Prepared remarks
Good afternoon, and welcome to Savers Value Village Conference Call to discuss Financial Results for the Fourth Quarter Ending December 28, 2024. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. Please note that this call is being recorded and a replay of this call and related materials will be available on the company's Investor Relations website. The comments made during this call and the Q&A that follows are copyrighted by the company and cannot be reproduced without written authorization from the company. Certain comments made during this call may constitute forward-looking statements, which are subject to significant risks and uncertainties that could cause the company's actual results to differ materially from expectations or historical performance. Please review the disclosure on forward-looking statements included in the company's earnings release and filings with the SEC for a discussion of these risks and uncertainties.
Please be advised that statements are current only as of the date of this call, and while the company may choose to update these statements in the future, it is under no obligation to do so unless required by applicable law or regulations. The company may also discuss certain non-GAAP financial measures. A reconciliation of each of these non-GAAP measures to the most directly comparable GAAP financial measure can be found in today's earnings release and SEC filings. Joining from management on today's call are Mark Walsh, Chief Executive Officer; Jubran Tanious, President and Chief Operating Officer; Michael Maher, Chief Financial Officer; and Ed Yruma, Vice President of Investor Relations and Treasury. Mr. Walsh, you may go ahead, sir.
Thank you, and good afternoon, everyone. We appreciate you joining us today. Let me start by giving you a few highlights on our fourth quarter performance and then talk about the things we are doing to drive the business forward. The overall trends we saw in the fourth quarter were within the range of our expectations, and we saw a healthy acceleration in trends across the U.S. and Canada. Our U.S. business remains solid and continues to generate positive comp sales growth, driven by an increase in both transactions and average basket. Our Canadian business saw sequential improvement over the last five months. In the fourth quarter, continued focus on sharp value, coupled with freshness, engendered a positive consumer reaction. That said, we have more work to do as the sales trends in Canada are not yet where we expect. We opened nine new stores in the quarter and delivered against our 2024 new store targets.
We are confident in our 25 to 30 new store opening plan for 2025. And as we called out at ICR, we believe that our targeted 20% store level adjusted EBITDA margins will drive long-term profitable growth. As a class, our new stores continue to perform well, which in 2025 will help drive sales growth, but will be a headwind to adjusted EBITDA. 2026 will be an important inflection point as we expect accelerating profit contribution from new stores. We also continue to see solid growth in our loyalty program with double-digit percent growth in active members over last year. Loyalty members accounted for 72% of our total sales in the quarter, up from 70% last year. Finally, the resilience of our business model allowed us to generate $74 million of adjusted EBITDA in the quarter or more than 18% of sales. Our sales performance strengthened in the fourth quarter in both the U.S. and Canada. We are especially pleased with double-digit total revenue growth in the U.S., driven by accelerating new store growth and strong comparable store sales.
The U.S. is our key growth market, and we continue to see significant white space opportunities. Our work on competitive pricing, looking across thrift, off-price, and discount retail reaffirms that we have a strong price value offering for consumers. Our competitive pricing tools give us actionable insights that are particularly important in a challenging macroeconomic environment. These processes and analytics allow us to better respond to rapidly shifting competitive dynamics in a localized way, which we think further enhances our agility. This is a great example of how innovation is a key part of our DNA. We continue to identify more opportunities to use data and technology to better serve our customers. As we noted in our third quarter call, we pulled back too far on production levels in Canada during the summer months. We are pleased the Canadian consumer has responded well to our rebalanced levels since then.
We believe that improved inventory levels and surgical price adjustments helped drive a 500 basis point sequential improvement in our Canadian comp. For 2025, the Canadian landscape is ever-changing. The Bank of Canada is reducing interest rates. Unemployment has ticked down slightly, and there was a small improvement in consumer sentiment. That said, the tariff issue certainly clouds the picture. We are staying focused on what we can control, planning conservatively and continuing to drive improvements in our processes, innovations, and making our business stronger with the same great value Canadians have come to love. Our goal is simple: to get our Canadian business back to positive comparable store sales growth. We are excited about our expanding store footprint that accelerated in the second half of 2024 with 18 new store openings. We've done a comprehensive analysis to understand our store opening and maturation economics and added capabilities to our real estate and other support teams.
