparable store sales growth was 4.7%, primarily reflecting growth in transaction volume. During fiscal year 2022, our comparable store sales growth was 13.5%, compared to 44.5% for fiscal year 2021.
We believe investors can use this metric to assess our ability to increase comparable store sales over time. During fiscal year 2024, our comparable store sales were relatively flat . During fiscal year 2023 , our comparable store sales increased 4.7% , primarily reflecting growth in transaction volume.
Comparable store sales growth Comparable store sales growth provides us with visibility into top-line performance on a like-for-like basis excluding new stores opened in the current or previous reporting period and excluding all closed stores as of the end of the current reporting period.
(3) We define sales yield as retail sales generated per pound processed on a currency neutral and comparable store basis. 48 Table of Contents Comparable store sales Comparable store sales provides us with visibility into top-line performance on a like-for-like basis excluding new stores opened in the current or previous reporting period and excluding all closed stores as of the end of the current reporting period.
In fiscal year 2023, the U.S. dollar weakened against the Canadian dollar resulting in remeasurement gains of $9.8 million arising primarily on USD-denominated debt held by one of our Canadian subsidiaries, which is the primary driver of foreign currency remeasurement gains and losses.
In fiscal year 2024, the USD strengthened against CAD resulting in remeasurement losses of $27.3 million arising primarily on USD-denominated debt held by one of our Canadian subsidiaries, which was the primary driver of foreign currency remeasurement gains and losses in both fiscal year 2024 and fiscal year 2023.
We account for acquired businesses using the acquisition method of accounting which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values with the differences between consideration and net assets acquired being recorded as goodwill.
We account for acquired businesses using the acquisition method of accounting which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values with the differences between consideration and net assets acquired being recorded as goodwill. 61 Table of Contents Goodwill is reviewed for impairment annually in the Company’s fourth quarter and whenever circumstances indicate goodwill might be impaired.
Our primary short-term requirements for liquidity and capital are to meet general working capital needs, fund capital expenditures and to make interest payments on our debt. Our primary long-term liquidity and capital needs relate to repaying the principal balance on our debt and making lease payments on our retail stores and processing facilities.
Our primary long-term liquidity and capital needs relate to repaying the principal balance on our debt and making lease payments on our retail stores and processing facilities.
If the assessment indicates that it is more likely than not, we compare the carrying value of the reporting unit to the estimated fair value of the reporting unit, both as of the testing date.
If the assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs a quantitative assessment by comparing the carrying value of the reporting unit to the estimated fair value of the reporting unit, both as of the testing date.
In general, the Company's financial results are affected positively by a weaker U.S. Dollar and are affected negatively by a stronger U.S. Dollar. References to operating results on a constant-currency basis mean operating results without the impact of foreign currency exchange rate fluctuations.
In general, given the Company's significant operations in Canada, the Company's financial results are affected positively by a weakening of the USD against CAD and are affected negatively by a strengthening of the USD against CAD. References to operating results on a constant-currency basis mean operating results without the impact of foreign currency exchange rate fluctuations.
These sources of liquidity and capital have also been the primary means by which we funded dividend payments of $262.2 million, $69.4 million and $75.0 million in fiscal years 2023, 2022 and 2021, respectively.
These sources of liquidity and capital have also been the primary means by which we funded a dividend payment of $262.2 million in fiscal year 2023.
Key Performance Indicators We use the key business metrics below to evaluate the performance of our business, identify trends, formulate financial projections and make strategic decisions. We believe that these metrics provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team.
We believe that these metrics provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team.
Segment results The following table presents net sales and profit by segment for the periods presented: Fiscal Year (in thousands) 2023 2022 $ Change % Change Net sales: U.S.
Income Taxes, and an increase to the valuation allowance. Segment results The following table presents net sales and profit by segment: Fiscal Year (in thousands) 2024 2023 $ Change % Change Net sales: U.S.
Loss on extinguishment of debt The following table presents loss on extinguishment of debt: Fiscal Year (in thousands) 2023 2022 $ Change % Change Loss on extinguishment of debt $ (16,626) $ (1,023) $ (15,603) n/m ____________ n/m – not meaningful In fiscal year 2023, the Company used net proceeds from its IPO, net proceeds from issuing $550.0 million aggregate principal amount of Senior Secured Notes and cash on hand to repay $485.8 million in outstanding borrowings on its Term Loan Facility and $55.0 million aggregate principal amount of its Senior Secured Notes (the “Notes”), and consequently recognized a loss on debt extinguishment of $16.6 million.
In fiscal year 2023, the Company used net proceeds from its IPO, net proceeds from issuing $550.0 million aggregate principal amount of Senior Secured Notes and cash on hand to repay $485.8 million in outstanding borrowings on its Term Loan Facility and $55.0 million aggregate principal amount of its Senior Secured Notes, resulting in a loss on extinguishment of debt of $16.6 million. 53 Table of Contents Income tax expense (benefit) The following table presents income tax expense (benefit): Fiscal Year (in thousands) 2024 2023 $ Change % Change Income tax expense (benefit) $ 20,404 $ (6,036) $ 26,440 n/m n/m - not meaningful During fiscal year 2024, the Company recorded income tax expense of $20.4 million on income before income taxes of $49.4 million, resulting i n an effective tax rate of 41.3%.
