8-K: Torrid Holdings Announces Strategic Share Repurchase Amidst Secondary Stock Offering and Operational Overhaul

• Torrid Holdings Inc. announced an underwritten public offering of 10,000,000 shares of common stock by certain selling stockholders, with an option for underwriters to purchase an additional 1,500,000 shares.
• The Company will not receive any proceeds from the sale of shares in the secondary offering.
• Concurrently, Torrid has agreed to purchase $20 million of its common stock from Sycamore Partners Torrid, L.L.C. in a private transaction, approved by the Board of Directors on the recommendation of the audit committee.
• The repurchased shares will be held as treasury stock and the repurchase is conditioned upon the closing of the secondary offering.
• Torrid is implementing a retail store optimization strategy, planning to close approximately 60 stores by the end of the second quarter of fiscal year 2025 and targeting up to 120 additional closures throughout the remainder of fiscal year 2025.
• The Company has enhanced its product development, introducing a portfolio of sub-brands in Q4 FY24, which are estimated to represent nearly 10% of net sales for fiscal year 2025 and are targeted to increase to 30% by the end of fiscal year 2026.
• Inventory has been reduced by approximately 18% from its peak in fiscal year 2022 as of February 1, 2025, improving working capital efficiency.
• The Company has significantly reduced its exposure to product sourced from China, expecting it to represent only a low-to-mid single-digit percentage of total sourcing receipts by the end of fiscal year 2025.

Score: 7

Explanation: The document outlines significant positive strategic and operational improvements, including strong customer satisfaction metrics, inventory efficiency, and a clear plan for future growth and profitability through sub-brands and retail optimization. The concurrent share repurchase is also a positive signal. While the secondary offering by selling stockholders means the company isn't raising capital and could create short-term stock pressure, the overall focus on internal improvements and shareholder return through repurchase is favorable.

• The Company's average Net Promoter Score (NPS) was 85 from February 2024 to February 2025, significantly higher than the industry average in the low 40s.
• Torrid's return rate was approximately 10% in fiscal year 2024, which is considerably lower than the industry average of approximately 25%.
• Loyalty program members accounted for 96% of net sales in the three months ended May 3, 2025, indicating strong customer loyalty.
• Inventory was successfully reduced by approximately 18% from its fiscal year 2022 peak as of February 1, 2025, improving working capital efficiency.
• The retail optimization strategy, including store closures, is expected to enhance customer experience, significantly reduce cost structure, and improve working capital and cash flow generation, supporting Adjusted EBITDA Margin expansion in fiscal year 2026 and beyond.
• Sub-brands have attracted a younger customer with higher household income, increased long-term customer value, shopping frequency, and participation, with 90% of sub-brand customers adding core Torrid products to their baskets.
• Improved sourcing capabilities have shortened the product development cycle by approximately three weeks and increased efficiencies in product cost.
• Reduced reliance on China for sourcing, with expected low-to-mid single-digit percentage of total sourcing receipts from China by end of fiscal year 2025.
• The Company achieved a 78% net sales retention rate in 2024 and 52% brand awareness based on a 2024 third-party market survey.
• Experienced low-double-digit percentage growth in online customer reactivations and mid-single-digit percentage growth in new online customer file during the last twelve months ended May 3, 2025.
• The concurrent share repurchase of $20 million signals management's confidence and can be accretive to earnings per share.

• Torrid Holdings Inc. will not receive any proceeds from the secondary public offering of 10,000,000 shares, as these shares are being sold by existing stockholders.
• The secondary offering by selling stockholders could create downward pressure on the stock price due to increased supply in the market.

