Savers Value Village, Inc.

Previous wording

You should read the following discussion and analysis of the financial condition and results of operations of Savers Value Village, Inc. in conjunction with the unaudited interim condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements for the year ended December 30, 2023 and related notes included in our Annual Report on Form 10-K filed with the SEC on March 8, 2024 (our “Annual Report”). Unless the context otherwise requires, all references in this section to “Savers Value Village”, ”the Company”, “we”, “us” or “our” refer to the business of Savers Value Village, Inc..

Current wording

You should read the following discussion and analysis of the financial condition and results of operations of Savers Value Village, Inc. in conjunction with the unaudited interim condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q (the “Quarterly Report”) and our audited consolidated financial statements for the year ended December 28, 2024 and related notes included in our Annual Report on Form 10-K filed with the SEC on February 21, 2025 (our “Annual Report”).

Previous wording

We are the largest for-profit thrift operator in the United States (“U.S.”) and Canada and operate a total of 344 stores under the Savers®, Value Village®, Value Village Boutique™, Village des Valeurs™, Unique®, and 2nd Ave.® banners. We are committed to redefining secondhand shopping by providing one-of-a-kind, low-priced merchandise ranging from quality clothing to home goods in an exciting treasure-hunt shopping environment. We purchase secondhand textiles (e.g., clothing, bedding and bath items), shoes, accessories, housewares, books and other goods from our non-profit partners (“NPPs”) either directly from them or via on-site donations (“OSDs”) at Community Donation Centers (“CDCs”) at our stores as well as through GreenDrop’s mobile donation stations. We then process, select, price, merchandise and sell these items in our stores. Items that are not sold to our retail customers are marketed to wholesale customers, who reuse or repurpose the items they purchase from us. We believe our hyper-local and socially responsible procurement model, industry-leading and innovative operations, differentiated value proposition and deep relationships with our customers distinguish us from other secondhand and value-based retailers. Our business model is rooted in ESG principles, with a mission to positively impact our stakeholders: thrifters, NPPs and their donors, our team members and our stockholders. As a leader and pioneer of the for-profit thrift category, we seek to positively impact the environment by reducing waste and extending the life of reusable goods. The vast majority of the clothing and textiles we source are sold to our retail or wholesale customers.

Current wording

We are the largest for-profit thrift operator in the United States (“U.S.”) and Canada based on number of stores and operate a total of 353 stores under the Savers®, Value Village®, Value Village Boutique™, Village des Valeurs™, Unique® and 2nd Ave.® banners. We are committed to redefining secondhand shopping by providing one-of-a-kind, low-priced merchandise ranging from quality clothing to home goods in an exciting treasure-hunt shopping environment. We purchase secondhand textiles (e.g., clothing, bedding and bath items), shoes, accessories, housewares, books and other goods from our non-profit partners (“NPPs”). We then process, select, price, merchandise and sell these items in our stores. Items that are unsuited for or unsold at retail stores are marketed to wholesale customers who reuse or repurpose the items they purchase from us. We believe our hyper-local and socially responsible procurement model, industry-leading and innovative operations, differentiated value proposition and deep relationships with our customers distinguish us from other secondhand and value-based retailers. Our business model is rooted in sustainability and contributing to the communities we serve, with a mission to positively impact our stakeholders: thrifters, NPPs and their donors, our team members and our stockholders. As a leader and pioneer of the for-profit thrift category, we seek to positively impact the environment by reducing waste and extending the life of reusable goods. The vast majority of the clothing and textiles we source is sold to our retail or wholesale customers.

Previous wording

We offer a dynamic, ever-changing selection of items, with an average unit retail (“AUR”) price of approximately $5. Our most engaged customers are members of our Super Savers Club® loyalty program. As of September 28, 2024, we had 5.8 million total active members enrolled in our U.S. and Canadian loyalty programs each of whom have made a purchase within the last 12 months, compared to 5.2 million total active members as of September 30, 2023. Active members drove 71.9% of point-of-sale transaction value during the twelve months ended September 28, 2024, compared to 69.9% of point-of-sale transaction value during the twelve months ended September 30, 2023.