Canada Retail Canada Retail net sales increased by $22.7 million, or 3.9%, during fiscal year 2023 , compared to fiscal year 2022 . The increase in net sales resulted primarily from comparable store sales growth of 5.0% and a 4.6% increase in the number of retail stores year over year, partially offset by the unfavorable impact of foreign currency.
Canada Retail Canada Retail sales decreased by $18.7 million, or 3.1%, during fiscal year 2024 , compared to fiscal year 2023 . The decrease in Canada Retail sales resulted from a 4.0% decrease in comparable store sales and the unfavorable impact of foreign currency exchange rates, partially offset by growth in our store base .
Comparable store daily sales growth is the percentage change in comparable store daily sales over the comparable period in the prior fiscal year. Comparable store daily sales growth excludes stores acquired in the 2nd Ave. Acquisition, because those stores were not yet fully integrated during the prior year comparative period.
For fiscal year 2023, comparable store sales excludes stores acquired in the acquisition of 2nd Ave. because those stores were not yet fully integrated during the prior year comparative period. Comparable store sales is measured in local currency for Canada, while total comparable store sales is measured on a constant-currency basis.
Net cash used in changes in operating assets and liabilities during fiscal year 2023 consisted primarily of a $110.4 million change in operating lease liabilities and a $10.9 million change in inventory. The change in operating lease liabilities resulted from the payment towards our lease liabilities.
Net cash used in changes in operating assets and liabilities during fiscal year 2024 consisted primarily of a $122.6 million change in operating lease liabilities and a $10.7 million change in accrued payroll and related taxes. The change in operating lease liabilities resulted from lease payments.
A reconciliation of GAAP net income to Adjusted EBITDA is presented in the table below: Fiscal Year (dollars in thousands) 2023 2022 2021 Net income $ 53,115 $ 84,720 $ 83,394 Interest expense, net 88,500 64,744 53,565 Income tax (benefit) expense (6,036) 39,578 (5,529) Depreciation and amortization 61,144 55,753 47,385 Loss on extinguishment of debt (1) 16,626 1,023 47,541 Stock-based compensation expense (2) 72,604 1,943 732 Non-cash occupancy-related costs (3) 5,902 1,464 228 Lease intangible asset expense (4) 4,093 7,677 — Pre-opening expenses (5) 7,536 5,858 1,628 Store closing expenses (6) 1,613 2,732 397 Executive transition costs (7) — 1,532 420 COVID-19 related adjustments (8) — — (21,367) Transaction costs (9) 3,103 4,728 12,604 Dividend-related bonuses (10) 24,097 6,499 — (Gain) loss on foreign currency, net (6,660) 20,737 (1,583) Other adjustments (11) (3,260) 2,698 3,964 Adjusted EBITDA $ 322,377 $ 301,686 $ 223,379 Net income margin 3.5% 5.9% 6.9% Adjusted EBITDA margin 21.5% 21.0% 18.6% (1) Removes the effects of the loss on debt extinguishment in relation to the partial repayment of outstanding borrowings under the Term Loan Facility on February 6, 2023 and July 5, 2023, the partial redemption of our Senior Secured Notes on July 3, 2023, the repayment of a mortgage loan on January 6, 2022 and repayment of the Company’s prior term loan facility on April 26, 2021.
A reconciliation of GAAP net income to Adjusted EBITDA is presented in the table below: Fiscal Year (dollars in thousands) 2024 2023 Net income $ 29,030 $ 53,115 Interest expense, net 62,444 88,500 Income tax expense (benefit) 20,404 (6,036) Depreciation and amortization 69,530 61,144 Loss on extinguishment of debt (1) 4,088 16,626 Stock-based compensation expense (2) 61,636 72,604 Non-cash occupancy-related costs (3) 7,943 5,902 Lease intangible asset expense (4) 3,531 4,093 Pre-opening expenses (5) 14,768 7,536 Store closing expenses (6) 874 1,613 Executive transition costs (7) 689 — Transaction costs (8) 2,621 3,103 Dividend-related bonus (9) — 24,097 Loss (gain) on foreign currency, net 14,294 (6,660) Other adjustments (10) 4,312 (3,260) Adjusted EBITDA, as defined through fiscal year 2024 296,164 322,377 Non-cash occupancy-related costs (3) (7,943) (5,902) Pre-opening expenses (5) (14,768) (7,536) Store closing expenses (6) (874) (1,613) Adjusted EBITDA, as defined beginning fiscal year 2025 $ 272,579 $ 307,326 Net income margin 1.9% 3.5% Adjusted EBITDA margin, as defined through fiscal year 2024 19.3% 21.5% Adjusted EBITDA margin, as defined beginning fiscal year 2025 17.7% 20.5% (1) Removes the effects of the loss on debt extinguishment in relation to the repricing of outstanding borrowings under the Term Loan Facility on January 30, 2024, the partial repayment of outstanding borrowings under the Term Loan Facility on July 5, 2023 and February 6, 2023, and the partial redemption of our Senior Secured Notes on March 4, 2024 and July 3, 2023.
