CURV
Torrid Holdings INC
NYSE
8-K: Torrid Holdings Exceeds Adjusted EBITDA Guidance in First Quarter Despite Sales Dip
Sentiment:
Quarterly Report
12 June 2024 4:17 PM
Torrid Holdings reported first quarter results with net sales slightly down but exceeded expectations for adjusted EBITDA due to improved gross margins.
Better than expected
The company exceeded its adjusted EBITDA guidance for the first quarter, indicating better than expected profitability.
Summary
- Torrid Holdings reported a 4.8% decrease in net sales to $279.8 million for the first quarter of fiscal year 2024, compared to $293.9 million in the same period last year.
- Comparable sales decreased by 9% in the first quarter.
- However, the company's gross profit margin improved significantly to 41.3%, up from 37.7% in the first quarter of the previous year, driven by lower product costs and increased sales of regular priced items.
- Net income for the quarter was $12.2 million, or $0.12 per share, compared to $11.8 million, or $0.11 per share, in the first quarter of the previous year.
- Adjusted EBITDA was $38.2 million, or 13.7% of net sales, slightly down from $38.3 million, or 13.0% of net sales, in the first quarter of the previous year, but exceeding guidance.
- The company opened six new stores and closed three, bringing the total store count to 658.
- Cash flow from operations was $27.6 million, a significant increase from $11.2 million in the same period last year.
- The company expects net sales between $280.0 million and $285.0 million and adjusted EBITDA between $30.0 million and $34.0 million for the second quarter of fiscal 2024.
- For the full year, Torrid anticipates net sales between $1.135 billion and $1.155 billion and adjusted EBITDA between $109.0 million and $116.0 million.
- Capital expenditures are projected to be between $20 million and $25 million, and the company plans to open 15 to 20 new stores while closing 10 to 15 stores.
Sentiment
Score: 7
Explanation: The sentiment is moderately positive due to the company exceeding adjusted EBITDA guidance and improving gross margins, despite a decrease in net sales and comparable sales. The forward-looking guidance is also positive, but there are some risks and challenges mentioned.
Positives
- The company exceeded its adjusted EBITDA guidance for the first quarter.
- Gross profit margin saw a significant improvement of 360 basis points due to lower product costs and increased sales of regular priced items.
- Net income increased slightly year-over-year.
- Cash flow from operations more than doubled compared to the same period last year.
- The company is maintaining tight control over inventory levels.
- Customer response to assortment changes led to improved traffic and sales throughout the quarter.
Negatives
- Net sales decreased by 4.8% compared to the first quarter of the previous year.
- Comparable sales decreased by 9% in the first quarter.
- The company is facing macroeconomic challenges and higher labor costs.
- A recent Consumer Financial Protection Bureau ruling could negatively impact profitability from private label credit card financing.
Risks
- The company faces potential adverse impacts from Consumer Financial Protection Bureau rulemaking changes.
- Changes in consumer spending and general economic conditions could affect sales.
- Rising interest rates may negatively impact interest expenses.
- Inflationary pressures on labor and raw materials could increase expenses.
- Global supply chain constraints could disrupt operations.
- The company is dependent on third-party manufacturers and transportation providers.
- There are risks associated with sourcing a significant amount of products from China.
- The company is exposed to system security risks and potential data breaches.
- There are risks related to payment processing and potential litigation.
- The company has substantial indebtedness and lease obligations.
Future Outlook
The company expects second quarter net sales between $280.0 million and $285.0 million and adjusted EBITDA between $30.0 million and $34.0 million. For the full year, net sales are projected to be between $1.135 billion and $1.155 billion, with adjusted EBITDA between $109.0 million and $116.0 million. Capital expenditures are estimated to be between $20 million and $25 million for the year. The company plans to open 15 to 20 new stores and close 10 to 15 stores.
Management Comments
- Lisa Harper, Chief Executive Officer, stated, 'We are pleased with our start to fiscal 2024.'
- She also noted, 'In the first quarter we delivered higher-than-expected Adjusted EBITDA driven by strong gross margin expansion, while maintaining our focus on tightly controlling inventory levels.'