This underpins our confidence in our 25 to 30 new store openings this year and our long-term growth opportunity. With a targeted 20% store level adjusted EBITDA margin, we think that our first and best use of capital is to continue to grow our store fleet. The sector is highly fragmented and emerging, particularly in the U.S. and we are underpenetrated in major regions such as the South and the West. I also recently visited our Australian business and came away even more optimistic on our long-term growth opportunity, and I'm excited that we will open four stores there in 2025. Another essential element to accelerating new store growth is the expansion of our off-site processing capabilities. Our network of central processing centers and off-site warehouse facilities enables us to open stores in locations that for various reasons can't support on-site processing. This has already proven to be a critical unlock for our new store growth plans with more than half of our new stores going forward expected to utilize some form of off-site processing.
We are seeing great collaboration between our central processing centers in an effort to share best operating practices, which will help continue to lower cost per unit. In addition, we continue to embrace innovation and are always exploring new technologies to make our business run more efficiently. A great example of our innovation is automated book processing. And after seeing strong financial returns, we have now rolled it out to support over 156 stores. In closing, let me thank our more than 22,000 team members for their work and dedication to the Savers family. We took a year with challenging macroeconomic conditions and built new capabilities and refined our operating model. We come out of 2024 as a better, more agile business. Our consumers react positively to our compelling assortment and great values, which make us highly confident in expanding our store footprint. We look forward to updating you on our progress throughout 2025.
I am more confident than ever in our long-term growth prospects and in our mission to make secondhand second nature. Now, I'll turn the call over to Michael to discuss our fourth quarter financial performance and the outlook for 2025.
Thank you, Mark, and good afternoon, everyone. As Mark indicated, the results of the fourth quarter were within our expectations. Total net sales increased 5% to $402 million. On a constant currency basis, net sales increased 6% and comparable store sales increased 1.6%. We are especially pleased with double-digit sales growth in the US, despite continued constraints on consumer spending power, which has had a disproportionate effect on lower-income consumers. While our Canada results continue to be pressured by macroeconomic challenges, we were able to drive a 500 basis point sequential improvement in comparable store sales. We also opened 9 new stores during the quarter, achieving our target of 22 organic new stores for the year. In the US, net sales increased 10.5% to $220 million and comparable store sales increased 4.7%, driven by growth in both transactions and average basket. In Canada, net sales declined 2.7%, reflecting a weaker Canadian dollar.
On a constant currency basis, Canadian net sales declined 0.2% to $155 million and comparable store sales declined 2.5%, primarily driven by a decrease in transactions. Cost of merchandise sold as a percentage of net sales increased 230 basis points to 44.3%, with the increase reflecting the impact of new stores and deleverage on lower Canadian comparable store sales. Salaries, wages, and benefits expense was $82 million. Excluding IPO-related stock-based compensation, salaries, wages, and benefits as a percentage of net sales increased 20 basis points to 18.3%. The increase was driven primarily by new store growth and higher wages and benefits. Selling, general, and administrative expenses as a percentage of net sales increased 230 basis points to 22.9%, primarily due to new stores and preopening expenses, partially offset by continued expense discipline. Depreciation and amortization increased 3% to $17 million, reflecting investments in new stores, centralized processing centers, and automated book processing systems.
Net interest expense decreased 14% to $15 million, primarily due to reduced debt and lower average interest rates. Other expense of $15 million reflects a net loss on foreign currency related to a weaker Canadian dollar. GAAP net loss for the quarter was $1.9 million or $0.01 per diluted share. Adjusted net income was $15.9 million or $0.10 per diluted share. Fourth quarter adjusted EBITDA was $74 million and adjusted EBITDA margin was 18.4%. US segment profit was $49.8 million, down $1.3 million versus the prior year period, primarily due to new stores and preopening expenses. Canada segment profit was $40.3 million, down $8.7 million versus the prior year period due primarily to comp store sales declines, new stores and preopening expenses. Turning now to capital allocation. We remain committed to a disciplined approach that funds our growth and strengthens our balance sheet. As our business continues to generate strong cash flow, we will continue to repay debt and be opportunistic in returning capital to shareholders.