The following table summarizes our key performance indicators for the periods indicated: Fiscal Year 2023 2022 2021 Comparable Store Sales Growth (1) United States 4.4 % 4.5 % 64.8 % Canada 5.0 % 25.3 % 24.3 % Total (3) 4.7 % 13.5 % 44.5 % Comparable Store Daily Sales Growth (2) United States n/m 4.5 % 24.9 % Canada n/m 4.5 % 19.0 % Total (3) n/m 3.3 % 23.7 % Number of Stores United States 155 150 148 Canada 159 152 148 Total (3) 326 314 306 Other Metrics Pounds Processed (Ibs mm) 984 985 860 Sales yield (4) $ 1.48 $ 1.39 $ 1.30 Cost of merchandise sold per pound processed $ 0.63 $ 0.61 $ 0.55 ____________ n/m – not meaningful 62 Table of Contents (1) Comparable store sales growth is the percentage change in comparable store sales over the comparable period in the prior fiscal year.
The following table summarizes our key performance indicators for the periods indicated: Fiscal Year 2024 2023 Comparable Store Sales (1) U.S. 2.7 % 4.4 % Canada (4.0) % 5.0 % Total (2) (0.1) % 4.7 % Number of Stores U.S. 172 155 Canada 165 159 Total (2) 351 326 Other Metrics Pounds processed (Ibs mm) 1,012 984 Sales yield (3) $ 1.46 $ 1.48 Cost of merchandise sold per pound processed $ 0.66 $ 0.63 (1) Comparable store sales is the percentage change in comparable store sales over the comparable period in the prior fiscal year.
As of December 30, 2023, we had 5.3 million total active members enrolled in our U.S. and Canadian loyalty programs who have made a purchase within the last 12 months, compared to 4.8 million total active members as of December 31, 2022. Active members drove 70.3% of point-of-sale transaction value during both fiscal year 2023 and fiscal year 2022.
As of December 28, 2024, we had 5.9 million total active members enrolled in our U.S. and Canadian loyalty programs who have shopped with us during fiscal year 2024, compared to 5.3 million total active members as of December 30, 2023. Active members drove 72.4% of retail sales during fiscal year 2024, compared to 70.3% during fiscal year 2023.
We also recorded losses of $3.1 million on derivative instruments that we use to manage foreign currency exchange rate risk.
We also recorded gains of $13.0 million in fiscal year 2024 on derivative instruments that we use to mana ge foreign currency exchange rate risk.
The increase in comparable store sales was primarily driven by growth in transaction volume. Canada Retail segment profit increased by $16.0 million, or 9.2%, during fiscal year 2023 , compared to fiscal year 2022.
The decline in comparable store sales was primarily driven by a decrease in transactions. Canada Retail segment profit decreased by $24.8 million, or 13.0%, during fiscal year 2024 , compared to fiscal year 2023.
These cash payments were offset by $796.5 million of net debt proceeds received from the Term Loan Facility. Critical Accounting Policies and Estimates Our consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report are prepared in accordance with GAAP.
Critical Accounting Estimates Our consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report are prepared in accordance with GAAP.
(5) Transaction costs are comprised of non-capitalizable expenses related to offering costs and the 2nd Ave. Acquisition, such as accounting, consulting and legal fees. (6) Represents dividend-related bonuses and related payroll taxes paid in conjunction with our February 2023 and December 2022 dividends. (7) Other adjustments include the effect of asset disposals.
(7) Represents severance costs associated with executive leadership changes and retention costs associated with acquisitions. (8) Transaction costs are comprised of non-capitalizable expenses related to offering costs, debt transactions and acquisitions. (9) Represents dividend-related bonus and related payroll taxes paid in conjunction with our February 2023 dividends. (10) Other adjustments include the effect of asset disposals.
Goodwill is reviewed for impairment annually in our fourth quarter or whenever circumstances indicate goodwill might be impaired. We first perform a qualitative assessment, evaluating relevant events or circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If not, no further impairment testing is performed.
The Company has the option of performing a qualitative assessment that involves evaluating relevant events and circumstances to determine whether it is more likely than not (i.e. a likelihood of greater than 50%) that the fair value of a reporting unit is less than its carrying amount. If not, no further impairment testing is performed.
Fiscal year 2021 includes $1.9 million of expense related to the fair value step-up of inventory pursuant to the 2nd Ave. Acquisition. Constant currency The Company reports certain operating results on a constant-currency basis in order to facilitate period-to-period comparisons of its results without regard to the impact of fluctuating foreign currency exchange rates.
Fiscal year 2023 also includes legal and insurance settlement proceeds of $4.7 million. 58 Table of Contents Constant-currency The Company reports certain operating results on a constant-currency basis in order to facilitate period-to-period comparisons of its results without regard to the impact of fluctuating foreign currency exchange rates.