Current wording

We offer a dynamic, ever-changing selection of items, with an average unit retail price of approximately $5. Our most engaged customers are members of our Super Savers Club® loyalty program. As of March 29, 2025, we had approximately 6.0 million total active members enrolled in our U.S. and Canadian loyalty programs who have shopped with us within the last twelve months, compared to approximately 5.5 million total active members as of March 30, 2024. Active members drove 72.6% of retail sales during the twelve months ended March 29, 2025, compared to 70.9% during the twelve months ended March 30, 2024.

Previous wording

We purchase merchandise from our NPPs which provides them with revenue to support their community-focused missions. From 2018 to 2023, over 90% of our supply was locally sourced, delivering a broad and diverse selection to our customers and fostering a sense of community. Our stores deliver a broad selection for our customers and at the same time reduce transportation costs and emissions typically associated with the production and distribution of new merchandise.

Current wording

Our strategy is to locally source our merchandise by purchasing secondhand items donated to our NPPs, which provides them with revenue to support their community-focused missions. This also aids in creating a broad and diverse selection for our customers, fosters a sense of community, and reduces transportation costs and emissions typically associated with the production and distribution of new merchandise. While purchases made by our customers in our stores do not directly benefit any NPP, we pay a market-competitive contractual rate to purchase donated items.

Previous wording

We source our merchandise locally by purchasing secondhand items donated to our NPPs primarily through three distinct and strategic procurement models:

Current wording

We source our merchandise primarily through three distinct and strategic procurement models: (i) on-site donations (“OSDs”), (ii) GreenDrop locations and (iii) delivered supply. Increasing the proportion of OSDs and GreenDrop as a percentage of total supply is desirable as donations from these sources are usually of higher quality and collectively have a lower cost than product sourced through other channels. OSDs and GreenDrop are collectively the largest part of our supply mix, accounting for 74.0% of our total pounds processed for the thirteen weeks ended March 29, 2025, compared to 71.9% forthe thirteen weeks ended March 30, 2024.

Previous wording

•OSDs: donations of items by individuals to our local NPPs made at CDCs located at our stores;

Current wording

•OSDs: Donations of items by individuals to our NPPs, made at Community Donation Centers (“CDCs”) located at our stores. We operate as a registered professional fundraiser where required, accepting donations on behalf of our NPPs. Each store is specifically designated as an OSD location for a particular NPP, such that all donations received at the CDC are credited to that NPP.

Previous wording

•delivered supply: items donated to and collected by our NPPs through a variety of methods, such as neighborhood collections and donation drives.

Current wording

•Delivered supply: Delivered supply comprises donations delivered either to our CPCs or our stores, or both. These donations can be collected by our NPPs through a variety of methods such as neighborhood collections or donation drives, or we may solicit, collect and deliver the items on behalf of our NPPs.

Previous wording

We display approximately 50% of all textile items we receive on our retail sales floors, approximately 50% of which are sold to thrifters. In support of our efforts to extend the life of reusable goods and recover a portion of the cost of acquiring our supply of secondhand items, we sell the majority of textiles, shoes and books unsold at retail to our wholesale customers (predominantly comprised of textile graders and small business owners) who supply local communities across the globe with gently used, affordable items like clothing, housewares, toys and shoes. Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation, carpet padding), further reducing waste.

Current wording

In support of our efforts to extend the life of reusable goods and recover a portion of the cost of acquiring our supply of secondhand items, we sell the majority of textile items that are unsuited for or unsold at retail stores to our wholesale customers (predominantly comprised of textile graders and small business owners) who supply local communities across the globe with gently used, affordable items like clothing, housewares, toys and shoes. Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation, carpet padding), further reducing waste.