Our balance sheet remains strong with $150 million in cash and cash equivalents and a net leverage ratio of 2.1x at the end of the quarter. This month, we redeemed $44.5 million of our senior secured notes or 10% of the outstanding balance. We repurchased approximately 1.1 million shares of our common stock during the quarter at an average price of $9.67 per share. As of the end of the fourth quarter, we had approximately $18 million remaining on our share repurchase authorization. Finally, I'd like to discuss our outlook for 2025, which we believe reflects continued momentum in the business while also acknowledging the near-term impact of the macroeconomic environment and new store openings. I'll start by providing some important context for our outlook. First, as we've previously discussed, we are at an inflection point in our long-term growth strategy. Between our 2024 and 2025 openings, we will have approximately 50 stores in their first year of operation in 2025.
On average, new stores generate approximately $3 million in sales in their first year and achieve profitability by their second year. We therefore, expect new stores to be a meaningful driver of revenue growth this year, but a net headwind of approximately $10 million to adjusted EBITDA. We expect an inflection in profitability by 2026 as these stores mature and drive both top and bottom-line growth. Second, we are taking a conservative approach to planning comparable store sales growth with continued steady growth in the US and a cautious approach in Canada. As Mark indicated, the Canadian economy has shown some signs of stabilization recently, but the potential for new tariffs creates additional uncertainty. On a related note, the Canadian dollar has weakened and is currently trading near a multi-decade low relative to the US dollar. Our outlook for 2025 is based on an estimated exchange rate of USD 0.70 per Canadian dollar, which negatively impacts our year-over-year comparisons for sales by approximately 1.7 percentage points and for adjusted EBITDA by approximately $6.5 million.
Also, as we announced last month, effective in 2025, we are changing the way we report certain non-GAAP financial measures, including comparable store sales, adjusted EBITDA, and adjusted net income to better reflect our accelerating growth and for improved consistency with peer companies. Please refer to today's earnings release for additional details on these changes and a recast of previous year amounts based on our new measurements for comparability. Finally, 2025 is a 53-week fiscal year. We estimate the 53rd week will add approximately 1.5% to total sales growth with no significant impact on net income, adjusted net income, or adjusted EBITDA. There is also no impact on comparable store sales growth, which will be reported on a like-for-like 52-week basis. With that context in mind, our full year outlook for 2025 includes the following: 25 to 30 new store openings, most of which will occur in the second half of the year; net sales of $1.61 billion to $1.65 billion; comparable store sales up 0.5% to 2.5% with the U.S. continuing to outperform Canada; net income of $36 million to $52 million; adjusted net income using our new definition of $62 million to $77 million, compared with $97 million in 2024 using the same definition.
Adjusted EBITDA using our new definition of $245 million to $265 million, compared with $273 million in 2024 using the same definition, and capital expenditures of $125 million to $150 million. Our outlook for net income assumes net interest expense of approximately $66 million and an effective tax rate of approximately 35%. For adjusted net income, we are assuming an effective tax rate of approximately 27%. We're projecting weighted average diluted shares outstanding to be approximately 168 million for the full year. This does not contemplate any potential future share repurchases. Finally, I'd like to briefly touch on our expectations for the first quarter. Q1 will be our smallest quarter of the year in terms of both revenue and adjusted EBITDA due to a number of factors. The first quarter is typically our smallest due to normal seasonal variations. In addition, we will have a temporary lull in new store openings with two new stores and one relocation during the quarter before the pace picks back up again in the second quarter.
Finally, since our 2024 new store openings were back half weighted, most of those stores are still early in their first year of operation and are therefore still generating operating losses in the first quarter. We expect most of them to begin achieving profitability by the end of this year. As a result of these factors, we expect total sales growth in the first quarter in the low single digits and a first-quarter adjusted EBITDA margin in the high single digits to low double digits. This concludes our prepared remarks. We would now like to open the call for questions.