Excluding the receipt of wage subsidies in fiscal year 2021, our adjusted cost of merchandise sold per pound processed was $0.57 for fiscal year 2021. 64 Table of Contents Results of Operations The following table sets forth our results of operations for each of the periods presented: Fiscal Year 2023 2022 2021 (in thousands) Amount % of Sales Amount % of Sales Amount % of Sales Net sales $ 1,500,249 100.0% $ 1,437,229 100.0% $ 1,204,124 100.0% Operating expenses: Cost of merchandise sold, exclusive of depreciation and amortization 619,671 41.3 599,926 41.7 474,462 39.4 Salaries, wages and benefits 366,189 24.4 273,587 19.0 239,806 19.9 Selling, general and administrative 311,388 20.8 301,737 21.0 260,235 21.6 Depreciation and amortization 61,144 4.0 55,753 3.9 47,385 3.9 Total operating expenses 1,358,392 90.5 1,231,003 85.6 1,021,888 84.8 Operating income 141,857 9.5 206,226 14.4 182,236 15.2 Other (expense) income: Interest expense, net (88,500) (5.9) (64,744) (4.5) (53,565) (4.4) Gain (loss) on foreign currency, net 6,660 0.4 (20,737) (1.4) 1,583 0.1 Other income (expense), net 3,688 0.2 4,576 0.3 (4,848) (0.5) Loss on extinguishment of debt (16,626) (1.1) (1,023) (0.1) (47,541) (3.9) Other expense, net (94,778) (6.4) (81,928) (5.7) (104,371) (8.7) Income before income taxes 47,079 3.1 124,298 8.7 77,865 6.5 Income tax (benefit) expense (6,036) (0.4) 39,578 2.8 (5,529) (0.4) Net income $ 53,115 3.5% $ 84,720 5.9% $ 83,394 6.9% Comparison of fiscal year 2023 and fiscal year 2022 Net sales The following table presents net sales: Fiscal Year (in thousands) 2023 2022 $ Change % Change Retail sales $ 1,427,024 $ 1,365,109 $ 61,915 4.5 % Wholesale sales 73,225 72,120 1,105 1.5 Total net sales $ 1,500,249 $ 1,437,229 $ 63,020 4.4 % Retail net sales increased by $61.9 million, or 4.5%, during fiscal year 2023 compared to fiscal year 2022.
Cost of merchandise sold per pound processed during fiscal years 2024 and 2023 was $0.66 and $0.63, respectively. 49 Table of Contents Results of Operations The following table sets forth our results of operations for each of the periods presented: Fiscal Year 2024 2023 (in thousands) Amount % of Sales Amount % of Sales Net sales $ 1,537,617 100.0% $ 1,500,249 100.0% Operating expenses: Cost of merchandise sold, exclusive of depreciation and amortization 669,744 43.6 619,671 41.3 Salaries, wages and benefits 331,023 21.5 366,189 24.4 Selling, general and administrative 337,131 21.9 311,388 20.8 Depreciation and amortization 69,530 4.5 61,144 4.0 Total operating expenses 1,407,428 91.5 1,358,392 90.5 Operating income 130,189 8.5 141,857 9.5 Other (expense) income: Interest expense, net (62,444) (4.1) (88,500) (5.9) (Loss) gain on foreign currency, net (14,294) (0.9) 6,660 0.4 Other income, net 71 — 3,688 0.2 Loss on extinguishment of debt (4,088) (0.3) (16,626) (1.1) Other expense, net (80,755) (5.3) (94,778) (6.4) Income before income taxes 49,434 3.2 47,079 3.1 Income tax expense (benefit) 20,404 1.3 (6,036) (0.4) Net income $ 29,030 1.9% $ 53,115 3.5% Comparison of fiscal year 2024 and fiscal year 2023 Net sales The following table presents net sales: Fiscal Year (in thousands) 2024 2023 $ Change % Change Retail sales $ 1,463,404 $ 1,427,024 $ 36,380 2.5 % Wholesale sales 74,213 73,225 988 1.3 % Total net sales $ 1,537,617 $ 1,500,249 $ 37,368 2.5 % Retail sales increased by $36.4 million, or 2.5%, during fiscal year 2024, compared to fiscal year 2023.
We are committed to redefining secondhand shopping by providing one-of-a-kind, low-priced merchandise ranging from quality clothing to home goods in an exciting treasure-hunt shopping environment.
We are committed to redefining secondhand shopping by providing one-of-a-kind, low-priced merchandise ranging from quality clothing to home goods in an exciting treasure-hunt shopping environment. We purchase secondhand textiles (e.g., clothing, bedding and bath items), shoes, accessories, housewares, books and other goods from our non-profit partners (“NPPs”). We then process, select, price, merchandise and sell these items in our stores.
Similar to goodwill, our indefinite-lived trade names and trademarks are not amortized, but reviewed for impairment annually, or earlier whenever events or changes in business circumstances indicate that their carrying values may not be recoverable. We assessed our indefinite-lived trade names and trademarks for impairment in the fourth quarter of fiscal year 2023 by utilizing a qualitative analysis.
Similar to goodwill, our indefinite-lived trade names and trademarks are not amortized, but reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired.
Number of stores Our number of stores provides us visibility into our scale of operations and is viewed as a key driver of long-term growth. We believe investors can use this metric to assess our ability to open new stores in high-growth markets while reducing the number of stores in low-growth markets.
We believe investors can use this metric to assess our ability to open new stores in high-growth markets while reducing the number of stores in low-growth markets. Our number of open stores increased to 351 stores as of December 28, 2024, from 326 stores as of December 30, 2023.
Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation, carpet padding), further reducing waste.
Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation, carpet padding), further reducing waste. Recent Developments Macroeconomic Conditions in Canada The macroeconomic environment in Canada remains challenging, with elevated levels of unemployment and a high cost of living that is especially hard on low-income consumers.
As a percentage of net sales, cost of merchandise sold remained consistent year over year at 41.3% during fiscal year 2023 , compared to 41.7% during fiscal year 2022. Personnel costs classified within cost of merchandise sold increased to $368.6 million during fiscal year 2023 , compared to $343.4 million during fiscal year 2022.
Personnel costs classified within cost of merchandise sold were $393.1 million during fiscal year 2024 , compared to $378.6 million during fiscal year 2023 . As a percentage of net sales, personnel costs classified within cost of merchandise sold was 25.6% during fiscal year 2024 , compared to 25.2% during fiscal year 2023 .
