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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM 10-Q
____________________________
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 2024
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 001-41733
____________________________
Savers Value Village, Inc.
(Exact name of registrant as specified in its charter)
____________________________
Delaware
83-4165683
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
11400 S.E. 6th Street
Suite 125, Bellevue, WA
98004
(Address of Principal Executive Offices)(Zip Code)
____________________________
425-462-1515
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.000001 per share
SVV
The New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
1
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
x
Smaller reporting company
o
Emerging growth company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The registrant had outstanding 160,704,629 shares of common stock as of August 7, 2024.
Table of Contents
Page
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and are made in reliance on the safe harbor protections provided thereunder. Forward looking statements can be identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects” or the negative of these terms or other comparable terminology. In particular, statements about the markets in which we operate, including competition, growth and trends in our markets and industry; our strategies, outcomes and prospects; our expectations, beliefs, plans, objectives, assumptions; and future events or performance made in the sections titled “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Notes to Interim Condensed Consolidated Financial Statements (unaudited)” are forward-looking statements.
2
Forward-looking statements are based on our current expectations and assumptions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:
•the impact on both the supply and demand for our products caused by general economic conditions and changes in consumer confidence and spending;
•our ability to anticipate consumer demand and to source and process a sufficient quantity of quality secondhand items at attractive prices on a recurring basis;
•risks related to attracting new, and retaining existing customers, including by increasing acceptance of secondhand items among new and growing customer demographics;
•risks associated with our status as a “brick and mortar” only retailer and our lack of operations in the growing online retail marketplace;
•our failure to open new profitable stores or successfully enter new markets on a timely basis or at all;
•risks associated with doing business with international manufacturers and suppliers including, but not limited to, transportation and shipping challenges, regulatory risks in foreign jurisdictions (particularly in Canada, where we maintain extensive operations) and exchange rate risks, which we may not be able to fully hedge;
•the loss of, or disruption or interruption in the operations of, our centralized distribution centers;
•risks associated with litigation, the expense of defense, and the potential for adverse outcomes;
•our failure to properly hire and to retain key personnel and other qualified personnel or to manage labor costs;
•risks associated with the timely and effective deployment, protection, and defense of our computer networks and other electronic systems, including e-mail;
•changes in government regulations, procedures and requirements;
•our ability to maintain an effective system of internal controls and produce timely and accurate financial statements or comply with applicable regulations;
•risks associated with heightened geopolitical instability due to the conflicts in the Middle East and Eastern Europe;
•the outbreak of viruses or widespread illness, such as the recent COVID-19 pandemic, natural disasters or other highly disruptive events and regulatory responses thereto; and
•other factors set forth under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 8, 2024.
These risks are not exhaustive. Other sections of this Quarterly Report include additional factors that could adversely affect our business and financial performance.
Any forward-looking statement made by us in this Quarterly Report speaks only as of the date on which it is made, and while we believe that information forms a reasonable basis for such statements, that information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Moreover, factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We are not under any obligation (and we specifically disclaim any such obligation) to update or alter these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

3
Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited)
SAVERS VALUE VILLAGE, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(All amounts in thousands, except per share amounts, unaudited)
Thirteen Weeks EndedTwenty-Six Weeks Ended
June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Net sales$386,663 $379,102 $740,835 $724,786 
Operating expenses:
Cost of merchandise sold, exclusive of depreciation and amortization162,626 154,945 320,790 300,698 
Salaries, wages and benefits90,955 67,342 174,652 159,974 
Selling, general and administrative83,486 73,259 161,229 150,304 
Depreciation and amortization17,380 14,693 35,681 29,177 
Total operating expenses354,447 310,239 692,352 640,153 
Operating income32,216 68,863 48,483 84,633 
Other (expense) income:
Interest expense, net(15,767)(27,734)(31,843)(52,204)
(Loss) gain on foreign currency, net(940)4,487 (1,896)5,782 
Other income, net496 434 390 218 
Loss on extinguishment of debt— — (4,088)(6,011)
Other expense, net(16,211)(22,813)(37,437)(52,215)
Income before income taxes16,005 46,050 11,046 32,418 
Income tax expense6,293 11,000 1,801 7,563 
Net income9,712 35,050 9,245 24,855 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments(681)(1,682)(2,574)(1,948)
Cash flow hedges(2,515)2,039 (3,340)(1,608)
Other comprehensive (loss) income(3,196)357 (5,914)(3,556)
Comprehensive income$6,516 $35,407 $3,331 $21,299 
Net income per share, basic$0.06 $0.25 $0.06 $0.18 
Net income per share, diluted$0.06 $0.24 $0.06 $0.17 
Basic weighted average shares outstanding161,788 141,712 161,518141,705
Diluted weighted average shares outstanding168,010 146,174 168,020146,258
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
4
SAVERS VALUE VILLAGE, INC.
Condensed Consolidated Balance Sheets
(All amounts in thousands, except per share amounts, unaudited)
June 29, 2024December 30, 2023
Current assets:
Cash and cash equivalents$160,651 $179,955 
Trade receivables, net13,674 11,767 
Inventories37,549 32,820 
Prepaid expenses and other current assets38,325 25,691 
Derivative assets – current52 7,691 
Total current assets250,251 257,924 
Property and equipment, net251,719 229,405 
Right-of-use lease assets539,624 499,375 
Goodwill678,895 687,368 
Intangible assets, net165,045 166,681 
Other assets3,876 3,133 
Derivative assets – non-current— 23,519 
Total assets$1,889,410 $1,867,405 
Current liabilities:
Accounts payable and accrued liabilities$106,092 $92,550 
Accrued payroll and related taxes50,150 65,096 
Lease liabilities – current80,899 79,306 
Current portion of long-term debt6,000 4,500 
Total current liabilities243,141 241,452 
Long-term debt, net735,593 784,593 
Lease liabilities – non-current460,038 419,407 
Deferred tax liabilities, net7,314 27,909 
Other liabilities23,869 17,989 
Total liabilities1,469,955 1,491,350 
Commitments and contingencies (see Note 12)
Stockholders’ equity:
Preferred stock, $0.000001 par value, 100,000 shares authorized; zero shares issued and outstanding
— — 
Common stock, $0.000001 par value, 800,000 shares authorized; 161,702 and 160,453 shares issued and outstanding
— — 
Additional paid-in capital636,494 593,109 
Accumulated deficit(241,612)(247,541)
Accumulated other comprehensive income24,573 30,487 
Total stockholders’ equity419,455 376,055 
Total liabilities and stockholders’ equity$1,889,410 $1,867,405 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
5
SAVERS VALUE VILLAGE, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(All amounts in thousands, except per share amounts, unaudited)
Thirteen Weeks Ended
Common stockAdditional
paid in
capital		Accumulated
deficit		Accumulated
other
comprehensive
income		Total
SharesAmount
Balance at March 30, 2024161,728$— $615,196 $(248,008)$27,769 $394,957 
Stock-based compensation expense—— 21,650 — — 21,650 
Stock issued under stock incentive plans, net262— (352)— — (352)
Repurchase of common stock under share repurchase program(288)— — (3,316)— (3,316)
Comprehensive income (loss)—— — 9,712 (3,196)6,516 
Balance at June 29, 2024161,702$— $636,494 $(241,612)$24,573 $419,455 
Balance at April 1, 2023141,735$— $226,899 $(310,851)$35,538 $(48,414)
Stock-based compensation expense—— 940 — — 940 
Repurchase of common stock prior to IPO(32)— (504)— — (504)
Comprehensive income—— — 35,050 357 35,407 
Balance at July 1, 2023141,703$— $227,335 $(275,801)$35,895 $(12,571)
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
6

SAVERS VALUE VILLAGE, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(All amounts in thousands, except per share amounts, unaudited)
Twenty-Six Weeks Ended
Common stockAdditional
paid in
capital		Accumulated
deficit		Accumulated
other
comprehensive
income		Total
SharesAmount
Balance at December 30, 2023160,453$— $593,109 $(247,541)$30,487 $376,055 
Stock-based compensation expense—— 40,779 — — 40,779 
Stock issued under stock incentive plans, net1,537— 2,606 — — 2,606 
Repurchase of common stock under share repurchase program(288)— — (3,316)— (3,316)
Comprehensive income (loss)—— — 9,245 (5,914)3,331 
Balance at June 29, 2024161,702$— $636,494 $(241,612)$24,573 $419,455 
Balance at December 31, 2022141,590$— $226,327 $(38,443)$39,451 $227,335 
Stock-based compensation expense—— 1,857 — — 1,857 
Stock issued under stock incentive plan, net158— (150)— — (150)
Repurchase of common stock prior to IPO(45)— (699)— — (699)
Dividends declared, $1.32 per share
—— — (262,213)— (262,213)
Comprehensive income (loss)—— — 24,855 (3,556)21,299 
Balance at July 1, 2023141,703$— $227,335 $(275,801)$35,895 $(12,571)
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
7
SAVERS VALUE VILLAGE, INC.