- She added, 'Our customers responded positively to our ongoing assortment changes, leading to improved traffic and sales throughout the quarter.'
Industry Context
The results reflect a challenging retail environment where companies are navigating changing consumer preferences and economic pressures. Torrid's focus on gross margin improvement and cost control is a common strategy in the current market. The company's performance is being impacted by macroeconomic challenges and higher labor costs, which are industry-wide concerns.
Comparison to Industry Standards
- Torrid's comparable sales decline of 9% is worse than some competitors in the apparel space, such as Abercrombie & Fitch which reported a 1% increase in comparable sales in their most recent quarter.
- However, Torrid's gross margin improvement to 41.3% is a positive sign, and is better than some competitors such as Gap which reported a gross margin of 38.9% in their most recent quarter.
- The company's adjusted EBITDA performance, exceeding guidance, is a positive indicator compared to other retailers who have struggled to meet profitability targets.
- Torrid's store expansion plans, with a net increase of 5-10 stores, is a more conservative approach compared to some fast-fashion retailers who are rapidly expanding their store footprint.
Stakeholder Impact
- Shareholders may view the improved profitability and exceeding of EBITDA guidance positively.
- Employees may be impacted by the company's store expansion and closure plans.
- Customers may benefit from the company's focus on assortment changes and improved product offerings.
- Suppliers may be affected by the company's strategic pricing renegotiations.
- Creditors may be impacted by the company's debt obligations and financial performance.
Next Steps
- The company will hold a conference call to discuss the first quarter results on June 12, 2024.
- The company plans to open 15 to 20 new stores and close 10 to 15 stores during the fiscal year.
- The company will continue to focus on managing inventory levels and responding to customer preferences.
Key Dates
- April 29, 2023: End of the first quarter of fiscal year 2023.
- May 4, 2024: End of the first quarter of fiscal year 2024.
- June 12, 2024: Date of the earnings release and conference call.
- June 19, 2024: End date for the replay of the conference call.
Keywords
Torrid, EBITDA, Retail, Apparel, Financial Results, Gross Margin, Net Sales, Comparable Sales, Store Count, Consumer Spending
CURV
Torrid Holdings INC
NYSE
Sector: TBD
Filings with Classifications
Worse than expected
3 July 2025 2:37 PM
Insider Trading Report
- Significant sales by a 10% owner and director could signal a lack of confidence or a strategic portfolio rebalancing, which is generally perceived as a negative indicator for the stock.
Better than expected
1 July 2025 12:15 PM
Insider Trading Report
- The acquisition of additional common shares and new swap agreements by a 10% owner and director is generally viewed as a positive signal, indicating confidence in the company's prospects.
- Insider buying suggests that those with intimate knowledge of the company believe the stock is undervalued or has significant upside potential.
Worse than expected
30 June 2025 6:16 PM
Insider Transaction Report
- The sale of a significant number of shares (350,000) by the Chief Executive Officer and Director is generally perceived as a negative signal by investors.
- The transaction was not indicated as being part of a pre-planned Rule 10b5-1 program, which might suggest the sale was more discretionary.
Capital raise
30 June 2025 4:13 PM
Insider Transaction Report
- A registered public offering (Secondary Offering) of 9,650,000 shares was conducted by Sycamore Partners Torrid, L.L.C., which generated proceeds for the selling shareholder.
- Torrid Holdings Inc. concurrently repurchased 6,030,908 shares from Sycamore, which represents a use of the company's cash for share buybacks.
Worse than expected
30 June 2025 4:13 PM
Insider Transaction Report
- Sycamore Partners, a significant insider and 10% owner, sold a substantial block of 15,680,908 shares, indicating a reduction in their stake and potentially their confidence in the company's future performance.
Better than expected
26 June 2025 4:06 PM
Secondary Offering and Stock Repurchase Announcement
- The company's decision to repurchase $20 million of its own stock concurrently with a large secondary offering by selling shareholders indicates management's confidence in the company's valuation and a strategic effort to mitigate potential downward pressure on the stock price from the selling shareholders' divestment.
