Good afternoon, and welcome to Savers Value Village, Inc.'s conference call to discuss financial results for the first quarter ending 04/04/2026. At this time, 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, it is under no obligation to do so unless required by law or regulation. The company may also discuss certain non-GAAP financial measures. A reconciliation of each of the historical 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 Ruma, vice president of investor relations and treasury. Mark Walsh, you may go ahead, sir.

Thank you, and good afternoon, everyone. We appreciate you joining us today. We are pleased with our first quarter results as we once again delivered strong sales performance and continued our earnings inflection for the second consecutive quarter of year-over-year adjusted EBITDA growth. We increased segment profit in both of our major markets through a combination of continued strength in our U.S. comp store fleet, the ongoing maturation of our new stores, profit improvement initiatives, and tremendous operational discipline. We also made continued progress on our innovation agenda, which is already delivering benefits to our business. Let me start with a few highlights from the quarter. Sales in our U.S. business grew 11.2% with comps up 6.4% driven by both average basket and transactions. The secular trend towards thrift remains a powerful tailwind, and our maturing new store fleet is in the early stages of contributing to comp sales growth. In Canada, our sales trends were largely as expected with a 0.6% comp decrease during the quarter, reflecting a roughly 70 basis point headwind due to an early Easter. I am especially proud of our Canadian team's execution this quarter. Despite flat comps, we grew Canadian segment profit almost 24% as we tightly managed production levels and benefited from some significant and sustainable profit improvement initiatives. We opened three new stores during the quarter, all of which were in the U.S., and we continue to expect around 25 total new store openings this year. Our new store portfolio continues to perform in line with expectations, giving us confidence in our ability to drive profitable sales growth as these stores mature. Financially, we generated $44 million of adjusted EBITDA in the quarter, or 11% of sales. Finally, we are reaffirming our outlook for 2026, which Michael will address in more detail. Turning to our results by geography, in the U.S. we believe that we are still in the early innings of consumer thrift adoption. Our 6.4% comp, despite some unusually disruptive weather, was broad-based with strong growth across regions, categories, and income cohorts. We continue to see the strongest growth in our younger and more affluent consumer cohorts, which speaks to the power of our model and its ability to resonate with shoppers across demographics. We feel very good about our competitive positioning and value gaps as new clothing and footwear prices continue to face upward pressure. Additionally, on-site donation growth continues to be robust, which helps power our flywheel, enabling our compelling assortment. In short, the U.S. business is firing on all cylinders, and we are excited about our continued expansion in this market. In Canada, our 0.6% comp decrease was largely in line with our flattish comp expectation, with the Easter shift negatively impacting our comp by roughly 70 basis points. Macro conditions remain stable but sluggish, particularly in our key Southern Ontario market, including the Greater Toronto Area and Windsor, where we have roughly 35% of our Canadian store fleet. We do not expect a material change in the economic conditions in Canada in the near term, and we continue to plan our business around a roughly flat comp. Having said this, our first quarter results demonstrated our ability to drive meaningful profit improvement in Canada despite limited top-line growth. Canadian segment profit increased $6 million over last year, and profit margin expanded 310 basis points, which we attribute to our continued focus on productivity and tight management matching demand and production. We also have a number of tests and initiatives underway to drive meaningful improvements in sales yields and cost per unit in our off-site facilities. We are quickly sharing learnings and best practices across our central processing centers and expect incremental benefits in the coming quarters. Moving on to new stores, we opened three new store locations in the U.S. during the quarter and continue to be pleased with the results as they are performing in line with our expectations. As I indicated earlier, we are excited to continue growing our store fleet in the U.S. and believe we can expand at current rates for years to come. For 2026, we are planning to open around 25 new stores, over 20 of which will be in the United States across 11 states, with a nice mix of infill and new markets. An upcoming highlight this quarter is our first North Carolina store, as our Burlington location opens later this month. Repeating our theme, our new store growth remains the highest return and most important use of our capital, and we are excited to bring our value offering to more consumers. Shifting now to innovation, where our key priority areas are strengthening our price-value equation, driving efficiency and cost reduction, and expanding our data science and business insights. Last quarter, we announced the launch of ABP Lite, an asset-light extension of our automated book processing, or ABP, system. I am pleased to report that we have completed our rollout plans ahead of schedule, with the vast majority of the fleet now leveraging our ABP capability. We expect these stores will now reap the proven benefits of ABP. I think this is a great example of how we can deploy technology in a cost-effective and high-return way across our store portfolio. We also continue to significantly strengthen the foundation of our data science and business insights. The team has been working hard to transition to a more robust data state, structuring operating data that allows us to translate and communicate insights to drive field action, thus improving our ability to, one, react to changes in sales trends, two, improve productivity, three, support margin discipline, and finally, help us continually refine our value proposition for consumers. I would like to highlight the progress we are making through a strategic partnership with Microsoft. For several months Microsoft has had a team of forward-deployed engineers working closely with Savers Value Village, Inc. to embed AI agents directly into our operating model. Our first agentic AI capability monitors our loyalty program, empowering our field organization with insights to boost consumer engagement and drive productivity. Our loyalty program is a strategically important part of our business as it represents roughly 73% of our sales and is a key focus as we continue to grow our store fleet. This deployment also provides us an agentic template for an agile future rollout of AI capabilities and insights across our enterprise. We have already identified several other use cases for AI agents across our business and are either deploying or finalizing for implementation as part of our broader innovation road map. We look forward to sharing more updates on future calls. I would like to thank our nearly 24,000 team members for their efforts in driving a strong start to 2026 and helping us deliver our commitments to our customers, nonprofit partners, and shareholders. Our mission is to make secondhand second nature, and that continues to gain momentum. We are well positioned to build on this momentum and deliver continued success. I will now hand the call over to Michael to discuss our first quarter financial performance and the outlook for the remainder of 2026.