Condensed Consolidated Statements of Cash Flows
(All amounts in thousands, unaudited)
Twenty-Six Weeks Ended
June 29, 2024July 1, 2023
Cash flows from operating activities:
Net income$9,245 $24,855 
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense40,779 1,857 
Amortization of debt issuance costs and debt discount2,755 3,223 
Depreciation and amortization35,681 29,177 
Operating lease expense63,593 58,275 
Deferred income taxes, net(20,631)5,290 
Loss on extinguishment of debt4,088 6,011 
Other items(3,931)(10,800)
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables(1,838)(596)
Inventories(4,315)(8,291)
Prepaid expenses and other current assets(12,270)(19,466)
Accounts payable and accrued liabilities14,197 24,727 
Accrued payroll and related taxes(14,658)(6,898)
Operating lease liabilities(59,981)(55,100)
Other liabilities1,852 1,526 
Net cash provided by operating activities54,566 53,790 
Cash flows from investing activities:
Purchases of property and equipment(53,284)(47,167)
Business acquisition, net of cash acquired(2,856)— 
Settlement of derivative instruments, net28,136 32 
Net cash used in investing activities(28,004)(47,135)
Cash flows from financing activities:
Proceeds from issuance of long-term debt, net— 529,247 
Principal payments on long-term debt(52,500)(237,525)
Payment of debt issuance costs(1,004)(4,359)
Prepayment premium on extinguishment of debt(1,485)— 
Advances on revolving line of credit— 42,000 
Repayments of revolving line of credit— (79,000)
Proceeds from stock option exercises3,139 — 
Dividends paid— (262,235)
Repurchase of common stock under share repurchase program(2,866)— 
Repurchase of shares and shares withheld for taxes(40)(849)
Settlement of derivative instrument, net11,925 3,889 
Principal payments on finance lease liabilities(705)— 
Net cash used in financing activities(43,536)(8,832)
Effect of exchange rate changes on cash and cash equivalents(2,330)1,610 
Net change in cash and cash equivalents(19,304)(567)
Cash and cash equivalents at beginning of period179,955 112,132 
Cash and cash equivalents at end of period$160,651 $111,565 
Supplemental disclosures of cash flow information:
Interest paid on debt$39,385 $33,874 
Income taxes paid, net$21,233 $9,257 
Supplemental disclosure of noncash investing activities:
Noncash capital expenditures$4,535 $3,331 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
8
SAVERS VALUE VILLAGE, INC.
Notes to Interim Condensed Consolidated Financial Statements (unaudited)
Note 1. Description of Business and Basis of Presentation
Description of business
Savers Value Village, Inc., a Washington State based company, together with its wholly owned subsidiaries (the “Company”, “we”, “us” or “our”), sells second-hand merchandise primarily in retail stores located in the United States (“U.S.”), Canada and Australia.
Basis of presentation
The accompanying interim condensed consolidated financial statements as of June 29, 2024 and for the thirteen and twenty-six weeks ended June 29, 2024 and July 1, 2023, have not been audited but, in the opinion of management, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the financial statements. The condensed consolidated balance sheet at December 30, 2023, has been derived from the audited financial statements at that date but does not include all of the disclosures required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the fiscal year ended December 30, 2023, and related notes included in the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 8, 2024. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year, which ends on the Saturday nearest to December 31.
All dollar and share amounts in the notes to these unaudited interim condensed consolidated financial statements, with the exception of per share amounts, are rounded to the nearest thousand unless otherwise indicated.
Note 2. Summary of Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies as described in the Company’s consolidated financial statements as of and for the fiscal year ended December 30, 2023.
Use of estimates
The preparation of these unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. These estimates are based on available information and on various other assumptions that are believed to be reasonable under the circumstances. Certain items subject to such estimates and assumptions include, but are not limited to, the valuation of insurance reserves, the valuation of intangibles, the valuation of goodwill, income taxes and stock-based compensation. Actual results could vary from those estimates under different assumptions or conditions.
Revenue recognition
The following table disaggregates our revenue by retail and wholesale during each of the periods presented:
Thirteen Weeks EndedTwenty-Six Weeks Ended
(in thousands)June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Retail sales$367,922 $360,421 $704,717 $687,849 
Wholesale sales18,741 18,681 36,118 36,937 
Total net sales$386,663 $379,102 $740,835 $724,786 
9
Recently issued accounting pronouncements not yet adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update require enhanced disclosures about significant expenses on an annual and interim basis for all public entities. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. This guidance is expected to impact the Company’s disclosures only with no impact to its results of operations, financial position or cash flows.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update require that public business entities on an annual basis disclose specific categories in the rate reconciliation table, provide additional information for reconciling items that meet a quantitative threshold and provide additional information about income taxes paid. The amendments in this update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. This guidance is expected to impact the Company’s disclosures only with no impact to its results of operations, financial position or cash flows.
Note 3. 2 Peaches Acquisition
On May 6, 2024, the Company acquired all of the equity of 2 Peaches Group, LLC (“2 Peaches”) for $5.4 million, which primarily comprised of cash consideration of $3.5 million, including a holdback of $0.5 million, and acquisition-related contingent consideration with an initial fair value of $1.9 million (the “2 Peaches Acquisition”). 2 Peaches is a thrift store chain with seven locations in the Atlanta, Georgia metropolitan area. The acquired stores are the Company’s first locations in the state of Georgia and will serve as a base for the Company’s entrance and expansion into the southeast region of the U.S.