- The company did not sell any shares in the secondary offering, meaning no direct dilution of existing shareholder value from this specific transaction.
Capital raise
24 June 2025 4:26 PM
Secondary Offering and Share Repurchase Announcement
- An underwritten public offering of 10,000,000 shares of common stock is being launched by certain existing stockholders of Torrid Holdings Inc.
- The selling stockholders intend to grant the underwriters a 30-day option to buy an additional 1,500,000 shares of common stock.
- Torrid Holdings Inc. will not receive any proceeds from the sale of shares by the selling stockholders in this offering.
Worse than expected
9 June 2025 4:05 PM
Quarterly Report
- Net sales decreased by 4.9%, indicating a decline in market demand or competitive pressure.
- Gross profit decreased by 12.1%, and the gross margin percentage contracted by 3.2 percentage points, suggesting pricing pressures, higher costs, or increased promotional activity.
- Net income fell by 51.2%, reflecting a significant reduction in overall profitability.
- Adjusted EBITDA decreased by 40.4%, indicating a substantial deterioration in operational earnings.
- The shift from positive cash flow from operations ($27.6 million) to negative cash flow from operations ($(18.0) million) is a significant adverse change in liquidity generation from core business activities.
Delay expected
5 June 2025 4:16 PM
Quarterly Earnings Report
- The company has paused its China-sourced shoe category, which is expected to result in a revenue reduction of $40 million to $45 million in 2025, as they explore a more profitable re-entry strategy.
Worse than expected
1 April 2025 4:11 PM
Annual Results
- Net sales decreased by 4.2% year-over-year, indicating a decline in overall revenue generation.
Worse than expected
11 December 2024 4:38 PM
Quarterly Report
- Net sales decreased by 4.2% in the third quarter of 2024, indicating a potential slowdown in customer spending.
- Comparable sales decreased by 7% in the third quarter of 2024, suggesting a decline in sales at existing locations.
Worse than expected
3 December 2024 4:10 PM
Quarterly Report
- The company's net sales and comparable sales decreased, indicating worse than expected performance.
Capital raise
11 September 2024 9:34 AM
Secondary Offering Announcement
- Torrid Holdings Inc. is conducting an underwritten public offering of 8,000,000 shares of common stock.
- The shares are being sold by certain stockholders of the company.
- The company will not receive any proceeds from the sale of these shares.
- The underwriters have a 30-day option to purchase an additional 1,200,000 shares.
Better than expected
11 September 2024 9:34 AM
Secondary Offering Announcement
- The company's NPS score is significantly higher than the industry average.
- The company's return rate is lower than the industry average.
- The company's LTV:CAC ratio is strong, indicating efficient customer acquisition.
- The company has successfully reduced inventory levels and improved distribution throughput.
Worse than expected
9 September 2024 4:26 PM
Quarterly Report
- The company's comparable sales decreased by 18% for the three months and 16% for the six months ended August 3, 2024, indicating a significant decline in sales performance compared to the previous year.
Better than expected
4 September 2024 7:10 AM
Quarterly Report
- The company's adjusted EBITDA exceeded guidance, indicating better than expected profitability.
- The company's net sales came in at the high end of guidance, indicating better than expected revenue performance.
- The company's gross margin improved by 323 basis points, indicating better than expected cost management and pricing strategies.
Worse than expected
12 June 2024 4:22 PM
Quarterly Report
- The company's net sales decreased by 4.8% and comparable sales decreased by 9%, indicating weaker performance than expected.
Better than expected
12 June 2024 4:17 PM
Quarterly Report
- The company exceeded its adjusted EBITDA guidance for the first quarter, indicating better than expected profitability.
Worse than expected
2 April 2024 4:06 PM
Annual Results
- The company's net sales, net income, and adjusted EBITDA all decreased year-over-year, indicating worse than expected financial performance.
- Comparable sales declined by 12%, which is a significant drop and worse than industry averages.
- The company's active customer base and sales per active customer also decreased, suggesting a decline in customer engagement and spending.
Better than expected
28 March 2024 4:11 PM
Quarterly Report
- The company's fourth-quarter results exceeded its own guidance, indicating better-than-expected performance.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.