The $12.6 million change in accrued payroll and related taxes resulted from the payment of incentive compensation to our employees. As of January 1, 2022, we accrued $35.3 million related to employee incentive compensation, which was subsequently paid during fiscal year 2022.
The change in accrued payroll and related taxes resulted primarily from the annual payment of incentive compensation to our employees, partially offset by increases in accrued payroll and insurance reserves. As of December 30, 2023, we had accrued $24.4 million for employee incentive compensation which was paid during the first quarter of fiscal year 2024.
Comparable store daily sales growth is measured in local currency for Canada, while total comparable store daily sales growth is measured on a constant currency basis. (3) Total comparable store sales growth, total comparable store daily sales growth and total number of stores include our Australia retail locations, in addition to the United States and Canada.
(2) Total comparable store sales and the total number of stores include our Australia retail locations, in addition to the U.S. and Canada.
The effective tax rate for fiscal year 2023 is adjusted to remove Section 162(m) limitations and the tax benefit of restructuring. The effective tax rate for fiscal 2021 excludes the benefit of a change in valuation allowance.
(8) Tax effect on adjustments as defined through fiscal year 2024 is calculated based on the overall effective tax rate for the respective periods. The effective tax rate for fiscal year 2023 is adjusted to remove Section 162(m) limitations and the tax benefit of restructuring.
The increase in net sales resulted primarily from comparable store sales growth of 4.4% and a 3.3% increase in the number of retail stores year over year. The increase in comparable store sales was primarily driven by growth in transaction volume. U.S. Retail segment profit increased by $16.5 million, or 9.1%, during fiscal year 2023, compared to fiscal year 2022.
Retail sales increased by $52.5 million, or 6.7%, during fiscal year 2024, compared to fiscal year 2023 . The increase in U.S. Retail sales resulted from growth in our store base, as well as a 2.7% increase in comparable store sales. The increase in comparable store sales was driven by higher transactions and average basket. U.S.
Cash Flows The following table summarizes our cash flows for the periods indicated: Fiscal Year (in thousands) 2023 2022 2021 Net cash provided by operating activities $ 175,165 $ 169,433 $ 175,762 Net cash used in investing activities (92,365) (110,502) (263,172) Net cash (used in) provided by financing activities (17,044) (40,218) 52,999 Effect of exchange rate changes on cash and cash equivalents 2,067 (4,496) (5,533) Net increase (decrease) in cash and cash equivalents $ 67,823 $ 14,217 $ (39,944) Comparison of fiscal year 2023 and fiscal year 2022 Net cash provided by operating activities Net cash provided by operating activities was $175.2 million for fiscal year 2023, resulting from net income of $53.1 million, non-cash charges added back of $226.0 million and a net decrease of $104.0 million in operating assets and liabilities.
Cash Flows The following table summarizes our cash flows for the periods indicated: Fiscal Year (in thousands) 2024 2023 Net cash provided by operating activities $ 134,276 $ 175,165 Net cash used in investing activities (80,523) (92,365) Net cash used in financing activities (76,630) (17,044) Effect of exchange rate changes on cash and cash equivalents (7,111) 2,067 Net change in cash and cash equivalents $ (29,988) $ 67,823 Comparison of fiscal year 2024 and fiscal year 2023 Net cash provided by operating activities Net cash provided by operating activities was $134.3 million for fiscal year 2024, compared to $175.2 million for fiscal year 2023, a decrease of $40.9 million.
(3) Reflects stock-based compensation expense for performance-based options triggered by the completion of our IPO and expense related to restricted stock units issued in connection with the Company’s IPO. (4) Represents benefits, net of costs, received in connection with the COVID-19 pandemic including wage subsidies, and severance costs.
(3) Represents stock-based compensation expense for performance-based options triggered by completion of our IPO and expense related to restricted stock units issued in connection with the Company’s IPO. (4) Transaction costs are comprised of non-capitalizable expenses related to offering costs, debt transactions and acquisitions. (5) Represents dividend-related bonus and related payroll taxes paid in conjunction with our February 2023 dividends.
The change in inventories is primarily due to the timing of processing and higher processing costs. Net cash provided by operating activities was $169.4 million for fiscal year 2022, primarily resulting from net income of $84.7 million, after consideration of non-cash charges of $220.6 million and a net decrease of $135.9 million in our operating assets and liabilities.
The change in operating lease liabilities resulted from lease payments. The change in inventories is primarily due to the timing of processing and higher processing costs. Net cash used in investing activities Net cash used in investing activities was $80.5 million for fiscal year 2024 and $92.4 million for fiscal year 2023 .
Salaries, wages and benefits The following table presents salaries, wages and benefits expense: Fiscal Year (in thousands) 2023 2022 $ Change % Change Retail and wholesale $ 193,930 $ 195,861 $ (1,931) (1.0) % Corporate 172,259 77,726 94,533 121.6 Total salaries, wages and benefits $ 366,189 $ 273,587 $ 92,602 33.8 % Salaries, wages and benefits expense increased by $92.6 million, or 33.8%, during fiscal year 2023, compared to fiscal year 2022.