The 2 Peaches Acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with Topic 805, Business Combinations, and the purchase price was allocated to the assets acquired and the liabilities assumed based on their fair value at the acquisition date. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill, which is deductible for income tax purposes. Under the acquisition method, the unaudited condensed consolidated financial statements of the Company include the operations of 2 Peaches from the acquisition date. Measurement period adjustments to preliminary fair values, with a corresponding offset to goodwill, are permitted up to one year from the acquisition date.
Goodwill arising from the acquisition amounted to less than $0.1 million. Goodwill was allocated to the U.S. Retail reporting unit. The preliminary fair value of assets acquired was $12.5 million, which primarily comprised $8.5 million for right-of-use assets, $2.9 million for a charity licensing agreement, $0.5 million for inventory, $0.4 million for property and equipment, and $0.1 million of cash. The charity licensing agreement will be amortized on a straight-line basis through the remaining useful life period which is expected to be through the end of fiscal 2024. The preliminary fair value of liabilities assumed was $7.1 million.
The acquisition-related contingent consideration arrangement with an initial fair value of $1.9 million requires us to make a future cash payment of up to $2.7 million upon achievement of specific revenue milestones; the associated liability is classified in other liabilities in the unaudited interim condensed consolidated balance sheets. See Note 5. Fair Value Measurements, for information related to the fair value of the contingent consideration.
We have not presented pro forma results of operations including 2 Peaches since their results of operations are not material to our consolidated financial results.
10
Note 4. Indebtedness
Debt consisted of the following:
(in thousands)June 29, 2024December 30, 2023
Senior Secured Notes$445,500 $495,000 
Term Loan Facility318,756 321,756 
Total face value of debt764,256 816,756 
Less: current portion of long-term debt6,000 4,500 
Less: unamortized debt issuance costs and debt discount22,663 27,663 
Long-term debt, net$735,593 $784,593 
On January 30, 2024, the Company entered into an amendment (the “Third Amendment”) to its Senior Secured Credit Facilities. Among other things, the Third Amendment (i) removed the SOFR adjustment margin, (ii) reduced the margin on existing borrowings under the Term Loan Facility from a range of 4.25% to 5.50% to a range of 2.75% to 4.00%, (iii) revised the leverage-based pricing grid applicable to borrowings under the Term Loan Facility such that, among other things, a lower leverage ratio than was previously required is needed to obtain a 0.25% reduction in margin, (iv) provided for a 0.25% reduction of the margin applicable to term loan borrowings if the Company achieves certain public corporate family ratings and (v) increased the limit on the customary incremental uncommitted revolving credit facility that does not require consent of the required lenders to the greater of (a) $102.0 million and (b) 50% of EBITDA for the prior four quarters. The Third Amendment resulted in a loss on extinguishment of debt of $0.7 million.
On February 9, 2024, the Company achieved the public corporate family ratings required for a 0.25% reduction of the margin applicable to its term loan borrowings.
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. This transaction resulted in a loss on extinguishment of debt of $3.4 million.
On June 27, 2024, the Company entered into another amendment to its Senior Secured Credit Facilities (the “Fourth Amendment”). Among other things, the Fourth Amendment (i) increased the maximum amount available under the Revolving Credit Facility by $50.0 million to $125.0 million, and (ii) extended the maturity date of the Revolving Credit Facility from April 26, 2026 to April 26, 2027.
As of June 29, 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.
Note 5. Fair Value Measurements
The Company utilizes fair value measurements for its financial assets and financial liabilities and fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is based upon a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
•Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
•Level 2 inputs are inputs other than unadjusted quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
•Level 3 inputs are unobservable inputs for the asset or liability.
The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement.
11
The following table presents financial assets and financial liabilities that are measured at fair value on a recurring basis at June 29, 2024:
Fair Value Hierarchy
(in thousands)Level 1Level 2Level 3Total
Assets:
Money market funds$69,000 $— $— $69,000 
Forward contracts— 52 — 52 
Total$69,000 $52 $— $69,052 
Liabilities:
Forward contracts$— $26 $— $26 
Acquisition-related contingent consideration— — 1,971 1,971 
Total$— $26 $1,971 $1,997 
The following table presents financial assets and financial liabilities that are measured at fair value on a recurring basis at December 30, 2023:
Fair Value Hierarchy
(in thousands)Level 1Level 2Level 3Total
Assets:
Money market funds$90,000 $— $— $90,000 
Interest rate swaps— 10,379 — 10,379 
Cross currency swaps— 20,831 — 20,831 
Total$90,000 $31,210 $— $121,210 
Liabilities:
Cross currency swaps$— $466 $— $466 
Forward contracts— 384 — 384 
Total$— $850 $— $850 
Money market funds consist of short-term deposits with an original maturity of three months or less. Interest rate swaps, cross currency swaps and forward contracts are fair valued using independent pricing services and the Company obtains an understanding of the methods used in pricing. As such, these derivative instruments are classified within Level 2.
The fair value of the Company’s Senior Secured Notes, based on Level 1 inputs, was $475.8 million and $525.5 million at June 29, 2024 and December 30, 2023, respectively. The fair value of borrowings under the Company’s Senior Secured Credit Facilities approximate their carrying value as the current rates approximate rates on similar debt and were based on rate notices provided by the Administrative Agent (Level 2 inputs) at June 29, 2024 and December 30, 2023.
The fair value of the acquisition-related contingent consideration liability is based on significant unobservable inputs, including management estimates and assumptions, and is measured based on the probability-weighted present value of the potential payment. Accordingly, the fair value of acquisition-related contingent consideration has been classified as Level 3 within the fair value hierarchy.
The following table provides quantitative information regarding Level 3 inputs used in the fair value measurement of the acquisition-related contingent consideration liability as of June 29, 2024:

Acquisition-related contingent consideration liabilities
Valuation Technique
Unobservable Input
Range
Potential payment
Probability-weighted present value
Probability of payment
0% - 100%
Discount rate
11% - 12%
Projected years of payments
2025 - 2027

12
The following table provides a reconciliation of the acquisition-related contingent consideration liability measured at fair value using Level 3 significant unobservable inputs:

(in thousands)
Balance at May 6, 2024(1)
$1,898 
Change in fair value recorded in selling, general and administrative expenses
73 
Balance at June 29, 2024
$1,971 
(1)May 6, 2024 reflects the acquisition date of 2 Peaches.

Note 6. Derivative Financial Instruments
As a result of its operating and financing activities, the Company is exposed to market risks from changes in foreign currency exchange rates and interest rates. These market risks may adversely affect the Company’s operating results, cash flows and financial position. The Company seeks to manage the risk from changes in foreign currency exchange rates through the use of forward contracts or cross currency swaps or both, and from time to time, may also use interest rate swaps to manage the risk of changes in interest rates. The Company’s forward contracts are not collateralized and are entered into with large, reputable financial institutions that are monitored for counterparty risk. Refer to Note 5 for information on the fair value of our derivative financial instruments.
Foreign currency contracts
The Company operates in foreign countries, which exposes it to market risk associated with foreign currency exchange rate fluctuations. The Company uses forward contracts to manage its exposure to fluctuations in the U.S. Dollar (“USD”) – Canadian Dollar (“CAD”) and may also use cross currency swaps for the same reason. Forward contracts lock in the exchange rate for a portion of the estimated cash flows of the Company’s Canadian operations. As of June 29, 2024 and December 30, 2023, the Company’s forward contracts had USD equivalent gross notional amounts of $146.3 million and $33.2 million, respectively. In April 2024, the Company terminated its cross currency swaps, resulting in net proceeds of $28.1 million. These cross currency swaps were not designated in hedging relationships. Cross currency swaps with notional amounts of $275.0 million were outstanding as of December 30, 2023.