Thank you, Mark, and good afternoon, everyone. As Mark indicated, we had a solid first quarter. Total net sales increased 8.9% to $403 million. On a constant currency basis, net sales increased 6.9% and comparable store sales increased 3.5%. We are especially pleased with our sales results in the U.S., where net sales increased 11.2% to $234 million. Comparable store sales increased 6.4%, fueled by both average basket and transactions, with broad-based gains across categories, regions, and income cohorts. Given the breadth of our sales performance, and the fact that we have yet to see a material lift from our new store openings, we remain very confident in our ability to grow the U.S. business. We also saw continued stability in Canada, where net sales increased 6.7%. On a constant currency basis, Canadian net sales increased 2% to $131 million, and comparable store sales decreased 0.6%, reflecting an earlier Easter that negatively impacted comp by 70 basis points due to store closures on Good Friday. In the near term, we do not assume any material improvement in the Canadian economy and, as such, we will be planning our Canadian business conservatively. However, as Mark mentioned, we did successfully expand segment margins and grow profit contribution even without comp sales growth through strong execution, efficiency gains, and the continued maturation of our new stores. All things considered, we believe this quarter is a good model for how we will continue to grow segment profit contribution even with limited sales growth going forward. Cost of merchandise sold as a percentage of net sales decreased 10 basis points to 45.4% due to comp leverage, efficiency initiatives, as well as growth in on-site donations, partially offset by the impact of new store openings. Salaries, wages, and benefits expense was $86 million. Excluding IPO-related stock-based compensation, salaries, wages, and benefits as a percentage of net sales was roughly flat at 20.5%. Selling, general, and administrative expenses increased 13% to $98 million and, as a percentage of net sales, increased 80 basis points to 24.4%, primarily due to growth in our store base, increased routine maintenance costs—namely higher snow removal expenses—and increased occupancy costs. Depreciation and amortization increased 18% to $23 million, reflecting investments in new stores. Net interest expense decreased 15% to $13 million, primarily due to the impact of our debt refinancing last fall. GAAP net loss for the quarter was $5 million, or $0.03 per diluted share. Adjusted net income was $2 million, or $0.02 per diluted share. First quarter adjusted EBITDA was $44 million and adjusted EBITDA margin was 11%. U.S. segment profit was $43 million, an increase of $4 million, primarily due to increased profit from our comparable stores. Canada segment profit was $31 million, up $6 million due to disciplined management of production and expenses and the CPC productivity and efficiency initiatives Mark mentioned earlier. Our new stores continue to perform in line with our expectations and mature on schedule as their contribution ramps. However, as we mentioned last quarter, a more balanced store opening schedule this year means more front-loaded preopening expenses. While we expect preopening expenses for the year to be roughly flat with last year at approximately $14 million to $16 million, first quarter preopening expenses were approximately $1 million higher than last year. Our balance sheet remains strong with $62 million in cash and cash equivalents and a net leverage ratio of 2.5 times at the end of the quarter. We also repurchased 1.2 million shares at a weighted average price of $8.51. Our capital allocation strategy remains unchanged, as we continue to prioritize organically funding new store growth, repaying debt as we target a net leverage ratio under 2 times by the end of next year, and opportunistically repurchasing shares. I would like to now turn to our guidance and discuss our outlook for fiscal 2026, which remains unchanged from the previous full-year guidance we gave back in February. We continue to expect net sales of $1.76 billion to $1.79 billion, comparable store sales growth of 2.5% to 4%, net income of $66 million to $78 million, or $0.41 to $0.48 per diluted share, adjusted net income of $73 million to $85 million, or $0.45 to $0.53 per diluted share, adjusted EBITDA of $260 million to $275 million, capital expenditures of $125 million to $145 million, and approximately 25 new store openings. Our outlook for net income assumes net interest expense of approximately $50 million and an effective tax rate of approximately 28%. For adjusted net income, we are assuming an effective tax rate of approximately 27%. We are projecting weighted average diluted shares outstanding to be approximately 163 million for the full year. This does not contemplate any potential future share repurchases. Finally, I would like to briefly touch on our expectations for the second quarter. We expect total revenue growth to be 100 to 200 basis points lower than the first quarter due to the impact of foreign exchange rates. We expect constant currency total revenue and comp sales growth similar to the first quarter. We also expect Q2 adjusted EBITDA growth to be similar to Q1, with the cadence of earnings through the balance of the year to resemble 2025. We plan to open six new stores during the quarter in line with our goal of more ratably opening stores throughout the year. This concludes our prepared remarks. We will now open the call for questions.

