Savers, previously known as Value Village, is a privately held thrift store chain based in Bellevue, Washington. The company was founded in 1954 by William Yde Jr. and his wife Elizabeth “Liz” Yde under the name Value Village. The Ydes opened the very first Value Village thrift store in San Jose, California after recognizing a need for affordable clothing and household goods in the post-war economic boom.
Over the next few decades, Value Village expanded across the West Coast of the U.S. and eventually grew into one of the largest thrift store chains in North America. The company adopted the name Savers in 1990s to unite its stores under one brand. Today, Savers operates over 300 thrift stores in the U.S., Canada and Australia. The company is known for its massive inventory of used goods at discount prices, as well as its community initiatives.
Founding and Early Years
Savers was founded in 1954 by William Ellison as Value Village. The first store opened in San Jose, California with the goal of offering affordable used goods to the local community. As a trained chemist, Ellison saw value in used goods that could be cleaned and repurposed for resale. The business model involved collecting donations of clothing and household items, then sorting, cleaning and pricing them for resale. This allowed low income families to shop for bargains and allowed more people to access used goods.
The name Value Village established the company’s core value – finding value in pre-owned goods. According to the Savers corporate website, “In those early days, neighbors donated the things they no longer needed to Mr. Ellison and volunteers cleaned and repaired them before putting those items on the sales floor. Shoppers purchased what they needed at affordable prices, extending the useful life of those goods.” This sustainable cycle allowed goods to be reused and recycled.
Within its first decade, Value Village had expanded to 3 locations in California. By 1970, there were 7 stores and the headquarters moved to Bellevue, Washington. The thrift stores grew steadily through the 70s and 80s under Ellison’s leadership.
Source: https://corporateofficehq.com/savers-inc-corporate-office/
Acquisition by Private Equity
Savers, which operates over 300 thrift stores across the United States, Canada, and Australia under brands like Savers and Value Village, was acquired by private equity firm Leonard Green & Partners in 2012.
Leonard Green & Partners purchased Savers from KKR for $1.6 billion. KKR had initially acquired Savers in 2006 for $1.7 billion from founder William Yellen, who founded the company in 1954.
Under Leonard Green & Partners’ ownership, Savers underwent a major geographical expansion, especially on the West Coast of the United States and in Canada. The company also launched online thrifting to complement its brick-and-mortar stores.
In 2021, Leonard Green & Partners sold Savers to another private equity firm, Ares Management. The deal valued Savers at $1.3 billion and gave Ares Management a majority stake in the company.
As of 2023, Savers remains owned by Ares Management as it continues its growth in the secondhand retail market.
Current Ownership
Savers Value Village is currently owned by private equity firm Ares Management. Ares acquired Savers in 2012 for $1.3 billion from previous private equity owners Leonard Green & Partners and TPG Capital.
Under Ares’ ownership, Savers has grown to over 300 retail stores across the United States, Canada, and Australia. In June 2022, Savers announced plans to go public through a SPAC merger with Ares Acquisition Corporation, which would value the company at almost $4 billion.
Company Operations
Savers operates over 370 thrift stores across the United States, Canada and Australia. The company employs over 22,000 people worldwide. In 2021, Savers generated $1.8 billion in revenue from its retail thrift stores and recycling business.
Savers stores focus on used clothing, accessories, household goods and other items donated by local communities. Donations are processed by Savers employees and then sold at affordable prices in its retail thrift stores. The recycling of used goods enables Savers to keep over 700 million pounds of items out of landfills each year.
In addition to its thrift stores, Savers operates recycling businesses that purchase used textiles as well as partner with nonprofits and businesses for donation drives and textile recycling programs. The company provides jobs and funding to local nonprofits through this reuse and recycling model.
Business Model
Savers’ business model involves partnership with local non-profits and purchasing and reselling donated items. The non-profits collect and deliver donated clothing and household goods to Savers, who then compensates the non-profits by the pound for the merchandise. Savers processes, prices and sells the donated goods in its retail thrift stores. This provides non-profits a source of funding while also supporting recycling and reuse.
However, some critics have questioned how much Savers actually gives back to charity based on this business model. Savers buys merchandise donated for charitable purposes at bulk rates of a few dimes per pound but resells at higher retail secondhand prices – keeping the substantial profit margin. Only a small percentage is returned to the non-profit partners. There have been disputes over the fairness of the compensation rates paid to charities.