Interest rate swap contracts
The Company’s market risk is affected by changes in interest rates. The Company’s Senior Secured Credit Facilities bear interest based on market rates plus an applicable margin. Because the interest rate on the Company’s floating-rate debt is tied to market rates, the Company may from time to time manage its exposure to interest rate movements by effectively converting a portion of its floating-rate debt to fixed-rate debt using interest rate swaps. Interest rate swaps involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount. The Company previously entered into two interest rate swaps that were designated as cash flow hedges. In April 2024, the Company terminated its interest rate swaps, resulting in net proceeds of $10.3 million. All amounts deferred into other comprehensive income prior to termination will be amortized to interest expense through May 2025, being the original maturity date of the interest rate swaps. Interest rate swaps with notional amounts of $275.0 million were outstanding at December 30, 2023.
13
The fair values of cross currency swap contracts, forward contracts and interest rate swap contracts were as follows:
(in thousands)Balance Sheet LocationJune 29, 2024December 30, 2023
Derivatives not designated as hedging instruments:
Forward contractsDerivative asset – current$52 $— 
Cross currency swapsDerivative asset – non-current— 20,831 
Total derivatives in an asset position$52 $20,831 
Forward contractsAccounts payable and accrued liabilities$26 $384 
Cross currency swapsAccounts payable and accrued liabilities— 466 
Total derivatives in a liability position$26 $850 
Derivatives designated as hedging instruments:
Interest rate swapsDerivative asset – current$— $7,691 
Interest rate swapsDerivative asset – non-current— 2,688 
Total derivatives in an asset position$— $10,379 
Total deferred gainAccumulated other comprehensive income$9,705 $13,045 
The impact of derivative financial instruments on the unaudited interim condensed consolidated statements of operations and comprehensive income was as follows:
Thirteen Weeks EndedTwenty-Six Weeks Ended
(in thousands)June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Gain (loss) on forward contracts recognized in (loss) gain on foreign currency, net$189 $(624)$460 $(689)
Gain (loss) on cross currency swaps recognized in (loss) gain on foreign currency, net$2,033 $(4,619)$7,647 $(3,930)
Gain on interest rate swaps recognized in interest expense, net$2,680 $2,729 $5,704 $5,123 
The table below presents the effect of cash flow hedge accounting on other comprehensive (loss) income, net of tax:
Thirteen Weeks EndedTwenty-Six Weeks Ended
(in thousands)June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Gain recognized in other comprehensive (loss) income$165 $4,768 $2,364 $3,515 
Gain reclassified from accumulated other comprehensive income into net income$2,680 $2,729 $5,704 $5,123 
Amounts reclassified from accumulated other comprehensive income into net income are recognized in interest expense, net. Within the next 12 months, the Company estimates that an additional $9.7 million of gains currently recognized within accumulated other comprehensive income will be reclassified as a decrease in interest expense, net.
14
Note 7. Segments
The Company has two reportable segments: U.S. Retail and Canada Retail. In addition to its two reportable segments, the Company has retail stores in Australia and wholesale operations, both of which are classified within Other.
The Company evaluates the performance of its segments based on Segment Profit, which it defines as operating income, exclusive of corporate overhead and allocations, asset impairments as applicable, and certain separately disclosed unusual or infrequent items. Segment Profit, as defined herein, may not be comparable to similarly titled measures used by other entities. These measures should not be considered as alternatives to our GAAP measures of Operating income, Net income, or cash flows from operating activities as an indicator of the Company’s performance or as a measure of its liquidity.
Our segment results were as follows:
Thirteen Weeks EndedTwenty-Six Weeks Ended
(in thousands)June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Net sales:
U.S. Retail$207,068 $196,500 $399,648 $380,521 
Canada Retail149,836 153,489 283,955 286,762 
Other29,759 29,113 57,232 57,503 
Total net sales$386,663 $379,102 $740,835 $724,786 
Segment profit:
U.S. Retail$51,855 $52,316 $93,646 $94,800 
Canada Retail43,968 50,516 79,498 84,484 
Other6,854 10,290 15,339 19,852 
Total segment profit102,677 113,122 188,483 199,136 
General corporate expenses53,081 29,566 104,319 85,326 
Depreciation and amortization17,380 14,693 35,681 29,177 
Operating income32,216 68,863 48,483 84,633 
Interest expense, net(15,767)(27,734)(31,843)(52,204)
(Loss) gain on foreign currency, net(940)4,487 (1,896)5,782 
Other income, net496 434 390 218 
Loss on extinguishment of debt— — (4,088)(6,011)
Income before income taxes16,005 46,050 11,046 32,418 
Income tax expense6,293 11,000 1,801 7,563 
Net income$9,712 $35,050 $9,245 $24,855 
15
Note 8. Net Income Per Share
Basic net income per share is computed by dividing net income by the weighted average number of shares outstanding during the period. Diluted net income per share is computed by giving effect to all potentially dilutive common equivalent shares outstanding for the period using the treasury stock method.
Basic and diluted net income per share were as follows:
Thirteen Weeks EndedTwenty-Six Weeks Ended
(in thousands, except per share data)June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Numerator
Net income$9,712 $35,050 $9,245 $24,855 
Denominator
Basic weighted average common shares outstanding161,788141,712161,518141,705
Dilutive effect of employee stock options and awards6,2224,4626,5024,553
Diluted weighted average common shares outstanding (1)
168,010146,174168,020146,258
Net income per share
Basic$0.06 $0.25 $0.06 $0.18 
Diluted$0.06 $0.24 $0.06 $0.17 
(1)For the thirteen and twenty-six weeks ended June 29, 2024, the calculation of diluted net income per share excludes the effect of 3.5 million and 2.4 million, respectively, of potential shares of common stock relating to awards of stock options and restricted stock units that, if exercised or vested, would have been antidilutive. For the thirteen and twenty-six weeks ended July 1, 2023, there were no stock awards that would have had an antidilutive impact on net income per share.
Note 9. Stock-based Compensation
Stock-based Compensation
Stock-based compensation expense for the twenty-six weeks ended June 29, 2024 and July 1, 2023 was $40.8 million and $1.9 million, respectively.
Time-based options
Stock option awards containing only a service condition (“time-based options”) generally vest in equal annual installments over a three-year or five-year period from the date of grant provided the participant continues to be employed by, or provide service to, the Company through each vesting date.
The following table summarizes activity related to time-based options:
(in thousands, except per share and remaining term amounts)Number of optionsWeighted average exercise price
per share		Weighted average remaining contractual term (in years)Aggregate intrinsic value
Outstanding at December 30, 20237,530 $5.99 6.93$85,774 
Granted520 19.18
Exercised(1,287)2.30
Outstanding at June 29, 20246,763 7.716.9138,459 
Exercisable at June 29, 20243,513 4.025.9729,759 
16
Performance-based options
Stock option awards containing a performance condition (“performance-based options”) vest in 25% increments as performance conditions are achieved through the term of the options. Twenty-five percent of the outstanding performance-based options vested upon completion of the Company's IPO, with the remainder scheduled to vest in equal increments over three years starting on June 30, 2024 provided market-specific conditions are achieved. The vesting of performance-based options is subject to continued employment through the vesting date.