Thank you. We will now begin the question-and-answer session. If you would like to withdraw your question, simply press 1 again. We will go to our first question from Matthew Boss at JPMorgan.

Great. Thanks, and congrats on a nice quarter. So Mark, can you elaborate on the step-up in comp trends that you are seeing in the U.S. business in particular? Two straight quarters of double-digit same-store sales on a two-year stack. Maybe if you can touch on new customer acquisition, secular thrift tailwinds, and just any puts and takes to consider with the second quarter comp trend maybe relative to the mid-single-digit full-year guide?

Yes. Thanks, Matt. Look, I think it starts with what we have seen is widespread growth across geographies and merchandise categories, and that obviously plays into a great experience—value and selection winning. On top of that, we are seeing accretive adoption trends amongst our younger and higher income households. We have seen that continue. So we are seeing trade down and trade in. I would also say that demand is really healthy across a broad base of all income demographics, and I think that is a key difference versus Canada. The secular trend certainly remains a tailwind, and what is really great is basket and transactions have driven comp. As we mentioned around the agentic initiative, the loyalty program is an important element in how we consider and drive growth, and we have continued to see really nice growth in our loyalty program in the U.S. And then, Matt, to your question about how we think about Q2, so far what we have seen in April in the U.S. is actually a little bit of acceleration in U.S. comps, but we do expect those comps to get a little tougher to lap as we progress through the year. So still thinking about a mid-single digit. In Canada, we really have not seen much change. It remains roughly flattish.

Sure. So new stores continue to perform in line with our expectations and consistent with the waterfall, as you described it, that we have laid out here over the last year or so. Just as a reminder for everyone, typically in year one we see about $3 million in top-line sales. We do lose money both from the preopening expenses that we incur as well as in the first year of operations as we are still ramping volume and developing and building that on-site donation foundation. Profitability typically passes breakeven in the second year and then continues to ramp as the sales improve. Ultimately, we target a year five top line of about $5 million and something close to a 20% margin. So far, our new store classes continue to perform in line with that waterfall. Thus far, Matt, we are still too early in that pipeline for those stores to be meaningfully contributing to our comp. Recall that we only started opening new stores at this pace in the last couple of years, and really only the 2024 classes at this point have entered the comp base. So it is less than 50 basis points in total benefit to the comp, but we expect that is going to continue to build as more of those stores enter the comp base going forward.