Salaries, wages and benefits The following table presents salaries, wages and benefits: Fiscal Year (in thousands) 2024 2023 $ Change % Change Retail and wholesale $ 201,441 $ 193,930 $ 7,511 3.9 % Corporate 129,582 172,259 (42,677) (24.8) % Total salaries, wages and benefits $ 331,023 $ 366,189 $ (35,166) (9.6) % Personnel costs for our retail and wholesale operations increased by $7.5 million, or 3.9%, during fiscal year 2024, compared to fiscal year 2023.
We define Adjusted net income per diluted share as Adjusted net income divided by diluted weighted average common shares outstanding.
Tax effect on adjustments as defined through fiscal year 2024 is calculated based on the overall effective tax rate for the respective years. We define Adjusted net income per diluted share as Adjusted net income divided by diluted weighted average common shares outstanding.
Segment profit for our other businesses increase by $17.2 million, primarily as a result of an increase in net sales. Non-GAAP Financial Measures The Company reports its financial results in accordance with GAAP.
The decrease in Canada Retail segment profit primarily reflects deleverage of expenses as a percentage of net sales on comparable store sales. 54 Table of Contents Non-GAAP Financial Measures The Company reports its financial results in accordance with GAAP.
On March 4, 2024, the Company redeemed $49.5 million aggregate principal amount of Senior Secured Notes, equal to 10% of the outstanding balance at December 30, 2023. In addition to paying accrued interest, the Company paid a premium of 3%, or $1.5 million, on the partial redemption.
Partial Redemption of Senior Secured Notes On February 6, 2025, the Company redeemed $44.5 million aggregate principal amount of Senior Secured Notes and paid accrued interest and a premium on the partial redemption.
We process inventory by receiving goods directly from our NPPs or through OSDs and GreenDrop, sorting them, and placing them on the sales floor . From 2019 to 2023, we have found that items sourced through OSDs have a cost per pound that is on average less than one-third that of delivered supply from our NPPs.
Pounds processed We define pounds processed as the total number of pounds of goods processed during the period, excluding furniture and other large items. We process inventory by receiving goods directly from our NPPs or through OSDs and GreenDrop, sorting them, and placing them on the sales floor .
Income tax expense The following table presents income tax expense: 68 Table of Contents Fiscal Year (in thousands) 2023 2022 $ Change % Change Income tax (benefit) expense $ (6,036) $ 39,578 $ (45,614) n/m ____________ n/m – not meaningful During fiscal year 2023, the Company recorded an income tax benefit of $6.0 million on income before income taxes of $47.1 million, resulting in an effective tax rate of (12.8)%.
During fiscal year 2023, the Company recorded an income tax benefit of $6.0 million on income before income taxes of $47.1 million, resulting in an effective tax rate of (12.8)%. The increase in our effective tax rate r esulted primarily from the internal legal entity restructuring that occurred during fiscal year 2023 as discussed in Note 15.
Gain (loss) on foreign currency, net The following table presents gai n (loss) on foreign currency, net: Fiscal Year (in thousands) 2023 2022 $ Change % Change Gain (loss) on foreign currency remeasurement $ 9,803 $ (29,955) $ 39,758 (132.7) % (Loss) gain on derivative instruments (3,143) 9,218 (12,361) (134.1) Total gain (loss) on foreign currency, net $ 6,660 $ (20,737) $ 27,397 (132.1) % Gains and losses on foreign currency relate primarily to movements in the Canadian dollar (“CAD”) relative to the U.S. dollar (“USD”).
This decrease was primarily due to the execution of the Third Amendment to our Senior Secured Credit Facilities on January 30, 2024, which lowered the total margin on existing borrowings under the Term Loan Facility by 151 basis points. 52 Table of Contents (Loss) gain on foreign currency, net The following table presents (loss) gain on foreign currency, net: Fiscal Year (in thousands) 2024 2023 $ Change % Change (Loss) gain on foreign currency remeasurement $ (27,342) $ 9,803 $ (37,145) n/m Gain (loss) on derivative instruments 13,048 (3,143) 16,191 n/m Total (loss) gain on foreign currency, net $ (14,294) $ 6,660 $ (20,954) n/m n/m - not meaningful Gains and losses on foreign currency relate primarily to movements in the Canadian dollar (“CAD”) relative to the U.S. dollar (“USD”).
Interest expense, net The following table presents interest expense, net: Fiscal Year (in thousands) 2023 2022 $ Change % Change Interest expense $ (93,559) $ (62,908) $ (30,651) 48.7 % Amortization of debt issuance costs and debt discount (6,051) (4,005) (2,046) 51.1 Realized and unrealized gain on interest rate swap 11,110 2,169 8,941 n/m Total interest expense, net $ (88,500) $ (64,744) $ (23,756) 36.7 % ____________ n/m – not meaningful Total interest expense, net increased in fiscal year 2023 by $23.8 million, or 36.7%, compared to fiscal year 2022.
Interest expense, net The following table presents interest expense, net: Fiscal Year (in thousands) 2024 2023 $ Change % Change Interest expense $ (67,810) $ (93,559) $ 25,749 (27.5) % Amortization of debt issuance costs and debt discount (5,611) (6,051) 440 (7.3) % Realized and unrealized gain on interest rate swaps 10,977 11,110 (133) (1.2) % Total interest expense, net $ (62,444) $ (88,500) $ 26,056 (29.4) % The decrease in interest expense, ne t was primarily due to a lower weighted average face value of debt and to a lesser extent, a decrease in the weighted average interest rate.