Upon completion of our IPO on July 3, 2023, we commenced recognition of stock-based compensation for our performance-based options as the underlying performance-based condition was satisfied. During the twenty-six weeks ended June 29, 2024, we recognized $35.5 million of expense related to amortization of the remaining outstanding performance-based options that are recognized on a graded vesting basis over their expected vesting period.
The following table summarizes activity related to performance-based options:
(in thousands, except per share and remaining term amounts)Number of OptionsWeighted average exercise price
per share		Weighted average remaining contractual term (in years)Aggregate intrinsic value
Outstanding at December 30, 20237,948 $2.05 5.78$121,750 
Exercised(107)1.63 
Forfeited or expired(278)1.61 
Outstanding at June 29, 20247,563 2.09 5.5576,803 
Exercisable at June 29, 20241,880 2.09 5.5519,082 
Restricted stock units
Restricted stock units (“RSUs”) contain a service condition and generally vest in equal annual installments over a one-year or three-year period from the date of grant, provided the participant continues to be employed by, or provides service to, the Company through each vesting date.
The following table summarizes activity related to RSUs:
(in thousands, except per share amounts)Number of unitsWeighted average grant-date fair value
per share
Unvested at December 30, 2023547 $22.81 
Granted552 18.80 
Vested(186)22.67 
Forfeited(10)22.79 
Unvested at June 29, 2024903 20.39 
Note 10. Share Repurchases
During the thirteen and twenty-six weeks ended June 29, 2024, under our share repurchase program announced in November 2023, we repurchased 0.3 million shares at a total cost of approximately $3.3 million, of which $0.5 million was paid subsequent to June 29, 2024. As of June 29, 2024, the Company had $46.7 million remaining under the share repurchase program. The share repurchase program does not obligate us to purchase any minimum number of shares, and the program may be suspended, modified, or discontinued at any time without prior notice. The timing, actual number and value of any additional shares purchased will depend on a variety of factors, including, but not limited to, the market price of the Company’s common stock, general business and market conditions, other investment opportunities, and applicable and regulatory requirements.
We have elected to retire shares repurchased to date and record the excess of cost over par value as an increase in accumulated deficit.
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Note 11. Income Taxes
The income tax provision for interim periods is generally determined using an estimate of the Company’s annual effective tax rate adjusted for discrete items. Each quarter the estimate of the annual effective tax rate is updated, and if the Company’s estimated tax rate changes, a cumulative adjustment is made.
The effective tax rate for the thirteen weeks ended June 29, 2024 and July 1, 2023 was 39.3% and 23.9%, respectively. The effective tax rates differed from the federal statutory rate primarily due to tax credits and Internal Revenue Code Section 162(m) excess compensation.
The effective tax rate for the twenty-six weeks ended June 29, 2024 and July 1, 2023 was 16.3% and 23.3%, respectively. The effective tax rates differed from the federal statutory rate primarily due to tax credits and Internal Revenue Code Section 162(m) excess compensation.
In the normal course of business, the Company is required to make estimated tax payments throughout the year based on the expected tax liability for the full year. This results in a prepaid balance during the first half of the year, as the Company earns most of its profit in the second half of the year. As of June 29, 2024, the Company had a $17.1 million balance in prepaid income taxes, which is classified in prepaid expenses and other current assets in the unaudited interim condensed consolidated balance sheets.
The Organization for Economic Cooperation and Development (“OECD”) proposed model rules to ensure a minimal level of taxation (commonly referred to as Pillar II) and the European Union member states have agreed to implement Pillar II’s proposed global corporate minimum tax rate of 15%. Many countries are actively considering, have proposed or have enacted, changes to their tax laws based upon the Pillar II proposals, which could increase our tax obligations in countries where we do business or cause us to change the way we operate our business. To mitigate the administrative burden for multinational enterprises in complying with the OECD Global Anti-Base Erosion rules during the initial years of implementation, the OECD developed the temporary “Transitional Country-by-Country Safe Harbor.” We considered the applicable tax law changes from Pillar II implementation in the relevant countries in which we operate, and there is no material impact to our tax provision for the thirteen and twenty-six weeks ended June 29, 2024. We will continue to evaluate the impact of these tax law changes in future reporting periods.
Note 12. Commitments and Contingencies
Litigation and regulatory matters
The Company is involved from time to time in claims, proceedings and litigation arising in the ordinary course of business. The Company has made accruals with respect to these matters, where appropriate, which are reflected in the unaudited interim condensed consolidated financial statements. For some matters, the amount of liability is not probable or the amount cannot be reasonably estimated and therefore accruals have not been made. The Company may enter into discussions regarding settlement of these matters and may enter into settlement agreements, if in the best interest of the Company. From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of the financial condition and results of operations of Savers Value Village, Inc. in conjunction with the unaudited interim condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements for the year ended December 30, 2023 and related notes included in our Annual Report on Form 10-K filed with the SEC on March 8, 2024 (our “Annual Report”). Unless the context otherwise requires, all references in this section to “Savers Value Village”, ”the Company”, “we”, “us” or “our” refer to the business of Savers Value Village, Inc..
This discussion contains forward-looking statements that involve risks and uncertainties about our business and operations and reflect our plans, estimates and beliefs. Our actual results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A “Risk Factors” in our Annual Report or in other parts of this Quarterly Report.
Overview
We are the largest for-profit thrift operator in the United States (“U.S.”) and Canada and operate a total of 337 stores under the Savers®, Value Village®, Value Village Boutique™, Village des Valeurs™, Unique®, and 2nd Ave.® banners. 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”) either directly from them or via on-site donations (“OSDs”) at Community Donation Centers (“CDCs”) at our stores as well as through GreenDrop’s mobile donation stations. We then process, select, price, merchandise and sell these items in our stores. 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. 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. 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. As of June 29, 2024, we had 5.7 million total active members enrolled in our U.S. and Canadian loyalty programs each of whom have made a purchase within the last 12 months, compared to 5.1 million total active members as of July 1, 2023. Active members drove 71.5% of point-of-sale transaction value during the twelve months ended June 29, 2024, compared to 69.6% of point-of-sale transaction value during the twelve months ended July 1, 2023. Beginning in the third quarter of fiscal 2023, the Company updated its active loyalty member statistics to include all stores. Active loyalty member statistics for prior years reflect this update.
We have innovated and invested in the development of significant operational expertise in order to integrate the three highly-complex parts of thrift operations—supply and processing, retail, and sales to wholesale markets. Our business model enables us to provide value to our NPPs and our customers, while driving attractive profitability and cash flow.
While purchases made by our customers in our stores do not directly benefit any NPP, we pay our NPPs a contracted rate for all donations. Our subsidiaries are registered professional fundraisers where required.
We source our merchandise locally by purchasing secondhand items donated to our NPPs primarily through three distinct and strategic procurement models:
•OSDs: donations of items by individuals to our local NPPs made at CDCs located at our stores;
•GreenDrop locations: mobile donation stations placed in convenient, attractive and high-traffic locations that offer a fast and friendly experience to donors in the communities surrounding our stores; and
•delivered supply: items donated to and collected by our NPPs through a variety of methods, such as neighborhood collections and donation drives.