• Changes in consumer spending and general economic conditions could negatively impact business.
• Interruption of merchandise flow from international manufacturers, including due to duties, tariffs, and other charges.
• Negative impact on interest expense due to high interest rates.
• Inflationary pressures on labor and raw materials, and global supply chain constraints, could increase expenses.
• Adverse impact of rulemaking changes by the Consumer Financial Protection Bureau on income streams and profitability.
• Ability to identify and respond to new and changing product trends and customer preferences.
• Dependence on a strong brand image and increased competition from other brands and retailers.
• Reliance on third parties to drive traffic to the Company's website.
• Success of shopping centers where stores are located.
• Ability to adapt to consumer shopping preferences and maintain a relevant and reliable omni-channel experience.
• Dependence upon independent third parties for the manufacture of all merchandise.
• Availability constraints and price volatility in raw materials.
• Risks associated with sourcing a significant amount of products from China (despite reduction efforts).
• Shortages of inventory, delayed shipments, and harm to reputation due to difficulties or shut-down of the distribution facility.
• Reliance upon independent third-party transportation providers for product shipments.
• Failure to attract and retain employees that reflect the brand image and possess appropriate skill sets.
• Damage to reputation arising from the use of social media, email, and text messages.
• Reliance on third parties for the provision of certain services, including real estate management.
• Dependence upon key members of the executive management team.
• Reliance on information systems and system security risk issues that could disrupt internal operations or IT services.
• Unauthorized disclosure of sensitive or confidential information.
• Failure to comply with federal and state laws and regulations and industry standards relating to privacy, data protection, advertising, and consumer protection.
• Payment-related risks that could increase operating costs or subject the Company to potential liability.
• Claims made against the Company resulting in litigation.
• Changes in laws and regulations applicable to the business.
• Regulatory actions or recalls arising from issues with product safety.
• Inability to protect trademarks or other intellectual property rights.
• Substantial indebtedness and lease obligations, and restrictions imposed by indebtedness on current and future operations.
• Changes in tax laws or regulations or in operations that may impact the effective tax rate.
• Possibility of recognizing impairments of definite-lived assets.
• Failure to maintain adequate internal control over financial reporting.
• Threat of war, terrorism, or other catastrophes, including natural disasters, that could negatively impact the business.

Torrid Holdings Inc. plans to continue its digitally-led, omni-channel strategy, enhancing product relevancy and introducing several new sub-brands in 2025, targeting 30% of net sales from sub-brands by the end of fiscal year 2026. The Company expects Adjusted EBITDA Margin expansion in fiscal year 2026 and beyond, supporting sustainable growth at structurally higher levels of profitability, driven by its retail optimization strategy, including significant store closures and increased penetration of more productive off-mall locations. They also anticipate further reductions in China production exposure and continued growth in online customer reactivations and new customer acquisition through balanced, digitally-led marketing initiatives.

• Management believes their brand experience and product offerings establish them as a differentiated and reliable choice for plusand mid-size customers, setting them apart in the market.
• The Company strives to be everything their customer needs in her closet, consistently delivering products that make her feel confident and stylish.
• Management believes their retail optimization strategy will enhance customer experience, significantly reduce cost structure, and improve working capital and cash flow generation, allowing for more aggressive reinvestment in customer reactivation and acquisition initiatives.
• The Company anticipates Adjusted EBITDA Margin expansion in fiscal year 2026 and beyond, which is expected to support sustainable growth at structurally higher levels of profitability.

Torrid operates in the direct-to-consumer apparel market, specifically targeting the curvy woman segment (sizes 10-30). The company emphasizes its differentiated position through exclusive, affordable, and high-quality products tailored to this underserved demographic. Its digitally-led omni-channel strategy, strong customer loyalty (96% of sales from loyalty members), and superior customer satisfaction metrics (NPS of 85 vs. industry average low 40s, 10% return rate vs. industry average 25%) suggest a strong competitive standing. The strategic shift towards sub-brands and retail optimization reflects broader industry trends of specialization, efficiency, and adapting to evolving consumer shopping preferences towards online channels and curated experiences.

• Torrid's average Net Promoter Score (NPS) of 85 from February 2024 to February 2025 is significantly higher than the industry average in the low 40s based on 2023 industry data, indicating superior customer satisfaction and loyalty compared to a set of 27 peers including department stores, mass-retailers, specialty retailers, and direct-to-consumer brands.
• The Company's return rate of approximately 10% in fiscal year 2024 is substantially lower than the industry average of approximately 25%, suggesting better product fit, quality, and customer satisfaction, leading to fewer returns.