Controversies
In 2014, Savers, which operates under the Value Village brand in the United States, faced allegations that it had misled customers about its charitable donations. According to a New York Times article, the Minnesota Attorney General accused Savers of pocketing over $1 million that should have gone to charity. The lawsuit alleged that Savers misled consumers into believing that purchases would primarily support charitable organizations. However, the company only donated a small fraction of profits to charity.
Savers settled the Minnesota lawsuit in 2017 and paid $1.8 million in restitution. However, legal troubles continued in other states like Washington. In 2019, a judge ruled that Savers had violated consumer protection laws by misleading the public about its charitable giving. But in 2023, the Washington Supreme Court rejected the deception charges against Savers in a unanimous decision. The court found the advertising was not deceptive enough to justify the lawsuit (AP News).
While Savers has faced criticism over its charitable giving claims, the company maintains that it has donated over $1 billion to nonprofit partners since its founding. However, some argue Savers should be more transparent about the exact percentage of profits that go to charity.
Philanthropy
Savers has a strong commitment to philanthropy and community involvement. The company partners with over 120 nonprofit organizations across the United States, Canada, and Australia. Savers accepts donations of used goods on behalf of these nonprofit partners and purchases the donated items from them, providing a source of funding for their charitable programs (Savers.com).
Since Savers’ founding in 1954, the company has provided over $1.8 billion in funding for community programs worldwide. Their nonprofit partners utilize these funds for initiatives like job training, affordable housing, and youth enrichment programs. Savers aims to create a “win-win-win” model, providing low cost merchandise for shoppers, funding for nonprofits, and diverting usable goods from landfills (Savers.com).
In addition to their partnership model, Savers encourages hands-on community involvement from their employees. Each Savers location adopts a local school or nonprofit to support through volunteer activities and drives for goods and cash donations. The company also maintains an employee-managed charitable fund that provides grants to organizations focused on poverty relief, medical research, and environmental sustainability.
Financial Performance
Recent financial results show that Savers Value Village continues to perform well despite challenging retail conditions. For the third quarter of fiscal year 2023 ending October 29, 2022, Savers reported a net sales increase of 3% to $350.9 million compared to the prior year period. Comparable store sales increased 3.7%, driven by a 2.2% increase in average ticket and a 1.5% increase in traffic. According to their latest quarterly earnings report from November 2022, Savers opened 5 new stores and ended the quarter with a total of 320 stores in operation across the U.S., Canada and Australia. The company reported net income of $11.3 million for the quarter. Savers attributes their continued sales growth to effectively managing inventory flows and maintaining a positive store experience for customers.
Looking back at recent years, Savers achieved record results in fiscal 2021 with sales reaching $1.3 billion, up from $1.2 billion the prior year. Net income also increased to $96.7 million in fiscal 2021 compared to $71.4 million in fiscal 2020. The company has continued to expand its footprint, ending fiscal 2021 with 307 stores in operation. Savers’ steady performance demonstrates the resiliency of its unique thrift retail model even during challenging macroeconomic conditions. The company remains focused on strategic investments to drive future growth while maintaining strong financial discipline.
The Future
Savers has good prospects for future growth as the resale industry continues to expand. The resale market is projected to reach $82 billion by 2026, up from $36 billion in 2021, presenting opportunities for Savers and other major players like Goodwill and The Salvation Army (1). However, some analysts argue that growth may slow in the long-term as younger generations shift to online resale platforms (2).
In terms of ownership changes, private equity firm Apax Partners acquired Savers in 2012 and still owns the company today. Apax is focused on growing through acquisitions, so industry watchers predict they may look to acquire additional thrift store chains or integrate vertically into related businesses. However, Apax has not publicly stated plans to sell or take Savers public in an IPO at this time.
Overall, the thrift industry remains fragmented, so Savers may have opportunities to gain market share through organic growth or acquisitions, if supported by its private equity owners. But the rise of digital resale also presents a challenge requiring strategic investments in e-commerce and omnichannel capabilities.
(1) https://www.pensionspolicyinstitute.org.uk/media/xfybvxtq/20230926-the-dc-future-book-9-2023.pdf
(2) https://www.ibisworld.com/industry-insider/analyst-insights/resale-industry-trends-and-analysis/