Charity is in short supply as a thrift-store battle brews.
The 225-store retailer hopes to fetch more than $1 billion as it touts annual revenue north of $900 million that last year generated $130 million in Ebitda, or earnings before interest, taxes, depreciation and amortization.
Those fat profits are coming despite the fact that privately owned Savers’ business model relies on deep ties with charitable organizations.
If that jarring juxtaposition makes some investors squeamish, sources said Savers has sought to soothe their worries by characterizing Goodwill — the 800-pound gorilla in a retail niche that’s dominated by mom-and-pops — as an inefficient bureaucracy staffed by overpaid execs.
Upping the ante, bankers for Savers have likewise characterized their client as a better community citizen.
“They claim they are more philanthropically oriented (than Goodwill),” according to one potential suitor who has heard the sales pitch for Savers.
Representatives for Barclays Capital and Moelis & Co., the banks hired to manage the sale, declined to comment.
Savers spokeswoman Sara Gaugl said the thrift chain “is focused on its own business and does not comment on the operations of other companies.”
Goodwill spokeswoman Lauren Lawson responded in an e-mail that “84 percent of the collective revenue of the sale of donated goods is funneled right back into community programs.”
Meanwhile, Savers has told investors that as much as half of donations to Goodwill end up in landfills, versus just 10 percent at Savers, which shunts much of its unsold clothing to Third World outlets.
“Goodwill diverts more than 2 billion pounds of goods from landfills each year,” Lawson countered in an e-mailed response.
Bellevue, Wash.-based Savers — which aims to double in size over the next five years — is working to convince investors that thrift stores are becoming more mainstream as shoppers become more wallet-conscious.
“The pitch is that consumers are now accustomed to bargains . . . like those they find on eBay,” according to a source.
For its part, some charities say Savers has played a crucial — if somewhat quiet — role as a supporter, paying by the pound for donated clothes, toys, electronics and housewares.
At Big Brothers & Big Sisters in southwestern Connecticut, payments for donated goods by local Savers stores have been “significant enough for us to maintain more case managers,” says Vincent Rodriguez, an operations supervisor at the mentoring program.
While the charity doesn’t actively alert donors that their goods are going to a for-profit retailer, those who ask generally are “happy that funds are being created,” Rodriguez says. “A lot of folks understand that grants are hard to come by these days.”
He adds that all donors get a receipt that comes with a coupon for “$3 off at Savers.”
Freeman Spogli, sales pitch, thrift stores, Barclays Capital and Moelis , Savers, Lauren Lawson, Savers.Representatives