Previous wording

The following highlights our financial results for the thirteen weeks ended September 28, 2024 (the “third quarter”) (comparisons are to the thirteen weeks ended September 30, 2023):

Current wording

The following highlights our financial results for the thirteen weeks ended March 29, 2025 (the “first quarter”). Comparisons are to the thirteen weeks ended March 30, 2024:

Previous wording

•Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $82.0 million and Adjusted EBITDA margin was 20.8%. Changes in foreign currency rates negatively impacted Adjusted EBITDA by $0.8 million during the third quarter.

Current wording

•Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $42.8 million and Adjusted EBITDA margin was 11.6%. Changes in foreign currency exchange rates negatively impacted Adjusted EBITDA by $1.5 million during the first quarter.

Previous wording

•Total active members enrolled in our U.S. and Canadian loyalty programs increased 11.5% to 5.8 million.

Current wording

•Total active members enrolled in our U.S. and Canadian loyalty programs increased high-single digits to nearly 6.0 million.

Previous wording

The macroeconomic environment in Canada remains challenging, with elevated levels of unemployment and a high cost of living that is especially hard on low-income consumers. In periods of perceived or actual unfavorable economic conditions, consumers may reallocate their discretionary spending, which may adversely impact demand for the Company’ products and our profitability.

Current wording

There remains significant uncertainty in the current macroeconomic environment, driven by several factors, including global trade policies and tariffs. While we are not directly impacted by tariffs due to our hyper-local procurement model, in periods of perceived or actual unfavorable economic conditions, consumers may reallocate their discretionary spending, which may adversely impact demand for the Company’ products and our profitability.

Previous wording

During the thirteen and thirty-nine weeks ended September 28, 2024, under our share repurchase program announced in November 2023, we repurchased 1.8 million and 2.1 million shares, respectively, at a total cost of $17.6 million and $20.9 million, respectively. As of September 28, 2024, the Company had $29.1 million remaining under the share repurchase program.

Current wording

During the thirteen weeks ended March 29, 2025, under our $50.0 million share repurchase program announced in November 2023, we repurchased 1.4 million shares at a weighted average price of $8.43 per share at a cost of $11.8 million, excluding the impact of commissions and excise tax on share repurchases. As of March 29, 2025, we had $6.4 million remaining under the share repurchase program.

Previous wording

(1)Comparable store sales is the percentage change in comparable store sales over the comparable period in the prior fiscal year. We define comparable store sales to be sales by stores that have been in operation for all or a portion of two consecutive fiscal years, or, in other words, stores that are starting their third fiscal year of operation. In fiscal year 2024, comparable store sales excludes stores acquired in the 2 Peaches Acquisition. In fiscal year 2023, comparable store sales excludes stores acquired in the 2nd Ave. acquisition because those stores were not yet fully integrated during the prior year comparative period. Comparable store sales is measured in local currency for Canada, while total comparable store sales is measured on a constant currency basis.

Current wording

(1)Comparable store sales is the percentage change in comparable store sales over the comparable period in the prior fiscal year. Beginning in fiscal 2025, comparable store sales is defined as sales by stores that have been in operation for all or a portion of 14 months. The impact of the change is inconsequential to prior periods, so we have not recast previous year amounts to reflect this change. For the periods presented, comparable store sales exclude stores acquired from 2 Peaches Group, LLC (the “2 Peaches Acquisition”). Comparable store sales is measured in local currency for Canada, while total comparable store sales is measured on a currency neutral basis.

Previous wording

(2)Total comparable store sales and total number of stores include our Australia retail locations, in addition to retail stores in the U.S. and Canada.

Current wording

(2)Total comparable store sales and the total number of stores include our Australia retail locations, in addition to retail stores in the U.S. and Canada.

Previous wording

Comparable store sales provides us with visibility into top-line performance on a like-for-like basis excluding new stores opened in the current or previous reporting period and excluding all closed stores as of the end of the current reporting period. We believe investors can use this metric to assess our ability to increase comparable store sales over time.

Current wording

Comparable store sales provides us with visibility into top-line performance on a like-for-like basis excluding new stores as defined above and excluding all closed stores as of the end of the current reporting period. We believe investors can use this metric to assess our ability to increase comparable store sales over time.