• **Shareholders:** Selling stockholders will realize liquidity from the secondary offering. Remaining shareholders may benefit from the share repurchase, which can be accretive to earnings per share and signals management confidence. The increased float from the secondary offering could create short-term price pressure.
• **Customers:** Expected to benefit from enhanced product relevancy through new sub-brands, improved product availability due to better inventory management, and a more optimized retail experience through store closures focusing on more productive locations and a strong omni-channel approach.
• **Employees:** Store closures may impact employees in affected locations, though the document does not detail specific employee impacts or severance plans.
• **Suppliers/Manufacturers:** Changes in sourcing strategy, including vendor consolidation and diversification away from China, will impact existing and potential suppliers.
• **Creditors:** The share repurchase will reduce cash, but the strategic initiatives aim to improve profitability and cash flow generation, which could strengthen the company's financial health in the long term.

• Consummation of the Concurrent Repurchase substantially concurrently with the closing of the Offering.
• Introduction of at least several new sub-brands in 2025.
• Closure of approximately 60 stores by the end of the second quarter of fiscal year 2025.
• Acceleration of store closures throughout the remainder of fiscal year 2025 to target as many as 120 additional store closures.
• Continued targeted marketing investments to support sales retention from closed stores.
• Achieving 30% of net sales from sub-brands by the end of fiscal year 2026.
• Further reduction of China production to a low-to-mid single-digit percentage of total sourcing receipts by the end of fiscal year 2025.
• Realization of Adjusted EBITDA Margin expansion in fiscal year 2026 and beyond.

• Torrid Holdings Inc. entered into a Stock Repurchase Agreement with Sycamore Partners Torrid, L.L.C. to purchase $20 million of shares of the Company's common stock. Sycamore Partners is identified as a related party, and its relationship to the Company is detailed in the Company's Definitive Proxy Statement filed on April 23, 2025.

• 2024-02-16: Initial Form S-3 registration statement filed with the U.S. Securities and Exchange Commission (SEC).
• 2024-02-01: End of fiscal year 2024.
• 2024-02-01: Inventory reduced by approximately 18% from its peak in fiscal year 2022 as of this date.
• 2024: Net sales retention rate of 78%.
• 2024: Brand awareness of 52% based on a third-party market survey.
• 2024-02-01: Fiscal year 2024 ended, with e-Commerce penetration at 61% of net sales and digital demand at approximately 70%.
• 2024-02-01: Return rate of approximately 10% in fiscal year 2024.
• 2024-02-01: Introduction of a portfolio of sub-brands in the fourth quarter of fiscal year 2024.
• 2024-02-01: Average NPS score of 85 from February 2024 to February 2025.
• 2025-05-03: End of the three-month period (first quarter) of fiscal year 2025.
• 2025-05-03: 96% of net sales in the three months ended May 3, 2025, accounted for by loyalty program members.
• 2025-05-03: Low-double-digit percentage growth in online customer reactivations and mid-single-digit percentage growth in new online customer file during the last twelve months ended May 3, 2025.
• 2025-05-03: Company operated 632 stores as of this date.
• 2025-04-23: Definitive Proxy Statement filed with the SEC, providing information on the Seller's relationship to the Company.
• 2025-06-23: Date Torrid Holdings Inc. entered into the Stock Repurchase Agreement with Sycamore Partners Torrid, L.L.C.
• 2025-06-24: Date of the Current Report on Form 8-K filing, preliminary prospectus supplement filed, and press release announcing the launch of the Offering and Concurrent Repurchase.
• 2025-06-27: Condition for termination of the Stock Repurchase Agreement if conditions are not satisfied by this date.
• 2025: Company intends to introduce at least several new sub-brands.
• 2025: Sub-brands are estimated to represent nearly 10% of net sales for fiscal year 2025.
• 2025: Approximately 60% of store leases are up for renewal in fiscal year 2025.
• 2025: Company intends to accelerate store closures throughout the remainder of fiscal year 2025 to target as many as 120 additional store closures.
• 2025: China production expected to represent only a low-to-mid single-digit percentage of total sourcing receipts by the end of fiscal year 2025.
• 2025-Q2: Plan to close approximately 60 stores by the end of the second quarter of fiscal year 2025.
• 2026: Target for sub-brands to increase to 30% of net sales by the end of fiscal year 2026.
• 2026: Expected Adjusted EBITDA Margin expansion in fiscal year 2026 and beyond.