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We purchase merchandise from our NPPs which provides them with revenue to support their community-focused missions. From 2018 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 stores deliver a broad selection for our customers and at the same time reduce transportation costs and emissions typically associated with the production and distribution of new merchandise.
Our continued investment in our stores has both elevated and modernized the thrift shopping experience, transforming our stores into a thrift destination for all generations with increasing traffic from younger generations. To maximize traffic, we leverage data to drive merchandising decisions. For each store, we closely track what is being sold to inform how we optimize our merchandising mix, including by leveraging data analytics. We have also implemented self-checkout kiosks to significantly enhance store efficiency and shorten lines, thereby further improving the shopping experience.
We display approximately 50% of all textile items we receive on our retail sales floors, approximately 50% of which are sold to thrifters. 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. 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.
Business Highlights
The following highlights our financial results for the thirteen weeks ended June 29, 2024 (the “second quarter”):
•Net sales increased 2.0% to $386.7 million, with the U.S. up 5.4% and Canada down 2.4%. Constant currency net sales increased 2.8% to $389.7 million.
•Comparable store sales decreased 0.1%, with the U.S. increasing 2.1% and Canada decreasing 3.1%.
•During the second quarter, the Company opened four new stores and also added seven stores through the acquisition of 2 Peaches Group, LLC (“2 Peaches”), ending the second quarter with 337 stores.
•Net income and Adjusted net income were $9.7 million and $23.7 million, respectively. Net income per diluted share and Adjusted net income per diluted share were $0.06 and $0.14, respectively. Net income margin was 2.5%.
•Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $80.0 million and Adjusted EBITDA margin was 20.7%. Changes in foreign currency rates negatively impacted Adjusted EBITDA by $0.8 million during the second quarter.
Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin, as well as amounts presented on a constant currency basis, are not measures recognized under U.S. GAAP. For additional information on our use of non-GAAP financial measures and a reconciliation to the nearest GAAP measure, see “Non-GAAP Financial Measures” below.

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Recent Developments
2 Peaches Acquisition
On May 6, 2024, the Company acquired all of the equity of 2 Peaches for $5.4 million, which primarily comprised of cash consideration of $3.5 million, including a holdback of $0.5 million, and acquisition-related contingent consideration with an initial fair value of $1.9 million (the “2 Peaches Acquisition”). 2 Peaches is a thrift store chain with seven locations in the Atlanta, Georgia metropolitan area. The acquired stores are the Company’s first locations in the state of Georgia and will serve as a base for the Company’s entrance and expansion into the southeast region of the U.S. Goodwill arising from the acquisition amounted to less than $0.1 million.

Derivative Financial Instruments
In April 2024, we terminated our interest rate swaps and cross currency swaps realizing net proceeds of $38.4 million.
Revolver Upsizing
On June 27, 2024, the Company entered into a fourth amendment to its Senior Secured Credit Facilities that, among other things, increased the maximum amount available under the Revolving Credit Facility by $50.0 million to $125.0 million, and extended the maturity date of the Revolving Credit Facility from April 26, 2026 to April 26, 2027.
Share Repurchases
During the thirteen and twenty-six weeks ended June 29, 2024, under our share repurchase program announced in November 2023, we repurchased 0.3 million shares at a total cost of approximately $3.3 million, of which $0.5 million was paid subsequent to June 29, 2024. As of June 29, 2024, the Company had $46.7 million remaining under the share repurchase program.


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Key Performance Indicators
We use the key performance indicators below to evaluate the performance of our business, identify trends, formulate financial projections and make strategic decisions. We believe 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.
The following table summarizes our key performance indicators for the periods indicated:
Thirteen Weeks EndedTwenty-Six Weeks Ended
June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Comparable Store Sales (1)
United States2.1 %5.6 %2.2 %5.6 %
Canada(3.1)%5.5 %(2.9)%7.1 %
Total (2)
(0.1)%5.5 %0.1 %6.3 %
Number of Stores
United States165152165152
Canada159154159154
Total (2)
337318337318
Other Metrics
Pounds Processed (Ibs mm)
254246492485
Sales yield (3)
$1.46$1.49$1.44$1.44
Cost of merchandise sold per pound processed$0.64$0.63$0.65$0.62
(1)Comparable store sales is the percentage change in comparable store sales over the comparable period in the prior fiscal year. 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. In fiscal year 2024, comparable store sales excludes stores acquired in the 2 Peaches Acquisition. In fiscal year 2023, comparable store sales excludes stores acquired in the 2nd Ave. acquisition 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.
(2)Total comparable store sales and total number of stores include our Australia retail locations, in addition to retail stores in the U.S. and Canada.
(3)We define sales yield as retail sales generated per pound processed on a currency neutral and comparable store basis.
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. We believe investors can use this metric to assess our ability to increase comparable store sales over time.
During the thirteen weeks ended June 29, 2024, our comparable store sales declined 0.1%, primarily reflecting a decrease in transactions and average basket in our Canada Retail segment, largely offset by higher transactions and average basket in our U.S. Retail segment. During the thirteen weeks ended July 1, 2023, our comparable store sales increased 5.5%, primarily reflecting higher transactions.
During the twenty-six weeks ended June 29, 2024, our comparable store sales increased 0.1%, primarily reflecting higher average basket and transactions in our U.S. Retail segment, largely offset by a decrease in transactions and average basket in our Canada Retail segment. During the twenty-six weeks ended July 1, 2023, our comparable store sales increased 6.3%, primarily reflecting higher transactions.
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Number of stores
Our number of stores provides us visibility into the scale of our 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, especially in in high-growth markets.
Our number of stores increased to 337 stores as of June 29, 2024, from 318 stores as of July 1, 2023. The increase in stores resulted from the opening of six new stores in the U.S., five new stores in Canada and one new store in Australia, as well as the addition of seven stores through the 2 Peaches Acquisition.
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. 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. This metric is an indicator of the amount of secondhand goods processed during the period and is typically a key driver of top-line sales growth. We believe investors can use this metric to assist in their evaluation of our sales growth and sales yield.
During the thirteen weeks ended June 29, 2024, we processed 254 million pounds of supply, of which 78.3% was comprised of supply from OSDs and GreenDrop. During the thirteen weeks ended July 1, 2023, we processed 246 million pounds of supply, of which 76.4% was comprised of supply from OSDs and GreenDrop.
During the twenty-six weeks ended June 29, 2024, we processed 492 million pounds of supply, of which 75.2% was comprised of supply from OSDs and GreenDrop. During the twenty-six weeks ended July 1, 2023, we processed 485 million pounds of supply, of which 72.4% was comprised of supply from OSDs and GreenDrop.
Sales yield
We define sales yield as retail sales generated per pound processed on a currency neutral and comparable store basis. We believe investors can use this metric as an indicator of the quality of goods we source, because when the quality is high, we are able to sell more items and/or sell items at higher prices from the volume we process than we would otherwise.
On a currency neutral and comparable store sales basis, our sales yield for the thirteen weeks ended June 29, 2024 was $1.46, compared to $1.49 for the thirteen weeks ended July 1, 2023. The 2.0% decline in sales yield primarily reflects a decrease in items sold per pound processed in Canada.