Let me supplement Michael's answer, Matt. It remains the highest and best use of our capital to open up these stores.

Helpful color. Best of luck.

Thank you.

We will move next to Brooke Roach at Goldman Sachs.

Good afternoon, and thank you for taking our question. I was hoping you could unpack the improvement in profitability that you are seeing in the Canadian business. How should we expect that to continue for the rest of the year? And then more broadly, can you help us understand what the quantitative impact that you see from your AI capability monitors and your agents is on profitability as you look on a multiyear basis?

Hi, Brooke. I can take the Canadian profitability question. The first thing I would say is it is driven by a few factors. It is not one thing. The first is some of our initiatives in CPC. Mark talked about those in his opening comments. Those continue to get better, more efficient, more effective through a variety of process improvements, and we have been very pleased with that and proud of the team. We are in the midst of expanding that to all of our off-site locations. The second thing, and we talked about this on past calls, is striking the right balance in total pounds processed—the amount of production level—and maintaining a good equilibrium so that we are feeding customers fresh product but also doing it in a very healthy gross margin way. We think the team did an excellent job at striking that equilibrium this past quarter. The third thing I would cite is ongoing refinement and improvement of our data and analytical tools. That is important because if you think about converting pounds into items, those improvements have helped us better align items that we supply to the customer at the category level, so it improves our ability to put the right thing at the right time in front of the customer, and that obviously benefits our sales yield. Lastly, I would cite the ongoing on-site donation growth, which we are seeing improve in a broad-based way. This past quarter, over three quarters of our supply came from on-site donation and GreenDrop mix—nice year-on-year improvement, and one that we expect to continue. So you put all that together, and yes, we absolutely expect those trends to continue through the balance of the year, and that is all contemplated in our guidance for Canada. On your question around AI and the agentic deployment, let me say that it is just one element of a much broader innovation approach that includes ABP Lite. It includes a number of process and efficiency improvements that we are driving in our off-site production centers and then applying data science and business insights to what is a data-rich business. From an AI-specific perspective, these efforts are primarily efficiency- and productivity-driven, and we will develop a better sense for how big of an impact it will be over time.

Brooke, just one closing thought on that. First, as Jubran stated, we are really pleased with what we are seeing in Canada. While we do not guide segment profit specifically, we do expect directionally that to continue, and we have contemplated that in the guidance for this year. Longer term, to your question about innovation, it gives us added confidence in that longer-term algorithm of getting back to that high-teens EBITDA margin as we continue to see the new stores mature, but also see the innovation initiatives really take root.

Great. Thanks so much. I will pass it on. Next, we will move to Randy Konik at Jefferies.

Thanks a lot. Michael, I just want to jump off of the last thing you said there in terms of segment profit, or geographic profit margins as we move higher. Can you give us some perspective on where we sit with those Canadian margins versus history in the U.S.? Are there things you are doing in Canada that you intend to apply to the U.S. business to kind of further those margins higher? Just give us some thoughts on some of these profit initiatives you are working on and where they are in that life cycle. How much higher can we go from here? And then, it looks like you managed payroll well in the quarter. You have had some deleverage in that item in the last four to six quarters. Is that something where now we are kind of turning the corner on that payroll side of things? Will we start to get some leverage going forward out into the balance of the year and into 2027 and beyond? How do you think about it?