The $30.0 million loss on foreign currency remeasurement in fiscal year 2022 resulted primarily from the U.S. dollar strengthening against the Canadian dollar and was partially offset by gains of $9.2 million on derivative instruments that hedge movements in the Canadian dollar.
The $9.8 million gain on foreign currency remeasurement in fiscal year 2023 resulted primarily from USD weakening against CAD, partially offset by losses of $3.1 million on derivative instruments that we use to manage foreign currency exchange rate risk.
The increase resulted primarily from an increase in prices charged to our wholesale customers. 65 Table of Contents Cost of merchandise sold, exclusive of depreciation and amortization The following table presents cost of merchandise sold, exclusive of depreciation and amortization: Fiscal Year (in thousands) 2023 2022 $ Change % Change Cost of merchandise sold, exclusive of depreciation and amortization $ 619,671 $ 599,926 $ 19,745 3.3 % Cost of merchandise sold increased by $19.7 million, or 3.3%, during fiscal year 2023, compared to fiscal year 2022.
The increase in retail sales resulted prima rily from growth in our store base, partially offset by the unfavorable impact of foreign currency exchange rates. 50 Table of Contents Cost of merchandise sold, exclusive of depreciation and amortization The following table presents cost of merchandise sold, exclusive of depreciation and amortization (“cost of merchandise sold”): Fiscal Year (in thousands) 2024 2023 $ Change % Change Cost of merchandise sold, exclusive of depreciation and amortization $ 669,744 $ 619,671 $ 50,073 8.1 % Cost of merchandise sold increased 230 basis points to 43.6% of net sales during fiscal year 2024, compared to 41.3% during fiscal year 2023.
On a currency neutral and comparable store basis, our sales yield for fiscal year 2022 was $1.39, compared to $1.30 for fiscal year 2021. The 6.9% improvement in sales yield primarily reflects a shift in consumer purchasing toward items at higher price points.
Our sales yield for fiscal year 2024 was $1.46, compared to $1.48 for fiscal year 2023 . The 1.4% decline in sales yield primarily reflects a decrease in items sold per pound processed, partially offset by items sold at higher price points.
We purchase merchandise from our NPPs which provides them with revenue to support their community-focused missions. From 2019 to 2023, over 90% of our supply was locally sourced, delivering a broad and diverse selection to our customers and fostering a sense of community.
Our strategy is to locally source our merchandise by purchasing secondhand items donated to our NPPs, which provides them with revenue to support their community-focused missions. This also aids in creating a broad and diverse selection for our customers, fosters a sense of community, and reduces transportation costs and emissions typically associated with the production and distribution of new merchandise.
(10) Represents dividend-related bonuses and related taxes paid in conjunction with our February 2023 and December 2022 dividends. (11) Other adjustments include the effect of asset disposals. Fiscal year 2023 further includes legal and insurance settlement proceeds of $4.7 million.
(6) Represents severance costs associated with executive leadership changes and retention costs associated with the 2 Peaches acquisition. (7) Other adjustments include the effect of asset disposals. Fiscal year 2024 also includes an impairment charge on long-lived assets of $4.3 million. Fiscal year 2023 also includes legal and insurance settlement proceeds of $4.7 million.
Net cash used in financing activities was $40.2 million for fiscal year 2022, consisting primarily of $69.4 million in dividends and $11.0 million in principal payments on our long-term debt, partially offset by $42.0 million of net borrowings on our Revolving Credit Facility.
Net cash used in financing activities Net cash used in financing activities was $76.6 million for fiscal year 2024, consisting primarily of $55.5 million of principal payments on our long-term debt and $31.7 million of share repurchases under our $50.0 million share repurchase program, partially offset by net proceeds of $11.9 million related to settlement of an interest rate swap with an other-than-insignificant financing element at inception, including $9.6 million related to the April 2024 termination of the aforementioned interest rate swap.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs such, we routinely enter into currency forwards and maintain cross currency swap contracts to reduce our exposure to fluctuations in earnings and cash flows associated with changes in foreign exchange rates. Currency forwards are maintained on a rolling 12- month basis and our cross currency swaps mature on May 31, 2025.
Biggest changeAs such, we seek to manage the risk from changes in foreign currency exchange rates through the use of forward contracts or cross currency swaps or both. Forward contracts are maintained on a rolling 12-month basis and in June 2024 we considerably increased our portfolio of such instruments.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk In the normal course of business, we are exposed to various market risks. Our primary market risks are interest rate risk associated with variable rate debt and foreign currency exchange risk associated with our operations in Canada and Australia.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk In the normal course of business, we are exposed to various market risks. Our primary market risks are interest rate risk associated with our variable rate debt and foreign currency exchange risk associated with our operations in Canada and Australia.
We continually monitor these risks and regularly develop appropriate strategies to manage them. Accordingly, we manage our exposure to these risks through the use of derivative financial instruments with the objective of reducing potential income statement, cash flow, and market exposures from changes in interest rates and foreign exchange rates.
We continually monitor these risks, regularly consider which risks need active management and, when appropriate, develop targeted risk management strategies. We may manage our exposure to changes in interest rates and foreign exchange rates through the use of derivative financial instruments with the objective of reducing potential income statement, cash flow and market exposures.
Operations conducted entirely in each jurisdiction use that jurisdiction’s currency as their functional currency and changes in foreign exchange rates affect the translation of the results of these businesses into U.S. dollars, which is the reporting currency of the Company.
