Savers Value Village Fiscal Q2 2026 earnings: U.S. comps drive sales and margin expansion

Savers Value Village (NYSE: SVV) reported fiscal 2026 second-quarter net sales of $448.2 million, up 7.4% from $417.2 million, while diluted EPS rose to $0.14 from $0.12. U.S. comparable-store sales growth of 6.6% and new stores drove revenue, and operating margin expanded to 9.4% despite higher SG&A and depreciation. The results cover the 13 weeks ended July 4, 2026, and were released on August 6.

Core financial results

Revenue growth translated into faster growth in operating income and net income. Merchandise costs and labor declined as percentages of sales, more than offsetting the higher SG&A and depreciation burden.

Adjusted EBITDA reached $74.5 million, marking the third consecutive quarter of year-over-year growth, although the company did not provide the prior-year amount in the release. The figures below are for the fiscal second quarter and are in USD millions except per-share data.

*Gross profit and gross margin are calculated as net sales less cost of merchandise sold, which excludes depreciation and amortization in the company’s financial statements.

Business and geographic performance

The U.S. remained the principal growth driver, with both net sales and comparable-store sales materially ahead of Canada. Total comparable-store sales increased 4.4%, while new locations also contributed to reported revenue growth.

An earlier Easter contributed approximately 0.7 percentage points to Canadian comparable-store sales growth, leaving underlying growth of roughly 0.1% after removing that timing benefit. This highlights the degree to which the quarter’s comparable-store momentum depended on the U.S. business.

Savers Value Village opened six stores during the quarter and ended the period with 375 locations. Pre-opening expenses were $3.8 million, reflecting the near-term cost of expansion before new stores mature.

Merchandise and labor leverage outweighed higher overhead

Cost of merchandise sold declined to 43.1% of sales from 44.8%, while salaries, wages and benefits fell to 19.1% from 20.8%. Those improvements provided 340 basis points of combined operating leverage.

Part of that benefit was absorbed by SG&A, which increased to 22.7% of sales from 21.2%, and depreciation and amortization, which rose to 5.7% from 5.0%. Even so, operating margin expanded by 120 basis points because merchandise and labor leverage was larger than the increase in overhead.

Below operating income, net interest expense decreased to $13.0 million from $16.0 million. However, the foreign-currency gain was only $3.5 million, compared with $8.6 million a year earlier, resulting in total other expense rising to $10.8 million from $7.4 million.

ThriftIQ pilots improved gross-profit growth while rollout remains early

Savers Value Village introduced ThriftIQ, a proprietary pricing platform developed with Kaizen Analytix. The platform has been deployed in 58 stores and has priced more than 25 million items across 45,000 brands.

According to the company, pilot stores recorded better unit sell-through, larger baskets and stronger sales yields. Gross-profit dollar growth at those stores was approximately 100 basis points higher than at non-pilot locations, while grader training time declined by almost half. Management also linked the platform to faster profitability ramp-ups at new stores.

The deployment remains at an early stage relative to the company’s 375-store network. Savers Value Village plans to roll out ThriftIQ across its U.S. and Canadian locations through the first half of 2028, with the phased implementation incorporated into fiscal 2026 guidance.

Cash flow and balance sheet

Cash generation improved substantially during the first 26 weeks of fiscal 2026. Operating cash flow was $92.7 million, up from $54.9 million in the comparable prior-year period. After $57.8 million of property and equipment purchases, approximately $34.9 million remained, compared with roughly $1.7 million a year earlier on the same basis.

The cash-flow improvement was supported by a $9.4 million inflow from prepaid expenses and other assets, versus a $13.2 million outflow in the prior-year period. Inventory used $4.5 million of cash, less than the $7.7 million used a year earlier.

At quarter-end, the company had $91.9 million in cash and equivalents, $179.2 million available under its revolving credit facility and $726.3 million of total debt. A June term-loan repricing is expected to reduce interest expense by approximately $1.8 million during the remainder of fiscal 2026 and by $3.6 million annually.

The company also repurchased 1.2 million shares during the quarter at a weighted average price of $8.10. Its remaining repurchase authorization was $21.7 million at quarter-end.

Fiscal 2026 guidance

Management raised the lower end of its net sales, comparable-store sales, adjusted net income and adjusted EBITDA ranges following the first-half performance. The GAAP net income range was narrowed, with both its lower and upper bounds changing, while capital spending and planned store openings were unchanged.

Capital expenditure guidance remains $125 million to $145 million, and the company still plans to open approximately 25 stores. The outlook assumes an exchange rate of CAD 1 to USD 0.72.

Beyond fiscal 2026, management expects the maturation of new stores, ThriftIQ and other profit initiatives to support a return to a high-teens adjusted EBITDA margin within three years. Beginning in 2027, the company expects annual adjusted EBITDA margin expansion of 50 to 100 basis points.

Recent insider transactions

The provided six-month summary lists 391,913 shares purchased across 12 transactions and 90,000 shares sold across three transactions, resulting in net purchases of 301,913 shares. Recent detailed filings included sales and derivative-security exercises; these transactions do not, by themselves, establish insiders’ views of the company’s prospects.

Risks investors should monitor

• Canadian demand remains subdued. Canada’s comparable-store sales increased only 0.8%, including an approximately 0.7-point Easter benefit, creating a substantial gap versus U.S. growth.
• Overhead is growing faster than revenue. SG&A increased to 22.7% of sales and depreciation rose to 5.7%. Continued increases could offset merchandise and labor leverage.
• ThriftIQ’s pilot results may not fully scale. The platform has been used in 58 stores, and deployment across the broader U.S. and Canadian network will continue through the first half of 2028.
• Expansion requires upfront spending. The company recorded $3.8 million of quarterly pre-opening expenses and plans approximately 25 fiscal-year openings, making store ramp-up speed important to profitability.
• Debt remains significant relative to cash. Total debt of $726.3 million compares with $91.9 million of cash, leaving earnings and cash flow exposed to financing costs despite the recent loan repricing.

Summary

Savers Value Village’s fiscal second quarter combined U.S.-led comparable-store sales growth with better merchandise and labor efficiency, producing faster operating-income growth and a higher operating margin. Stronger first-half cash flow and higher lower bounds for several full-year guidance measures provide additional support, while Canadian demand, rising overhead, new-store execution and the broader rollout of ThriftIQ remain the main operating issues to monitor.