There are broken business models. Then there are confused business models.
The more work my colleague Katherine Spurlock has done on Savers Value Village , it appears its business model is very confused…
Or, more to the point: Is it a for-profit thrift store? Or an off-price retailer? Or one masquerading as the other?
What’s clear: This company appears to be unsure of itself and it seems only logical that as it expands – with plans for 2,000 stores at some point in the future compared with around 300 today – that identity crisis might very well intensify.
The initial Red Flag Alerts on Savers discussed how the company blurs the lines between the for-profit and nonprofit worlds of donating to charity.
But the question now… is Savers also blurring the lines between business models?
Secondhand Rose
Seems that way, and the company suggests as much. A casual read of its 2021 IPO prospectus and annual 10-K make it clear it’s in the business of selling “secondhand” goods.
The first line of the “company overview” in its annual filing – blown up for emphasis in the prospectus – says its mission is to “champion reuse and inspire a future where secondhand is second nature.”
Savers goes on to mention how it is “committed to redefining secondhand shopping,” and how it purchases “secondhand textiles…shoes, accessories, homewares, books and other goods” in ways that “distinguish us from other secondhand and value-based retailers.”
In fact, the term “secondhand” is mentioned 95 times in its 10-K, the first since its 2022 IPO. But there’s also this line, regarding how the company sources its goods…
Third-party credential goods are purchased in small amounts on an as-needed basis from regional for-profit collectors, generally consisting of bin operators and other for-profit resellers.
As well as this nuanced disclosure in filings, which says (emphasis added)…
Inventories consist almost entirely of used clothing and other household goods purchased from nonprofit partners.
Here’s where it gets interesting…
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Meanwhile in the world of Bowling…
When a rollup buys a company outside of its core competency, that’s often a bell-ringer that it has become a rollup that is headed for a hard reset.
We’ve seen it time and time again. One of my favorite examples is Stericycle , a medical waste disposal company … when it bought a paper-shredding company.
Enter Bowlero, which I first wrote about here last September, with Katherine as a background source, and again here – and once again, here, this time with Katherine as a quoted source.
Since the first time, the stock has been all over the place, but is now back down to where it started with its first Red Flag Alert after announcing disappointing results along with news it had closed on its acquisition of Raging Waters.
Wait… what? As Katherine wrote in her internal morning notes today prior to discussing Bowlero on the Beats Roundtable call…
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DISCLAIMER: This is solely my opinion based on my observations and interpretations of events, based on published facts and filings, and should not be construed as personal investment advice. (Because it isn’t!) Neither author has a position in this stock.
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