Questions and answers
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Your first question is from Matthew Boss from JPMorgan. Please go ahead.
Great. Thanks and congrats on the progress. So Mark, maybe could you speak to the current health of your U.S. business, elaborate on drivers of the sequential improvement in Canada? And just maybe putting the pieces together, the support or your confidence in the pivot to same-store sales growth in 2025?
Thank you, Matt. I appreciate your positive feedback. As mentioned in our prepared remarks, our U.S. business has shown consistent strength throughout the year, with a notable acceleration in the fourth quarter. We have a strong and growing consumer base, particularly with our new loyalty membership, leading to increases in both transactions and customer segments. Canada has been more challenging, especially since August when the team adjusted production levels. This adjustment allowed for sequential improvement in our Canadian operations by the end of the fourth quarter. However, as we noted, this improvement hasn't yet reached our desired goals, so while it's a step in the right direction, we are not fully satisfied. Looking more closely at Canada, we saw some sequential improvement in the overall economy during the latter part of the year. Unemployment has slightly decreased, and the Bank of Canada has become more proactive in reducing interest rates, which is aiding consumer confidence, albeit to a small degree.
However, tariffs have introduced new uncertainties for our business. Regarding our core business, donations remain strong. The fourth quarter performance has translated positively into the first half of the current quarter of 2025, with a good start in January. February has been a bit more challenging due to weather impacts affecting our outlook. Our strategy is straightforward: we must maintain production levels that meet consumer demand and provide selection. This has been a key lesson for us. If Jubran has any thoughts to add, he would emphasize this point. Additionally, we need to stay focused on providing value through our pricing and continue engaging with our consumers by offering them added value throughout the year. We aim to control what we can and plan conservatively. With innovation and a commitment to attractive pricing, I believe we will be well-prepared to meet the needs of our Canadian customers with a great selection and value when the market improves.
Maybe, Michael, just to follow-up on that maybe could you, elaborate on the new store pipeline for 2025? If you could walk through the economics on some of the more recent builds and just speak to the timeline for the inflection to new store profitability?
As we discussed at ICR last month, new stores generally achieve around $3 million in sales on average in their first year. However, they typically operate at a loss during this period because they reach about 60% of their mature store volume, and the mix of on-site donations is lower. Profitability improves quickly, as stores usually become profitable by the second year and aim for approximately a 20% EBITDA margin by the fifth year. This means that as we increase new store openings, there will be a short-term challenge to profit margins, which we've estimated will be around $10 million in 2025. This challenge is particularly significant in 2025, as many of the 22 new stores we opened last year were back-loaded, and we are adding another 25 to 30 new stores this year. As these stores mature, they will become profitable by their second year and continue to increase profitability. It's important to note that there is typically a one-year lag between sales growth, which we are experiencing this year, and earnings growth, which we expect to see next year.
Regarding the timing, there will be a slight slowdown in Q1 with only two new store openings, but this is temporary. Q2 will return to a normal pace, and we expect to be well caught up by Q3 where we may exceed our pace. Additionally, opening new stores is still our best use of capital. There is considerable opportunity in the US market, and we anticipate that the majority of our new store growth will occur there in 2025 and more so in 2026. In contrast, our Canadian expansion will slow significantly after this year, focusing on strategic relocations and filling existing markets. Jubran and the operations real estate teams have effectively developed the capability to execute these targeted store openings, and we are also looking to expand our supply base with new opportunities. Overall, we are very optimistic about our new store initiative, the results, and the future opportunities ahead.
It’s great color. Best of luck.
Your next question is from Mark Altschwager from Baird. Please go ahead.
Good afternoon. Thank you for taking my question. I was just hoping to unpack the 2025 guide a little bit further. So you're guiding to a couple of hundred basis points of deleverage on EBITDA margin at the midpoint. I know you called out the $10 million specifically for the impact of new store kind of year one contribution. Can you unpack some of the other factors there that are driving that deleverage and maybe specifically how we should be thinking about gross margin through the year?