Sure, Randy. Why do I not start, and then I will let Jubran jump in and provide a little color too. First of all, we have long seen that we have structurally higher contribution margins in Canada than the U.S. I actually think that gap probably widens in the short term in 2026 because we continue to invest in growth in the U.S., which, as we have said now for a while, does create a short-term headwind. Long term it is absolutely value accretive, but we know that there is some short-term margin pressure as a result of opening new stores. We are generating nice comp growth and seeing healthy gains from on-site donations and yield improvements in the U.S. as well, but you do have that headwind. Whereas in Canada, the focus really is on profit improvement and process optimization. We are not investing meaningfully in new store growth in Canada at this point. We are a mature business there—much more highly penetrated, obviously, than we are in the U.S.—and so that gives us a chance to really focus on the productivity and efficiency initiatives that Jubran described earlier and really see those flow through into the bottom line as you saw here in the first quarter and the improvement in our Canadian segment profitability. I do expect directionally that trend to continue this year. On the OpEx line—salaries, wages, and benefits—I think you are referring to that. We are continuing to step down the IPO-related stock comp in that line. We have one quarter left of that here in the second quarter. That is roughly $4 million in each of Q1 and Q2. That falls away completely in Q3 and beyond, so you will see that. Excluding those nonrecurring items, I think you will see normalization as we go forward. We do still have some pressure from new stores and those maturing and getting to scale, so that normalizes as we get past the one-time items. I would expect actually more of the improvement this year to come from gross margin rather than the operating expense lines, as we continue to see the new stores mature and the benefit of that and their related on-site donation ramp flowing through to the margin line.

It absolutely cuts across borders. When we think about production, productivity, and efficiency improvements, the team does a very good job of working collaboratively on discovery, leveraging best practices, and scaling that across all of our operations. Two examples we talked about earlier: off-sites—the improvements that we have made in off-sites are going to benefit all locations, not just in Canada. Data and analytics—the refinement I mentioned, where we have tools that are better than they have been in terms of putting the right thing at the right time in front of the customer—cuts across all segments. So the short answer is yes, we expect broad-based benefits from that.

Super helpful. Thanks, guys.

We will go to our next question from Michael Lasser at UBS.

How long can you continue to grow the profitability in Canada on a flat comp? At some point, do you start to experience deleverage if the same-store sales do not grow, and do you need to take action to reinvigorate the same-store sales growth in that market? My follow-up question is on the delta between your sales yield and what you are paying for donations. What are you seeing with respect to the sales yield? How much of the improvement in sales yield is being driven by like-for-like pricing? And on the payment for donation, are you experiencing any inflation as a result of the overall environment and some of the scrutiny that charities are under around the country?

Hey, Michael. I will grab the profitability question. I understand your question. Long term, I think there is merit to what you are saying, but we think there is still a tremendous amount of opportunity—certainly for the remainder of this year—on all the initiatives that we have to improve efficiency and effectiveness. The trends that we saw in Q1 we expect to continue for the remainder of this year. On your supply cost question, a reminder that our supply cost is governed by a set of contracts that we have with all of our great nonprofit partners across our three countries that are typically anywhere between one and three years. They are deliberately relatively short to medium term because we are always evaluating the market so that we can stay very competitive in terms of what we pay for delivered product or on-site donation, which we have reliably continued to grow across all segments. So the short answer is no, we are not experiencing any unexpected upward pressure on supply costs. That is all very predictable. It is contract-based, we can see it clearly, and we plan for it many months in advance. In terms of availability of supply, both for our comp stores and to feed new store growth, we have no concerns at all. The team continues to execute well. We see no ceiling on how high on-site donations can go—that is what we are seeing in the business.

And then, Michael, on the sales yield, we were really pleased with the roughly 6.5% increase in sales yield that we delivered in the first quarter. There is an element of higher ASP in that. We strive to keep that at or below inflation over time, and that is a normal recurring thing. What really drove that outsized growth this quarter were the things Jubran talked about earlier—being very careful about how we are managing production and lining that up to demand, especially in Canada, and the productivity initiatives in our off-site processing facilities, which are helping us to get the right item to the right location at the right time and, therefore, drive greater sales yields on those items as well.

Thank you very much, and good luck.

We will take our next question from Robert Drbul at BTIG.

Good afternoon. A couple of questions for you. On the first one, when you look at energy cost impact, can you talk about how you are being impacted throughout the business from that perspective? And then the second question I have is, can you expand a bit more on new store productivity? Are you seeing any variations? And as you take a more measured approach to this year—five in the first quarter, six in the second—the benefits to a more measured rollout from an execution perspective, what are you seeing there? Thanks.

Yeah, Bob. Let me take the energy cost question, and then I will let Jubran take the new store one. The run-up in fuel costs came fairly late in the quarter for us, so not really a material impact to our first quarter. At these levels, we think there is some modest pressure for the balance of the year—nothing that we think we cannot mitigate—but it is obviously a fast-evolving situation that we will continue to monitor.

