Release Date: June 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Torrid Holdings Inc (CURV, Financial) delivered on its first quarter sales and EBITDA guidance, with net sales of $266 million and EBITDA of $27.1 million.
- The company's sub-brands, such as Festi, Belle Isle, Nightfall, and Retro Chic, are performing exceptionally well, exceeding expectations by 2x to 6x and attracting new and younger customers.
- Online sales demand is strong, approaching 70% of total sales, with expectations to reach a low-to-mid 70% penetration in 2026, supporting the company's digital transformation strategy.
- The company is optimizing its retail footprint by closing underperforming stores, which is expected to result in 150 to 250 basis points of EBITDA margin benefit.
- Torrid Holdings Inc (CURV) has reduced its exposure to China-sourced goods to low-single digits, down from the mid-teens, as part of its tariff mitigation strategy.
Negative Points
- Comparable store sales declined by 3.5%, reflecting continued pressure in physical retail locations.
- Gross profit decreased from $115.4 million to $101.4 million, with a gross margin decline of 320 basis points to 38.1%, driven by planned promotional initiatives.
- The company paused its shoe offerings, resulting in an expected revenue loss of approximately $40 million to $45 million for the year.
- Net income decreased to $5.9 million, or $0.06 per share, compared to $12.2 million, or $0.12 per share, in the prior year.
- The company anticipates a sizable sales growth deceleration in the second quarter, partly due to the pause in the shoe business and ongoing consumer price sensitivity.
Q & A Highlights
Q: Could you talk a little bit about how we should think about the cadence of newness for the second half?
A: We have another new sub-brand launching in August, called Lovesick, targeting a younger customer at a slightly lower price point. In September, we will launch Studio Luxe, a higher-end concept. By the end of the year, we will accelerate the timing of our launches for existing brands, delivering them on a monthly basis.
Q: What trends have you been seeing with new customers following their initial sub-brand purchase? Are they shopping across the broader assortment and other sub-brands?
A: We are seeing positive movement in acquiring and reactivating new and younger customers. Existing customers are also showing increased lifetime value and high transaction sizes. About 90% of sub-brand customers add core Torrid products to their basket. The demand is predominantly from the digital channel.
Q: For 2Q, your guidance implies a sizable sales growth deceleration. Is there anything specific causing this?
A: We are pausing our shoe business, which is primarily sourced from China and tends to be lower margin. This impacts about $45 million in sales for the year, spread evenly. We continue to see choppy customer behavior but expect strong performance in the latter half of the year.
Q: Can you explain your promotional strategy and how it coexists with the flow of newness? Are online channels more promotional?
A: We maintain our typical promotional cadence with major events like Torrid Cash and Semi-Annual sales. We respond to consumer price consciousness with promotional events, which are included in our guidance. Online channels are not necessarily more promotional but are a powerful storytelling medium.
Q: What is driving the acceleration in store closures, and how do you arrive at the 75:25 online-to-store split as the right level?
A: Customers prefer shopping online, with online penetration growing and more customers acquired online than in stores. Closing underperforming stores allows us to reallocate resources to digital investments. We retain over 60% of customers post-closure, and the closures will have a negligible sales impact due to increased marketing and digital channel focus.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