Yes, Mark, let me take a step back and clarify the connection from our 2024 EBITDA to our outlook for 2025. First, it's important to remember that we are updating our definition to include store pre-opening and other expenses starting in 2025, which we previously excluded. According to this new definition, our 2024 EBITDA was $273 million. There are two key factors in 2025 that will affect our EBITDA comparisons this year. The first factor is the new store investments, which will create a $10 million headwind. We are at a point where sales are on the rise, but earnings growth will take an additional year to catch up. The second factor is the weaker Canadian dollar, currently trading at around USD0.70, which is lower than the average exchange rate for 2024. This will add another $6.5 million headwind to our EBITDA in 2025 compared to 2024. So when you consider these two factors, they lead us from the 2024 figure of $273 million to approximately $255 million or $256 million, which is the midpoint of our 2025 guidance, reflecting a comparable sales increase of about 1.5%.
When we exclude these two specific items, our core comp EBITDA remains relatively flat with that 1.5% comp. If we consider the higher end of our guidance, where comp sales are 2.5%, then we would see an EBITDA increase of $10 million. This aligns with our long-term growth expectations, as we have discussed previously regarding low single-digit comparable sales growth. We anticipate EBITDA growth driven by these low single-digit comps. However, as we have noted for some time, 2025 is focused on investments in new stores, which will impact sales, with earnings growth expected to materialize in 2026. Additionally, we face the challenge of foreign currency translation.
That's very helpful. Thank you. And I was going to follow-up just on the kind of bigger picture algorithm beyond 2025. You just spoke to part of it kind of leverage on a comp kind of north of 1.5%. How should we think about the comp algo? I guess, as you start to realize the benefit from a large cohort of ramping stores, presumably that's going to be a building tailwind. So just maybe speak a little bit more to how you're thinking about the kind of the medium-term comp outlook.
Yes, that's correct, Mark. While we won't provide specific guidance for 2026, I want to emphasize our long-term financial model. We anticipate high-single-digit total revenue growth primarily driven by new stores, low-single-digit same-store sales, and we expect the U.S., as our growth market, to outperform Canada, which is more established for us. In the coming years, we believe this will support a high-teens EBITDA margin as our growth investments mature. We do face some near to medium-term challenges as we ramp up new store openings, which we expect to continue through 2025. However, by 2026, we'll have a significant number of newer stores contributing to our same-store sales. As we keep building our pipeline, it will not only support our new store growth but also enhance our same-store sales, as younger stores typically grow faster than more mature ones.
Okay. Great. Thank you for all the detail and best of luck.
Thank you.
Your next question is from Brooke Roach from Goldman Sachs. Please go ahead.
Good afternoon and thank you for taking our question. Mark, in the prepared remarks, you spoke to an increase in the proportion of sales from loyalty customers. Can you speak a little bit more about what you're seeing among your repeat customers and the changes in the customer cohorts that you're seeing as you expand the store base, but also given the macroeconomic pressures in the environment today?
Thank you, Brooke. That's a great question. I would say the trend for customer groups remains quite stable, particularly in Canada and the U.S., where we are seeing an increase in households earning over $100,000. However, we are noticing a decline in the lower income households. There is some trading down occurring in higher income groups as well. Unfortunately, the gains in higher incomes are offset by ongoing challenges facing lower income consumers in Canada. When we consider our comparable store performance, the primary concern in Canada is the weakness in trends among non-loyalty customers, and we are focusing a lot of our efforts there.
That's really helpful color. For Michael, I was hoping that you could help us understand the cadence of the EBITDA margin that you expect throughout the year. Understood that the first quarter is likely to see some healthy pressure as a result of the low-single-digit sales growth, but what drives that additional pressure in the first quarter? And how should we be thinking about the path to return to EBITDA margin growth?