Previous wording

During the thirteen weeks ended September 28, 2024, our comparable store sales declined 2.4%, primarily reflecting a decrease in transactions in our Canada Retail segment, partially offset by higher transactions and average basket in our U.S. Retail segment. During the thirteen weeks ended September 30, 2023, our comparable store sales increased 3.7%, primarily reflecting growth in transactions.

Current wording

During the thirteen weeks ended March 29, 2025, our comparable store sales increased 2.8%, primarily reflecting higher average basket. During the thirteen weeks ended March 30, 2024, our comparable store sales increased 0.3%, primarily reflecting an increase in average basket size and transactions in our U.S. Retail segment, partially offset by a decline in transactions in our Canada Retail segment.

Previous wording

Our number of stores provides us visibility into the scale of our operations and is viewed as a key driver of long-term growth. We believe investors can use this metric to assess our ability to open new stores, especially in in high-growth markets.

Current wording

Our number of stores provides us visibility into the scale of our operations and is viewed as a key driver of long-term growth. We believe investors can use this metric to assess our ability to open new stores in high-growth markets while reducing the number of stores in low-growth markets.

Previous wording

Our number of stores increased to 344 stores as of September 28, 2024, from 321 stores as of September 30, 2023. The increase in stores resulted from the opening of eight net new stores in the U.S., seven net new stores in Canada and one new store in Australia, as well as the addition of seven stores through the 2 Peaches Acquisition.

Current wording

Our number of stores increased to 353 stores as of March 29, 2025, from 326 stores as of March 30, 2024. The increase in stores resulted from the opening of 10 net new stores in the U.S., seven net new stores in Canada and three new stores in Australia, as well as the addition of seven stores through the 2 Peaches Acquisition.

Previous wording

We define pounds processed as the total number of pounds of goods processed during the period, excluding furniture and other large items. We process inventory by receiving goods directly from our NPPs or through OSDs and GreenDrop, sorting them, and placing them on the sales floor. From 2019 to 2023, we have found that items sourced through OSDs have a cost per pound that is on average less than one-third that of delivered supply from our NPPs. This metric is an indicator of the amount of secondhand goods processed during the period and is typically a key driver of top-line sales growth. We believe investors can use this metric to assist in their evaluation of our sales growth and sales yield.

Current wording

We define pounds processed as the total number of pounds of goods processed during the period, excluding furniture and other large items. This metric is an indicator of the amount of secondhand goods processed during the period and is typically a key driver of top-line sales growth. We process inventory by receiving goods directly from our NPPs or through OSDs and GreenDrop, sorting them, and placing them on the sales floor. Increasing the proportion of OSDs and GreenDrop as a percentage of total supply is desirable as donations from these sources are usually of higher quality and collectively have a lower cost than product sourced through other channels. We believe investors can use these metrics to assist in their evaluation of our sales growth and sales yield.

Previous wording

During the thirteen weeks ended September 28, 2024, we processed 261 million pounds of supply, of which 79.8% was comprised of supply from OSDs and GreenDrop. During the thirteen weeks ended September 30, 2023, we processed 249 million pounds of supply, of which 77.9% was comprised of supply from OSDs and GreenDrop.

Current wording

During the thirteen weeks ended March 29, 2025 and March 30, 2024, we processed 262 million and 238 million pounds of supply, respectively, of which 74.0% and 71.9% was comprised of supply from OSDs and GreenDrop, respectively.

Previous wording

Our sales yield for the thirteen weeks ended September 28, 2024 was $1.45, compared to $1.50 for the thirteen weeks ended September 30, 2023. The 3.3% decline in sales yield primarily reflects a decrease in items sold per pound processed in Canada and the U.S., partially offset by higher price points on items sold in the U.S.

Current wording

Our sales yield for the thirteen weeks ended March 29, 2025 was $1.38, compared to $1.41 for the thirteen weeks ended March 30, 2024. The 2.1% decline in sales yield primarily reflects a decrease in items sold per pound processed, partially offset by items sold at higher price points.

