Red Flag Update: 'Recession Resistant'... Really?
Quick update on Savers Value Village
Quick take…
When we added Savers Value Village ($SVV) to the Red Flag Alerts list a few days ago, we started with a yellow flag since the operator of secondhand thrift shops was days away from reporting fourth quarter results.
Now that the company has reported…
Based on the results this afternoon, we’re shifting the alert to a red flag... and not just because the company missed earnings and guided same-store sales to below expectations... or even that it suggested weaker-than-expected gross margins.
‘Uncertainty’
The clincher for us was this comment by CFO Jay Stasz, when discussing the company’s initial outlook for this year...
As Mark mentioned, there is some uncertainty in the overall environment and consumers continue to manage their discretionary spending. So we think some level of cautiousness in our initial guidance is prudent .
That’s not something you see from the same company that said this in its IPO filings last year...
In addition to being recession-resilient, growth in the secondhand market is accelerating due to a number of powerful secular trends.
Maybe it’s just us, but we tend to think that when consumers manage their discretionary spending because of economic uncertainty, recession-resistant companies should do better. In our view, this should be Savers time to shine.
A few more points…
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