New stores have been very pleasing, as Mark talked about in his opening comments. They are in line with our expectations. I think our ability to pick winners and refine our modeling of new stores has just gotten better and better over the years, and we are seeing that in performance. To your question of whether we are seeing any outliers, it has been pretty consistent. We feel very good about our ability to predict and execute all the things that have to go into making a new store open on time and be successful. In terms of our ability to prospect and find attractive new locations and fill up that pipeline, that has only gotten stronger. As we think about the remainder of this year and what we have committed to in 2027, we are right on track with where we hoped we would be.

Great. Thank you very much.

We will move next to Mark Altschwager at Baird.

Thank you. Good afternoon. I wanted to follow up on the price-value framework you have been building on here in the last few calls. With the U.S. comp now nicely in the mid-single digits and your competitive set continuing to take price, has anything in your testing changed your view on the AUR opportunity? Are you taking any incremental price tactically by category or by geography? And how are you thinking about further opportunity if that value gap widens? Is it more about loyalty growth with new customer acquisition on that trade down, or is there maybe some incremental AUR contribution to comp as we move forward? Thank you.

Great question. We are very focused on maintaining a super deliberate and very attractive price-value for our customer base in both the U.S. and Canada. We have a great dataset that informs our approach on where we are putting category pricing in a given geography—critical element. As we think about watching the item ratio or flow-through, that really informs us as to where there are certain opportunities in certain geographies and certain categories. So again, a very analytically, data-science-driven approach to how we are deploying pricing across our fleet in both countries. The differences are obviously the geographies and the sensitivities to price relative to how quickly those garments or those goods sell. We are monitoring our approach carefully, and in this environment we seem to be winning. We are really pleased with the throughput that we have gotten in both countries when it comes to our price-value relationship.

Thank you. And just a follow-up on the loyalty program, the loyalty file. Can you size up where that is today and how much it grew in Q1? Trying to get a better understanding of how much the U.S. strength is growth in that file versus deeper engagement with your existing base.

The file is growing quite nicely. We are a little north of 6 million total loyalty members across North America. We continue to see nice growth. I think the thing we are most pleased about is that the top loyalty cohort behavior really continues to outperform in both countries, and it represents roughly 73% to 74% of our sales. It is a great ability for us to connect with our consumers very cost efficiently at any given time.

Our next question comes from Peter Keith at Piper Sandler.

Nice quarter, guys. I know you sound like Q2 has continued the trend, but with the backdrop of higher gas prices, in the past you have spoken to a lower income element as a portion of your customer base. With the loyalty program, are you seeing anything of note as it relates to trade in versus trade down in this evolving economic backdrop? And to follow up on the prepared remarks about using AI and applying it to your loyalty program, can you unpack exactly what you are doing? It sounds like something that would enhance sales, but I would like to get a better understanding of what is happening.

I will take that. In both countries, we continue to see a really nice adoption trend amongst younger and higher income consumers. When you think about higher income consumers, trade in and trade down are certainly part of our growth mix in our loyalty platform. There are some differences between the countries. In the U.S., consistently, demand has remained healthy and broad-based across all income demographics. In Canada, where there is a little more economic sluggishness, we see our lower household income cohort disproportionately impacted. That is really the only difference we are seeing between the two countries and how they are engaging with us and through the loyalty program. On AI, our goal is to pick very important and critical strategic elements of our business model and what the stores do. The loyalty program is an important element of our consumer engagement platform. Having our store managers and store leadership continually focus on this very critical element was a great starting point for us to kick off our agentic strategy. What this agent is doing is communicating to our store managers where they are relative to their peer set from a loyalty perspective. It provides things to consider and actions to take relative to how you are engaging with the consumer at that moment when they could either sign up or be given the opportunity to get signed up. We see this as the unlock for several more agents to come right behind that, to allow us to keep our team and our store managers focused on critical issues throughout the week, period, and month, and then provide the information upward so that district managers, regional managers, Jubran, and the country leads can roll down appropriately to ensure that those key disciplines are being met and focused on throughout the year.

We will move to our next question from Jeremy Hamblin at Craig Hallum.