Previous wording

Retail net sales increased by $1.6 million, or 0.4%, during the thirteen weeks ended September 28, 2024, compared to the thirteen weeks ended September 30, 2023. The 0.4% increase in retail sales resulted from the opening of 16 net new stores year-over-year, offset by a 2.4% decrease in comparable store sales and the unfavorable impact of foreign currency.

Current wording

Retail sales increased by $14.0 million, or 4.1%, during the thirteen weeks ended March 29, 2025, compared to the thirteen weeks ended March 30, 2024. The increase in retail sales resulted primarily from growth in our store base and a 2.8% increase in comparable store sales, partially offset by the unfavorable impact of foreign currency exchange rates.

Previous wording

Personnel costs classified within cost of merchandise sold were $99.8 million during the thirteen weeks ended September 28, 2024, compared to $96.4 million during the thirteen weeks ended September 30, 2023. As a percentage of net sales, personnel costs classified within cost of merchandise sold was 25.3% during the thirteen weeks ended September 28, 2024, compared to 24.5% during the thirteen weeks ended September 30, 2023. The $3.4 million increase in personnel costs resulted primarily from 16 net new stores year-over-year, the opening of new offsite processing facilities and higher wages.

Current wording

Personnel costs classified within cost of merchandise sold were $105.5 million during the thirteen weeks ended March 29, 2025, compared to $95.7 million during the thirteen weeks ended March 30, 2024. The $9.8 million increase in personnel costs resulted primarily from growth in our store base and the opening of new offsite processing facilities.

Previous wording

The following table presents salaries, wages and benefits expense:

Current wording

The following table presents salaries, wages and benefits:

Previous wording

Personnel costs for our retail and wholesale operations increased by $3.7 million, or 2.6%, during the thirty-nine weeks ended September 28, 2024, compared to the thirty-nine weeks ended September 30, 2023. The increase primarily reflects growth in our store base year-over-year, as well as higher wages and benefits, partially offset by a reduction to annual incentive plan expense.

Current wording

Personnel costs for our retail and wholesale operations increased by$5.0 million, or 10.6%, during the thirteen weeks ended March 29, 2025, compared to the thirteen weeks ended March 30, 2024. The increase primarily reflects growth in our store base and an increase to annual incentive plan expense.

Previous wording

Personnel costs for our corporate employees decreased by $43.0 million during the thirteen weeks ended September 28, 2024, compared to the thirteen weeks ended September 30, 2023, primarily reflecting a $39.8 million decrease in IPO-related stock-based compensation expense. The remaining $3.2 million decrease primarily reflects a reduction to annual incentive plan expense, partially offset by higher non-IPO-related stock-based compensation expense and higher wages.

Current wording

Personnel costs for our corporate employees decreased by $3.9 million, or 10.9%, during the thirteen weeks ended March 29, 2025, compared to the thirteen weeks ended March 30, 2024, primarily reflecting a $9.1 million decrease in IPO-related stock-based compensation expense, partially offset by an increase to annual incentive plan expense and non-IPO-related stock-based compensation expense.

Previous wording

The following table presents selling, general and administrative expenses (“SG&A”):

Current wording

The following table presents selling, general and administrative (“SG&A”):

Previous wording

Personnel costs for our retail and wholesale operations increased by$1.1 million, or 2.3%, during the thirteen weeks ended September 28, 2024, compared to the thirteen weeks ended September 30, 2023.

Current wording

SG&A for our retail and wholesale operations increased by$11.6 million, or 18.0%, during the thirteen weeks ended March 29, 2025, compared to the thirteen weeks ended March 30, 2024. The increase resulted primarily from growth in our store base, rent and utilities, routine maintenance costs and pre-opening expenses.