Yes, that's a good question. Thanks, Brooke. First of all, Q1 is typically our lowest sales quarter of the year due to normal seasonality, and this year is no exception. We are also experiencing a temporary slowdown in new store openings, with only two this quarter, which means the contribution of new stores to total sales growth will be lower. Additionally, the weaker Canadian dollar is causing about a 1.7% drag on total sales growth for the year, and this impact is a bit higher in the first quarter, exceeding 2% in that period. As a result, we anticipate low single-digit total sales growth in Q1, which consists of low single-digit comparable store sales, the contribution from new stores, and the increased foreign exchange drag. Regarding the EBITDA margin, the decline is primarily due to lower sales affecting our cost leverage, leading to some deleverage in Q1. Additionally, the timing and dynamics of new stores are affecting this margin. The 2024 class of stores is significantly backloaded, meaning they are still in the early stages of their first year and generating operating losses. Therefore, we expect the EBITDA margin for the first quarter to be in the high-single digits to low-double digits, which is an outlier for us. We anticipate that the EBITDA margins in the remaining quarters will align more closely with our full-year expectations.
Thanks so much. I’ll pass it on.
Thank you.
Your next question is from Bob Drbul from Guggenheim. Please go ahead.
Good afternoon. I have a couple of questions. First, regarding Canada, you mentioned some of the drivers, but did you make any pricing adjustments to improve the trend? That's my first question. In the US, considering the weather impacts, especially in December and the first two months of this year, can you discuss whether you had the appropriate apparel in stores and how weather may have affected the business so far? Thanks.
Hey. Bob, thanks. So I'll start with the pricing tests, and then I'll pass it over to Jubran to talk about the trends we're seeing. Look, we have talked a lot and we've looked closely at price gaps between Savers Value Village and not just thrift, but also discount and off-price competitors. And all of that work reaffirms that we really have strong price gaps relative to that broader competitive set and that our $5 USD AUR provides great value. We did sharpen price on a small set of items. We were pleased with the results. But frankly, that was not a material impact to our fourth quarter improvement. So we will remain focused on looking at competitive pricing, respond dynamically when needed, both in geography and in category. But there's a really solid price value equation there for our consumer set in both countries.
Yes. Hey, Bob, this is Jubran. In terms of having the selection that's needed for a rough winter or what have you, we're pretty well covered on that. We back stock throughout the year. So in the warm weather months, we're back stocking cold weather items. And that's a very important metric that we measure at every store, at the store level, and we know exactly what we want to accumulate in the months leading up to the start of the winter season. That's very important because while we maintain the proper production levels for the demand that we're seeing, it allows us to be very opportunistic, if we want to have, say, more sweaters and ski jackets out there based on the weather that we're seeing. So we're in good shape in both countries on that. And I would tell you, as we sit here in February, we are approaching the end of the back stocking season for the warm weather months, and we feel very good about where we're at on that as well.
Thank you.
Your next question is from Michael Lasser from UBS. Please go ahead.
Good evening. Thank you so much for taking my question. Do you expect the Canadian business to comp positive in the first quarter? And if not, when would you expect that business to turn to positive comps? Thank you.
Yes, Michael, looking at our guidance for the year and considering that the US continues to outperform Canada, the downside scenario resembles 2024 with a low to mid-single-digit decline, while the upside case suggests some recovery and moderate growth. We're not specifically guiding for Q1, but I can say that our results so far are in line with our Q1 outlook, which indicates low single-digit total sales growth. As for our progress, Mark mentioned earlier that we saw continued momentum in January coming out of the fourth quarter, aided by favorable weather comparisons to last year, when January was challenging. This year, the weather pattern changed, and February has seen more severe conditions in both the US and Canada, complicating things a bit, which is typical for Q1. However, if you take a step back and review our results up to today, they align with our discussed outlook of low single-digit total revenue growth.
And Mike, just to clarify, in response to another question, you do expect positive comps in the first quarter. Is that right?
Yes.
Got you. And then as we think about 2026, does the arc of the impact to EBITDA from the new stores work symmetrically where you have a $10 million EBITDA drag from the new stores this year. Should you get all of that back and maybe even more in 2026 as they ramp up to full maturity and full profitability over the next few years?