This is Will on for Jeremy. Thanks for taking my questions. First, I was just wondering if you are able to size the weather impact you saw in Q1, and then you noted the 70 basis point headwind from Easter. Should we be considering a similar magnitude of benefit to your Q2 from the late Easter last year? And then on the ABP Lite rollout, it sounds like it is ahead of pace. It may be too early, but is there any quantifiable benefit you have been able to realize thus far from the rollout?

It is Michael. I do not know if I would quantify a weather impact other than to say it really was more about how the quarter played out—very lumpy in terms of the comps, given the weather patterns this year versus last. February was our softest comp because we had some really extreme storms in both the U.S. and Canada this year. Some degree of extreme weather is just par for the course in Canada in particular. It was probably more extreme than normal in the U.S. and therefore arguably a little bit more disruptive to our U.S. comp, which nevertheless continued to be strong. We are focused on what we can control, and as we exit the quarter and see that normalize, we are pleased with the reacceleration in the U.S. comp. As far as the Easter impact, yes, that headwind of roughly 70 basis points to Q1 will flip and benefit us in Q2 by a similar amount.

On ABP Lite, it is a little early to cite the results, but we are very pleased with the rollout. Between our traditional automated book processing, ABP, and now its derivative ABP Lite, we have rolled it to roughly 85% of the fleet. Rollout has gone well. Reminder, books are only about 5% of our business, but ABP Lite is a great example of our innovative process—data intensive, stress tested—and a smart rollout plan that we feel good about. We will continue to monitor it in the coming months.

We will go next to Owen Rickert at Northland Capital Markets.

Hi. This is Keaton Chokey on for Owen. You have called out the strength in the younger and more affluent cohorts. I was curious to hear how their basket size, purchase frequency, and category mix have been trending versus legacy customers, and how you expect that to trend going forward. Any early read on Tennessee and North Carolina stores? Are those markets ramping faster or slower than prior cohorts, and what are you expecting out of those?

Thanks for the question. Pretty consistent—nothing out of the ordinary in terms of the trend lines we are seeing from that particular customer cohort. On Tennessee and North Carolina, we are excited about those markets. We have not yet opened those stores. Our first store in North Carolina will open later this month, and our first store in Tennessee will be several months beyond that—maybe end of this year or early next year. Nothing to report yet, but suffice to say, we are very energized by the white space opportunity and the quality of the sites that we have secured.

And we will go next to Dylan Carden at William Blair.

Thanks a lot. I am curious, is there any incremental or change in the competitive dynamic in Canada? I know that market tends to lag from an online migration standpoint, if that is a piece of it. To the extent that there is not, what is the line of sight you have on some of the improvement in that market? Or if it is more that if you are managing the business to a flat comp, that becomes more of a manifest destiny that you feel more comfortable with. And then on the AI/technology side of things, any incremental thinking on how you might use that from an inventory management standpoint—pricing, decisions on what to keep versus donate?

In terms of a longer-term expectation of growing the top line, we are not satisfied with a flat comp. We think there are a number of things that we can test and trial. What we know is that we can control what we can control now, which is efficient and effective use of our material and labor to put the right thing at the right time and in the right amount in front of the customer. Doing that well in a more sophisticated way allowed us to have the gross margin improvement that we saw in Q1. In terms of competitive landscape directly for us in Canada, nothing specific that we could point to that has materially changed. Not-for-profit is really our number one competitive set in the Canadian market. Being within 12 miles of 90% of the population, we are fairly saturated. We are highly competitive in every market in Canada, and we are not satisfied with our comp trend. We are doing a lot to try to improve those trends.

To put a bow on that, we continue to work to drive the business in all facets, including top line. In the near term, we are mindful of the macro environment, and we believe it is prudent to plan for a flattish comp for the balance of this year. We continue to believe that even with that backdrop, we can drive profit improvement on the order of what we saw in the first quarter.

On AI, we have a robust innovation pipeline for sure, and we have a lot of promising initiatives in test. We are pretty conservative about bringing them public. Once we get to a place where we are ready to deploy, we will be sharing those opportunities.

That concludes our Q&A session. I will now turn the conference back over to Mark Walsh for closing remarks.

I just want to thank everyone again for their interest in Savers Value Village, Inc. We look forward to talking to you in roughly three months.

This concludes today's conference call. Thank you for your participation. You may now disconnect.