Previous wording

The following table presents depreciation and amortization expense:

Current wording

The following table presents depreciation and amortization:

Previous wording

Total interest expense, net decreased $3.2 million, or 17.3%, during the thirteen weeks ended September 28, 2024, compared to the thirteen weeks ended September 30, 2023. This $3.2 million decrease resulted primarily from a $3.6 million decrease in interest expense, net, which was primarily due to a lower weighted average face value of debt and a decrease in the weighted average interest rate. The weighted average face value of debt decreased 7.8% from $828.7 million during the thirteen weeks ended September 30, 2023 to $764.2 million during the thirteen weeks ended September 28, 2024 due to debt repayments. Over the same period, the weighted average interest rate decreased 69 basis points from 10.16% to 9.47%. This decrease was primarily due to the execution of the Third Amendment to our Senior Secured Credit Facilities on January 30, 2024, which lowered the total margin on existing borrowings under the Term Loan Facility by 151 basis points.

Current wording

The decrease in interest expense, net was primarily due to a lower weighted average face value of debt and a decrease in the weighted average interest rate. The weighted average face value of debt decreased 8.3% from $802.6 million during the thirteen weeks ended March 30, 2024 to $736.3 million during the thirteen weeks ended March 29, 2025 due to debt repayments. Over the same period, the weighted average interest rate decreased 70 basis points from 9.73% to 9.03%. This decrease was due to a decrease in interest rates affecting amounts borrowed under our Term Loan Facility.

Previous wording

Gains and losses on foreign currency relate primarily to movementsin the Canadian Dollar (“CAD”) relative to the U.S. Dollar (“USD”). During the thirteen weeks ended September 28, 2024, the USD weakened against CAD resulting in remeasurement gains of $3.6 million arising primarily on USD-denominated debt held by one of our Canadian entities. These gains were partially offset by a $1.2 million loss on derivative instruments used to manage foreign currency exchange rate risk.

Current wording

Gains and losses on foreign currency relate primarily to movementsin the Canadian dollar (“CAD”) relative to the U.S. dollar (“USD”). During the thirteen weeks ended March 29, 2025, the USD weakened against the CAD relative to December 28, 2024, resulting in remeasurement gains of $2.0 million arising primarily on USD-denominated debt held by one of our Canadian subsidiaries. We also recorded losses of $0.3 million during the thirteen weeks ended March 29, 2025 on derivative instruments we use to manage foreign currency exchange rate risk.

Previous wording

During thethirty-nine weeks ended September 30, 2023, the Company used net proceeds from its IPO and net proceeds from issuing $550.0 million aggregate principal amount of Senior Secured Notes and cash on hand to repay $485.8 million in outstanding borrowings on its Term Loan Facility and $55.0 million aggregate principal amount of its Senior Secured Notes, resulting in a loss on debt extinguishment of $16.6 million.

Current wording

During the thirteen weeks ended March 29, 2025, weredeemed $44.5 million aggregate principal amount of the Senior Secured Notes, resulting in a loss on debt extinguishment of $2.7 million.

Previous wording

During the thirty-nine weeks ended September 28, 2024, loss on extinguishment of debt of $4.1 million comprised $0.7 million associated with the repricing of outstanding borrowings under our Term Loan Facility on January 30, 2024 and $3.4 million associated with the redemption of $49.5 million aggregate principal amount of Senior Secured Notes on March 4, 2024.

Current wording

During the thirteen weeks ended March 30, 2024, loss on debt extinguishment of$4.1 million comprised $0.7 million associated with the repricing of outstanding borrowings under our Term Loan Facility on January 30, 2024 and $3.4 million associated with the redemption of $49.5 million aggregate principal amount of the Senior Secured Notes on March 4, 2024.

Previous wording

The following table presents income tax expense:

Current wording

The following table presents income tax benefit:

Previous wording

During the thirteen weeks ended September 28, 2024, we recorded income taxexpenseof $13.8 million on income before income taxesof $35.4 million, resulting in an effective tax rateof 38.8%. For the thirteen weeks ended September 30, 2023, we recorded $6.4 million of income tax expense on loss before income taxes of $9.2 million, resulting in an effective income tax rate of (69.4)%.