Yes, I believe the situation is such that we have a significant number of stores opening in late 2024 and 2025. Specifically, there are about 50 stores between those two years that will be in their first year during part of 2025, which, as we've noted, typically results in slight unprofitability in their initial year. Additionally, we are factoring in pre-opening expenses now. This situation is beginning to stabilize. This year's openings are somewhat backloaded, but not as much as last year. By Q3, we largely caught up. Therefore, the impact on 2026 won't be nearly as severe as it was on 2025. Furthermore, many of those 50 stores will be in their second or even third year in 2026. We are now starting to build a pipeline of stores in their first five years, where both sales and profits tend to grow rapidly, offering us a substantial advantage that we have not had until now. As we enter the second year of this transition, we will begin to see benefits not only in our top line but also in our bottom line.
Hi all. On here for Randy Konik at Jefferies. Thank you for taking our question. Just following up on Canada here. Would you say that there is a trade-down benefit Savers should be capturing as a result of a more pressured Canadian consumer or difficult macro? Or I guess I just want to unpack the dynamics there and if you would expect to be more of a beneficiary going forward if pressures persist.
Thank you for the question. As we've discussed in previous calls, we have strong brand awareness in Canada, with over 90% integration into the retail landscape. Our pricing strategy is effective, and we've worked to address price gaps not only against our traditional competitors but also against discount and off-price retailers. We're concentrating on maintaining that effectiveness. We may be observing a shift as higher-income customers trade down, but the benefits from this trade-down are being countered by ongoing challenges faced by our lower-income customer segment, which is significant in Canada. A large portion of our customers is living at or below the poverty line, and these households are under tremendous financial strain. In the past year, they've lost about 10% of their purchasing power due to rising costs of fuel, housing, and food. As we noted last quarter, these customers are not trading down; they're essentially inactive.
From a data standpoint, we're encouraged by the shopper frequency and the low attrition rates across different customer segments, indicating that we're expanding our customer base. Our loyalty base in Canada has increased by double digits once again, demonstrating stability, although our lower-income segment remains sidelined. We believe we are effectively attracting new customers at the top of our sales funnel, while those at the bottom are currently not participating in shopping. Once conditions improve, we hope to engage both segments more fully.
Thank you for taking my question. So, you mentioned in Canada that you're planning to significantly slow down new store openings in 2026. How do you think about the long-term sort of store target in Canada?
Hey, Anthony, this is Jubran. I can answer and the guys can jump in. But no question, it's the US with all of the white space that we have that is our big growth opportunity. And so I think to answer your question about what does the long term look like in Canada. Look, I think that we're always going to be looking for opportunistic deals that we can do that put us in parts of a market where we know we'll be successful. But our saturation is pretty expansive in Canada. And so it really comes down to opportunistic deals, infill in markets, and strategic relocations those are things that we will always be looking at. But no question, the growth of new stores is going to be coming from the US, and we're pretty excited about that. I mean we are prospecting in virtually every major market, including in some white spaces that we had not in the past. I mean Mark talked about the Southern tier and the Southeast, and we're starting to prospect locations in those markets as well. So pretty exciting.
Got it. And then just as a quick follow-up. And you sort of mentioned a few sort of macroeconomic Canadian KPIs. You mentioned the Bank of Canada lowering interest rates, unemployment declining, consumer confidence picking up. Would you say those are like sort of the three main KPIs that we should be looking at or maybe tracking if we want to try to get a gauge at a very high level for what's going on in the Canadian consumer?
Yeah, Anthony, this is Michael. I mean we are certainly not economists and don't want to pretend to be experts in that regard. But I think, obviously, the state of the Canadian economy is material and relevant to our business there. I think in addition to those things, we obviously look at inflation. And particularly when you think about who our core consumer is, it's inflation in nondiscretionary categories, food, housing, transportation that really has put pressure on their discretionary spending over the last year or so. And so I think that was a major driver for the pressure in our Canadian business in 2024.
There are no further questions at this time. Please proceed with closing remarks.
Once again, I'd like to thank everyone for their continued interest in Savers Value Village, and we look forward to our next call at the end of the first quarter. Thanks again.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.