On a currency neutral and comparable store sales basis, our sales yield for the twenty-six weeks ended June 29, 2024 was consistent with the twenty-six weeks ended July 1, 2023 at $1.44.
Cost of merchandise sold per pound processed
We define cost of merchandise sold per pound processed as cost of merchandise sold, exclusive of depreciation and amortization, on a reported basis, divided by total pounds of goods processed. We believe investors can use this metric to determine our ability to cost-effectively purchase and process supply items, and determine the value of incremental sales.
Cost of merchandise sold per pound processed during the thirteen weeks ended June 29, 2024 was $0.64, compared to $0.63 for the thirteen weeks ended July 1, 2023.
Cost of merchandise sold per pound processed during the twenty-six weeks ended June 29, 2024 was $0.65, compared to $0.62 for the twenty-six weeks ended July 1, 2023, primarily reflecting the impact of new stores and new offsite processing facilities, partially offset by improving efficiencies at existing offsite processing facilities.
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Results of Operations
The following table sets forth our results of operations for each of the periods presented:

Thirteen Weeks EndedTwenty-Six Weeks Ended
(in thousands)June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Net sales$386,663100.0%$379,102 100.0%$740,835100.0%$724,786 100.0%
Operating expenses:
Cost of merchandise sold, exclusive of depreciation and amortization162,62642.1154,945 40.9320,79043.3300,698 41.5
Salaries, wages and benefits90,95523.567,342 17.7174,65223.6159,974 22.1
Selling, general and administrative83,48621.673,259 19.3161,22921.8150,304 20.7
Depreciation and amortization17,3804.514,693 3.935,6814.829,177 4.0
Total operating expenses354,44791.7310,239 81.8692,35293.5640,153 88.3
Operating income32,2168.368,863 18.248,4836.584,633 11.7
Other (expense) income:
Interest expense, net(15,767)(4.1)(27,734)(7.3)(31,843)(4.3)(52,204)(7.2)
(Loss) gain on foreign currency, net(940)(0.2)4,487 1.1(1,896)(0.3)5,782 0.8
Other income, net4960.1434 0.13900.1218 —
Loss on extinguishment of debt——— —(4,088)(0.5)(6,011)(0.8)
Other expense, net(16,211)(4.2)(22,813)(6.1)(37,437)(5.0)(52,215)(7.2)
Income before income taxes16,005 4.146,050 12.111,0461.532,418 4.5
Income tax expense6,293 1.611,000 2.91,8010.37,563 1.1
Net income$9,7122.5%$35,050 9.2%$9,2451.2%$24,8553.4%
Thirteen Weeks Ended June 29, 2024 compared to the Thirteen Weeks Ended July 1, 2023
Net sales
The following table presents net sales:
Thirteen Weeks Ended
(in thousands)June 29, 2024July 1, 2023$ Change% Change
Retail sales$367,922 $360,421 $7,501 2.1 %
Wholesale sales18,741 18,681 60 0.3 
Total net sales$386,663 $379,102 $7,561 2.0 %
Retail net sales increased by $7.5 million, or 2.1%, during the thirteen weeks ended June 29, 2024, compared to the thirteen weeks ended July 1, 2023. The 2.1% increase in retail sales resulted primarily from the opening of 12 new stores year-over-year, partially offset by a 0.1% decrease in comparable store sales and the unfavorable impact of foreign currency during the thirteen weeks ended June 29, 2024.
Cost of merchandise sold, exclusive of depreciation and amortization
The following table presents cost of merchandise sold, exclusive of depreciation and amortization (“cost of merchandise sold”):
Thirteen Weeks Ended
(in thousands)June 29, 2024July 1, 2023$ Change% Change
Cost of merchandise sold, exclusive of depreciation and amortization$162,626 $154,945 $7,681 5.0 %
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Cost of merchandise sold increased by $7.7 million, or 5.0%, during the thirteen weeks ended June 29, 2024, compared to the thirteen weeks ended July 1, 2023.
Cost of merchandise sold increased 120 basis points to 42.1% of net sales during the thirteen weeks ended June 29, 2024. The 120 basis point increase in cost of merchandise sold primarily reflects the impact of new stores and new offsite processing facilities, as well as deleverage on lower sales in Canada, partially offset by improving efficiencies at existing offsite processing facilities.
Personnel costs classified within cost of merchandise sold were $96.7 million during the thirteen weeks ended June 29, 2024, compared to $94.2 million during the thirteen weeks ended July 1, 2023. As a percentage of net sales, personnel costs classified within cost of merchandise sold was 25.0% during the thirteen weeks ended June 29, 2024, compared to 24.8% during the thirteen weeks ended July 1, 2023.
Beginning in the second quarter of fiscal 2024, we have updated the way we define personnel costs classified within cost of merchandise sold that impacts the comparability of prior periods. Specifically, we have updated personnel costs classified within cost of merchandise sold to include offsite processing production labor due to the continued growth of offsite processing. Historically, these costs were included in other costs classified within cost of merchandise sold. Personnel costs classified within cost of merchandise sold for prior years reflects this updated definition. This update has no impact on total cost of merchandise sold for any period presented.
Salaries, wages and benefits
The following table presents salaries, wages and benefits expense:
Thirteen Weeks Ended
(in thousands)June 29, 2024July 1, 2023$ Change% Change
Retail and wholesale$50,737 $48,091 $2,646 5.5 %
Corporate40,218 19,251 20,967 108.9 
Total salaries, wages and benefits$90,955 $67,342 $23,613 35.1 %
Salaries, wages and benefits expense increased by $23.6 million, or 35.1%, during the thirteen weeks ended June 29, 2024, compared to the thirteen weeks ended July 1, 2023.
Personnel costs for our retail and wholesale operations increased by $2.6 million during the thirteen weeks ended June 29, 2024, compared to the thirteen weeks ended July 1, 2023. The increase primarily reflects growth in our store base year-over-year, as well as higher wage rates.
Personnel costs for our corporate employees increased by $21.0 million during the thirteen weeks ended June 29, 2024, compared to the thirteen weeks ended July 1, 2023. Adjusting for the $19.7 million of IPO-related stock-based compensation incurred during the thirteen weeks ended June 29, 2024, personnel costs for our corporate employees increased $1.2 million.
Selling, general and administrative
The following table presents selling, general and administrative expenses:
Thirteen Weeks Ended
(in thousands)June 29, 2024July 1, 2023$ Change% Change
Rent and utilities$49,298 $42,705 $6,593 15.4 %
Repairs and maintenance7,826 8,337 (511)(6.1)
Supplies4,035 4,051 (16)(0.4)
Professional service fees2,577 2,854 (277)(9.7)
Marketing2,561 2,873 (312)(10.9)
Other expenses17,189 12,439 4,750 38.2 
Total selling, general and administrative$83,486 $73,259 $10,227 14.0 %
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SG&A increased by $10.2 million, or 14.0%, during the thirteen weeks ended June 29, 2024, compared to the thirteen weeks ended July 1, 2023. The increase in SG&A resulted primarily from a $6.6 million increase in rent and utilities driven by growth in our store base and store preopening expenses, and a $4.8 million increase in other expenses which includes investments in information technology and an increase in general store expenses.
