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Investment overview
I wrote about Savers Value Village (NYSE:SVV) previously with a hold rating, as the Canada segment remains a big drag and even though the long-term tailwind was still in place, I did not see a catalyst
Savers Value Village: Remain Cautious As Margins Could Take A Big Hit Again
Summary
- I maintain a hold rating for Savers Value Village due to ongoing margin pressures, inventory risks, and a stretched valuation despite positive SSS growth.
- 1Q25 earnings showed 4.5% sales growth, driven by 2.8% SSS growth, but margins deteriorated significantly due to expansion costs and rising operating expenses.
- Margins face further downside from aggressive store openings and elevated operating expenses, with inventory growth outpacing sales, posing additional risks.
- Despite strong US performance and tariff advantages, the valuation at 22.5x forward PE seems aggressive; investors should wait for sustained profitable growth.
I am an individual investor that is now fully focus on managing my own capital that I have saved up over the years. My investing background spreads across a wide spectrum as I believe there are merits to each approach, for instance: Fundamental investing [Bottoms-up etc.], Technical investing [historical charts analysis], and to some extend momentum investing [share price reaction post earnings etc.]. Over the years, I have used the positive aspects of each approach to hone my investing process. The reason to write on SeekingAlpha is to use this platform as a tracker for my investing ideas performance, and also to connect with like-minded investors that have the same investing interest.
Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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