Current wording

For the thirteen weeks ended March 29, 2025, we recorded an income taxbenefitof $0.9 million on loss before income taxesof $5.7 million, resulting in an effective tax rateof 16.6%. For the thirteen weeks ended March 30, 2024, we recorded $4.5 million of income tax benefit on loss before income taxes of $5.0 million, resulting in an effectivetax rate of 90.6%. The decrease in our income tax benefit resulted primarily from a tax shortfall in stock-based compensation recognized during thethirteen weeks ended March 29, 2025, compared to a windfall tax benefit recorded during the thirteen weeks ended March 30, 2024.

Previous wording

U.S. Retail net sales increased by $12.3 million, or 6.2%, during the thirteen weeks ended September 28, 2024, compared to the thirteen weeks ended September 30, 2023. The increase in U.S. Retail net sales resulted primarily from the opening of eight net new stores year-over-year and a 1.6% increase in comparable store sales. The increase in comparable store sales was driven by higher transactions and average basket.

Current wording

U.S. Retail sales increased by $18.2 million, or 9.4%, during the thirteen weeks ended March 29, 2025, compared to the thirteen weeks ended March 30, 2024. The increase in U.S. Retail sales resulted from growth in our store base, as well as a 4.2% increase in comparable store sales. The increase in comparable store sales was driven by higher average basket and transactions.

Previous wording

The Company reports its financial results in accordance with GAAP. We also present the following non-GAAP financial measures: Adjustednet income, Adjusted net income per diluted share, Adjusted EBITDA, Adjusted EBITDA margin and Constant-currency net sales. In the discussion that follows, we provide definitions and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. We have provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this Quarterly Report that are calculated and presented in accordance with GAAP. These non-GAAP financial measures should not be considered superior to, as a substitute for, or an alternative to, and should be considered in conjunction with, the GAAP financial measures presented elsewhere in this Quarterly Report. These non-GAAP financial measures may differ from, and therefore may not be directly comparable to, similarly-titled measures used by other companies.

Current wording

The Company reports its financial results in accordance with GAAP. We also present the following non-GAAP financial measures: Adjustednet income, Adjusted net income per diluted share, Adjusted EBITDA, Adjusted EBITDA margin and constant-currency net sales. In the discussion that follows, we provide definitions and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. We have provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental to, and in addition to, the financial measures presented in this Quarterly Report that are calculated and presented in accordance with GAAP. These non-GAAP financial measures should not be considered superior to, as a substitute for, or an alternative to, and should be considered in conjunction with, the GAAP financial measures presented elsewhere in this Quarterly Report. These non-GAAP financial measures may differ from, and therefore may not be directly comparable to, similarly-titled measures used by other companies.

Previous wording

Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. We have included these non-GAAP financial measures as these are key measures used by our management and our board of directors to evaluate our operating performance and the effectiveness of our business strategies, make budgeting decisions, and evaluate compensation decisions. They also best allow comparison of the performance of one period with that of another period.

Current wording

Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. We have included these non-GAAP financial measures as these are key measures used by our management and our board of directors to evaluate our operating performance and the effectiveness of our business strategies, make budgeting decisions and evaluate compensation decisions. The Company presents Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin because it considers these meaningful measures to share with investors as they best allow comparison of the performance of one period with that of another period. In addition, by presenting Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin, the Company provides investors with management’s perspective of the Company’s operating performance.

Previous wording

Adjusted net income is defined asnet income (loss) excluding the impact of loss on extinguishment of debt, IPO-related stock-based compensation expense, transaction costs, dividend-related bonus,(gain) loss on foreign currency, net, executive transition costs, certain other adjustments, the tax effect on the above adjustments, andthe excess tax shortfall (benefit) from stock-based compensation. We define Adjusted net income per diluted share as Adjusted net income divided by diluted weighted average common shares outstanding.

Current wording

Adjusted net income is defined asnet loss excluding the impact of loss on extinguishment of debt, IPO-related stock-based compensation expense, transaction costs, foreign currency exchange rate impacts, certain other adjustments, the tax effect on the above adjustments andthe excess tax shortfall (benefit) from stock-based compensation. We define Adjusted net income per diluted share as Adjusted net income divided by adjusted diluted weighted average common shares outstanding.