Depreciation and amortization
The following table presents depreciation and amortization expense:
Thirteen Weeks Ended
(in thousands)June 29, 2024July 1, 2023$ Change% Change
Depreciation and amortization$17,380 $14,693 $2,687 18.3 %
Depreciation and amortization during the thirteen weeks ended June 29, 2024 increased by $2.7 million, or 18.3%, compared to the thirteen weeks ended July 1, 2023. The increase in depreciation and amortization resulted primarily from investments in our store build-outs, CPCs and Automatic Book Processing systems (“ABPs”), as well as capital expenditures related to capital maintenance.
Interest expense, net
The following table presents interest expense, net:
Thirteen Weeks Ended
(in thousands)June 29, 2024July 1, 2023$ Change% Change
Interest expense, net$(17,093)$(28,706)$11,613 (40.5)%
Amortization of debt issuance cost and debt discount(1,354)(1,757)403 (22.9)
Gain on interest rate swaps2,680 2,729 (49)(1.8)
Total interest expense, net$(15,767)$(27,734)$11,967 (43.1)%
Total interest expense, net decreased $12.0 million, or 43.1%, during the thirteen weeks ended June 29, 2024, compared to the thirteen weeks ended July 1, 2023. This $12.0 million decrease resulted primarily from a $11.6 million decrease in interest expense, net, which 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 weighted average face value of debt decreased 32.2% from $1.13 billion during the thirteen weeks ended July 1, 2023 to $765.7 million during the thirteen weeks ended June 29, 2024 primarily due to the timing of debt issuance and debt repayments. Over the same period, the weighted average interest rate decreased 90 basis points from 10.36% to 9.46%. This decrease was primarily due to the execution of the Third Amendment to our Senior Secured Credit Facilities on January 30, 2024, which lowered the total margin on existing borrowings under the Term Loan Facility by 151 basis points.
(Loss) gain on foreign currency, net
The following table presents (loss) gain on foreign currency, net:
Thirteen Weeks Ended
(in thousands)June 29, 2024July 1, 2023$ Change% Change
(Loss) gain on foreign currency remeasurement$(3,162)$9,730 $(12,892)n/m
Gain (loss) on derivative instruments2,222 (5,243)7,465 n/m
Total (loss) gain on foreign currency, net$(940)$4,487 $(5,427)(120.9)%
____________
n/m – not meaningful
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Gains and losses on foreign currency relate primarily to movements in the Canadian Dollar (“CAD”) relative to the U.S. Dollar (“USD”). During the thirteen weeks ended June 29, 2024, USD strengthened against CAD resulting in remeasurement losses of $3.2 million arising primarily on USD-denominated debt held by one of our Canadian entities. These losses were largely offset by a $2.2 million gain on derivative instruments used to manage foreign currency exchange rate risk, substantially all of which arose on cross currency swaps prior to their termination in April 2024.
During the thirteen weeks ended July 1, 2023, the U.S. dollar weakened against the Canadian dollar resulting in remeasurement gains of $9.7 million arising primarily on USD-denominated debt held by one of our Canadian entities, which was only partially offset by $5.2 million in losses on derivative instruments used to manage foreign currency exchange rate risk.
Other income, net
The following table presents other income, net:
Thirteen Weeks Ended
(in thousands)June 29, 2024July 1, 2023$ Change% Change
Other income, net$496 $434 $62 14.3 %
We did not incur material amounts of miscellaneous income or expenses during either the thirteen weeks ended June 29, 2024 or the thirteen weeks ended July 1, 2023.
Income tax expense
The following table presents income tax expense:
Thirteen Weeks Ended
(in thousands)June 29, 2024July 1, 2023$ Change% Change
Income tax expense$6,293 $11,000 $(4,707)(42.8)%
During the thirteen weeks ended June 29, 2024, we recorded income tax expense of $6.3 million on income before income taxes of $16.0 million, resulting in an effective tax rate of 39.3%. For the thirteen weeks ended July 1, 2023, we recorded $11.0 million of income tax expense on income before income taxes of $46.1 million, resulting in an effective income tax rate of 23.9%.

We estimate an annual projected effective tax rate for the fiscal year to determine income tax expense or benefit in the interim periods. As such, the increase in our effective income tax rate during the thirteen weeks ended June 29, 2024 compared to the thirteen weeks ended July 1, 2023 resulted primarily from a change in annual forecasted income before income taxes and its related impact on the annual effective tax rate.
Segment results
The following table presents net sales and profit by segment:
Thirteen Weeks Ended
(in thousands)June 29, 2024July 1, 2023$ Change% Change
Net sales:
U.S. Retail$207,068 $196,500 $10,568 5.4 %
Canada Retail149,836 153,489 (3,653)(2.4)
Other29,759 29,113 646 2.2 
Total net sales$386,663 $379,102 $7,561 2.0 %
Segment Profit:
U.S. Retail$51,855 $52,316 $(461)(0.9)%
Canada Retail$43,968 $50,516 $(6,548)(13.0)%
Other$6,854 $10,290 $(3,436)(33.4)%
27
U.S. Retail
U.S. Retail net sales increased by $10.6 million, or 5.4%, during the thirteen weeks ended June 29, 2024, compared to the thirteen weeks ended July 1, 2023. The increase in U.S. Retail net sales resulted primarily from a 2.1% increase in comparable store sales and the opening of six new stores year-over year. The increase in comparable store sales was driven by higher transactions and average basket.
U.S. Retail segment profit decreased by $0.5 million, or 0.9%, during the thirteen weeks ended June 29, 2024, compared to the thirteen weeks ended July 1, 2023. The decrease in segment profit primarily reflects expenses related to new store growth, including preopening expenses, which were partially offset by an increase in net sales. Cost of merchandise sold as a percentage of net sales was consistent for the thirteen weeks ended June 29, 2024 compared to the thirteen weeks ended July 1, 2023, primarily reflecting improving efficiencies at existing offsite processing facilities, offset by the impact of new stores and new offsite processing facilities.
Canada Retail
Canada Retail net sales decreased by $3.7 million, or 2.4%, during the thirteen weeks ended June 29, 2024, compared to the thirteen weeks ended July 1, 2023. The decrease in Canada Retail net sales resulted primarily from a 3.1% decline in comparable store sales, partially offset by the opening of five new stores year-over-year and the unfavorable impact of foreign currency during the thirteen weeks ended June 29, 2024. The decline in comparable store sales was driven by a decrease in transactions and average basket, partially offset by an approximate 100 basis point favorable impact due to the shift of Canada Day out of the thirteen weeks ended June 29, 2024 and into the third quarter of fiscal 2024.
Canada Retail segment profit decreased by $6.5 million, or 13.0%, during the thirteen weeks ended June 29, 2024, compared to the thirteen weeks ended July 1, 2023. The decrease in segment profit primarily reflects a decline in net sales and an increase in cost of merchandise sold as a percentage of net sales driven by the impact of new stores and new offsite processing facilities, as well as deleverage on lower sales, partially offset by improving efficiencies at existing offsite processing facilities.
Other
Other includes our Australian retail stores and our wholesale operations. Net sales for our other business increased $0.6 million and segment profit decreased $3.4 million during the thirteen weeks ended June 29, 2024.
Twenty-Six Weeks Ended June 29, 2024 compared to the Twenty-Six Weeks Ended July 1, 2023
Net sales