Foreign currency exchange risk In addition to our U.S. business, we operate in Canada and Australia. Operations conducted entirely in each jurisdiction use that jurisdiction’s currency as their functional currency and changes in foreign exchange rates affect the translation of the results of these businesses into USD, which is the reporting currency of the Company.
A hypothetical 10% change in the relative fair value of the U.S. dollar to the Australian dollar would not have a material impact on our operations. We will be susceptible to fluctuations in our local currency compared to foreign currency if we do not hedge the exchange rate exposure.
A hypothetical 10% change in the relative fair value of the USD to AUD would not have a material impact on our operations. We will be susceptible to fluctuations in USD compared to CAD and AUD if we do not hedge our exchange rate exposure.
A hypothetical 1.00% increase in Term SOFR would result in an increase to interest expense of $3.2 million over 12 months based on amounts outstanding and interest rates in effect as of December 30, 2023. To reduce our exposure to fluctuations in interest rates, we have entered into interest rate swaps.
A hypothetical 1 percentage point increase i n Term SOFR would result in an increase to interest expense of $3.2 million over 12 months based on amounts outstanding and interest rates in effect as of December 28, 2024. To reduce our exposure to fluctuations in interest rates, from time to time we enter into interest rate swaps.
Our variable rate debt uses Term SOFR as a reference rate and any future increases in Term SOFR will inherently result in an increase in interest expense and cash paid toward interest to the extent we are not fully hedged. 83 Table of Contents We performed a sensitivity analysis to determine the effect of interest rate fluctuations on our interest expense.
We currently use Term SOFR as a reference rate for our variabl e rate debt and any future increases in Term SOFR will inherently result in an increase in interest expense and cash paid toward interest. We performed a sensitivity analysis to determine the effect of interest rate fluctuations on our interest expense.
For the fiscal year 2023, approximately 45.5% of our net sales were denominated in a currency other than the U.S. dollar. For the fiscal year 2023, a hypothetical 10% strengthening of the U.S. dollar to the Canadian dollar would decrease our net sales by $63.9 million (and vice versa).
For the fiscal year 2024, approximately 43.3% of our net sales were denominated in a currency other than the USD. For the fiscal year 2024, a hypothetical 10% strengthening of the USD to the CAD would decrease our net sales by $62.0 million (and vice versa).
At December 30, 2023, the entire $321.8 million balance on our variable rate borrowings is USD-denominated and is owed by one of our Canadian subsidiaries whose functional currency is the Canadian dollar. These variable rate borrowings expose the Company to remeasurement risk.
Our cross currency swaps were scheduled to mature on May 31, 2025 but we terminated them in April 2024. At December 28, 2024, the entire $315.8 million balance on our variable rate borrowings is USD-denominated and is owed by one of our Canadian subsidiaries whose functional currency is CAD. These variable rate borrowings expose the Company to remeasurement risk.
We use derivative financial instruments solely to mitigate market exposure and not for trading or speculative purposes. Refer to “Note 10. Derivative Financial Instruments” for additional information. Interest rate risk Changes in interest rates affect the amount of interest due on our variable rate debt.
We use derivative financial instruments solely to mitigate market exposure and not for trading or speculative purposes. Refer to Note 10. Derivative Financial Instruments for additional information. 62 Table of Contents In April 2024, we terminated our interest rate swaps and cross currency swaps, realizing net proceeds of $38.4 million .
As of December 30, 2023, we had variable rate borrowings on the Term Loan Facility of $321.8 million, bu t no advances un der our Revolving Credit Facility.
Interest rate risk Changes in interest rates affect the amount of interest due on our variable rate debt. As of December 28, 2024, we had variable rate borrowings on the Term Loan Facility of $315.8 million an d no advances under our Revolving Credit Facility.
For the fiscal year 2023, a hypothetical 10% strengthening of the U.S. dollar to the Canadian dollar would decrease net income by $32.2 million (and vice versa). At December 31, 2022, the balance of variable rate borrowings that was USD-denominated and held by the same Canadian subsidiary was $592.5 million. 84 Table of Contents
At December 30, 2023, the balance of variable rate borrowings that was USD-denominated and held by the same Canadian subsidiary was $321.8 million . 63 Table of Contents
These interest rate swaps reduce our exposure to interest rate movements and effectively convert a portion of our floating-rate debt to a fixed-rate basis. Based on the notional amount of interest rate swaps in effect and the amounts borrowed as of December 30, 2023, our exposure to future interest rate movements will be reduced by 85.5%.
In the past we have used interest rate swaps to reduce our exposure to increases in interest rates and effectively convert a portion of our floating-rate debt to a fixed-rate basis. Our interest rate swaps were scheduled to mature on May 31, 2025 but we terminated them in April 2024.
Removed
Our interest rate swaps mature on May 31, 2025. Foreign currency exchange risk In addition to our U.S. business, we operate in Canada and Australia.
Added
In light of our historical and expected future deleveraging, the cross currency swaps no longer provided meaningful benefit to leverage and equity value at risk. The interest rate swaps were opportunistically terminated as the benefit of the swaps will diminish over time as we expect to continue to pay down debt.
Added
For the fiscal year 2024, a hypothetical 10% strengthening of USD to CAD would decrease net income by $28.7 million. For the fiscal year 2024, a hypothetical 10% weakening of USD to CAD would increase net income by $35.1 million.