Company: SVV
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0001883313-25-000066
Chunk: 109

Company: Savers Value Village, Inc.
Filing Date: 2025-07-31
Form: 10-Q
Item: Part I, Item 8
Chunk 109
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 Market Risk

In the normal course of business, we are exposed to various market risks. Our primary market risks are interest rate risk associated with our variable rate debt and foreign currency exchange risk associated with our operations in Canada and Australia. We continually monitor these risks, regularly consider which risks need active management and, when appropriate, develop targeted risk management strategies. We may manage our exposure to changes in interest rates and foreign exchange rates through the use of derivative financial instruments with the objective of reducing potential statement of operations, cash flow, and market exposures. We use derivative financial instruments solely to mitigate market exposure and not for trading or speculative purposes. Refer to Note 6. Derivative Financial Instruments for additional information.

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Interest rate risk

Changes in interest rates affect the amount of interest due on our variable rate debt. As of June 28, 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 June 28, 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 twenty-six weeks ended June 28, 2025, approximately 41.6% of our net sales were denominated in a currency other than the USD. For the twenty-six weeks ended June 28, 2025, a hypothetical 10% strengthening of the USD to the CAD would decrease our net sales by $27.4 million and a hypothetical 10% weakening of the USD to the CAD would increase our net sales by $33.5 million. 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