Company: SVV
Filing Date: 2025-05-02
Form Type: 10-Q
Source: 0001883313-25-000026
Chunk: 85

Company: Savers Value Village, Inc.
Filing Date: 2025-05-02
Form: 10-Q
Item: Part I, Item 8
Chunk 85
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 Refer to Note 6. Derivative Financial Instruments for additional information.

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Table of Contents

Interest rate risk

Changes in interest rates affect the amount of interest due on our variable rate debt. As of March 29, 2025, we had variable rate borrowings on the Term Loan Facility of $315.8 million and no advances under our Revolving Credit Facility. We currently use Term SOFR as a reference rate for our variable rate debt and any future increases in Term SOFR will inherently result in an increase in interest expense and cash paid toward interest. 

We performed a sensitivity analysis to determine the effect of interest rate fluctuations on our interest expense. A hypothetical 1 percentage point increase in Term SOFR would result in an increase to interest expense of $3.2 million over 12 months based on amounts outstanding and interest rates in effect as of March 29, 2025.

Foreign currency exchange risk

In addition to our U.S. business, we operate in Canada and Australia. Operations conducted entirely in each jurisdiction use that jurisdiction’s currency as their functional currency and changes in foreign exchange rates affect the translation of the results of these businesses into the USD, which is the reporting currency of the Company. For the thirteen weeks ended March 29, 2025, approximately 40.3% of our net sales were denominated in a currency other than the USD. For the thirteen weeks ended March 29, 2025, a hypothetical 10% strengthening of the USD to the CAD would decrease our net sales by $13.7 million (and vice versa). A hypothetical 10% change in the relative fair value of the USD to the Australian Dollar (“AUD”) would not have a material impact on our operations. We will be susceptible to fluctuations in the USD compared to the CAD and the AUD if we do not hedge our exchange rate exposure. As such, we seek to manage the risk from changes in foreign currency exchange rates through the use of forward contracts or cross currency swaps or both. Forward contracts are maintained on a rolling 12-month basis.

At March 29, 2025, the entire $315.8 million balance on our variable rate borrowings is USD-denominated and is owed by one of our Canadian subsidiaries whose functional currency is the CAD. These variable rate borrowings expose the Company to remeasurement risk. For the thirteen weeks ended March 29, 2025, a hypothetical 10% strengthening of the USD to the CAD would decrease net income by $28.7 million