Torrid (CURV) - 2023 Q3 - Quarterly Report

Financial Performance - Net sales for the three months ended October 29, 2022, were $290.034 million, a decrease of 5.3% compared to $306.241 million for the same period in 2021[20] - Gross profit for the three months ended October 29, 2022, was $91.771 million, down 26.6% from $125.147 million in the prior year[20] - Net income for the three months ended October 29, 2022, was $7.277 million, compared to a net loss of $58.902 million for the same period in 2021[20] - For the nine months ended October 29, 2022, Torrid reported a net income of $54.1 million, a significant improvement compared to a net loss of $7.2 million for the same period in the previous year[27] - For the three-month period ended October 29, 2022, net income was $7.3 million compared to a net loss of $58.9 million for the same period in 2021[146] - Net sales decreased by $5.5 million, or 0.6%, to $959.3 million for the nine months ended October 29, 2022, compared to $964.9 million for the same period in 2021[182] - Gross profit for the nine months ended October 29, 2022, decreased by $84.0 million, or 20.0%, to $335.8 million, with gross profit as a percentage of net sales dropping to 35.0% from 43.5%[183] Expenses and Costs - Selling, general, and administrative expenses for the three months ended October 29, 2022, were $59.180 million, down from $66.399 million in the same period last year[20] - Selling, general and administrative expenses decreased by $162.8 million, or 45.8%, to $192.5 million, with expenses as a percentage of net sales decreasing to 20.1% from 36.9%[184] - Marketing expenses decreased by $2.4 million, or 15.9%, to $12.6 million, with marketing expenses as a percentage of net sales decreasing from 4.9% to 4.3%[175] - Marketing expenses increased by $8.8 million, or 25.1%, to $44.1 million, with marketing expenses as a percentage of net sales rising to 4.6% from 3.6%[185] - The company experienced a write-down of inventory amounting to $1.75 million during the nine months ended October 29, 2022, compared to $510,000 in the prior year[27] Assets and Liabilities - Total current assets increased to $243.371 million as of October 29, 2022, from $220.926 million as of January 29, 2022[16] - Total liabilities decreased to $793.408 million as of October 29, 2022, from $836.820 million as of January 29, 2022[16] - Cash and cash equivalents decreased to $18.559 million as of October 29, 2022, from $29.025 million as of January 29, 2022[16] - Accrued and other current liabilities totaled $102.1 million as of October 29, 2022, down from $138.7 million at the end of January 29, 2022[52] - Deferred compensation plan liabilities were $5.8 million as of the end of the third quarter of fiscal year 2022, down from $7.2 million at the end of fiscal year 2021[141] Stock and Shareholder Information - The company authorized a share repurchase program on December 6, 2021, allowing for the purchase of up to $100.0 million of outstanding common stock, with approximately $44.9 million remaining as of October 29, 2022[127] - During the nine months ended October 29, 2022, the company repurchased 4,464,367 shares at an average cost of $7.10 per share[129] - As of October 29, 2022, the company had 103,641,356 shares of common stock issued and outstanding, with no preferred stock issued[125] Debt and Financing - The New Term Loan Credit Agreement has an initial aggregate amount of $350.0 million, with a maturity date of June 14, 2028[80] - As of October 29, 2022, total borrowings under the New Term Loan Credit Agreement, net of original issue discount and financing costs, amounted to $324.9 million[83] - The elected interest rate on the New Term Loan Credit Agreement was approximately 9% as of October 29, 2022[81] - The company recognized $7.5 million and $18.8 million in interest expense related to the New Term Loan Credit Agreement during the three- and nine-month periods ended October 29, 2022, respectively[83] Operational Insights - Torrid operates primarily through its e-Commerce platform and physical stores in the U.S., Puerto Rico, and Canada, targeting women aged 25 to 40 wearing sizes 10 to 30[38] - The company aims to connect with customers through a curated product assortment that emphasizes fit and quality for plus-size women[145] - The company has faced challenges in customer acquisition and retention due to increased costs and new privacy regulations implemented in 2021[153] - The company continues to invest in brand awareness and customer engagement through targeted marketing efforts[157] - The impact of inflation has led to increased costs in wages, transportation, and product costs, which may reduce future profits[155] Tax and Compliance - Provision for income taxes was $23.5 million for the nine months ended October 29, 2022, with an effective tax rate of 30.3%, compared to $13.0 million and 222.9% for the same period in 2021[187] - The total liability for income tax associated with unrecognized tax benefits was $4.0 million as of the end of the third quarter of fiscal year 2022[98] - The effective tax rates for the three- and nine-month periods ended October 29, 2022, were 36.3% and 30.3%, respectively, compared to 256.5% and 222.9% for the same periods in 2021[94] Inventory Management - Inventory increased to $199.877 million as of October 29, 2022, compared to $170.608 million as of January 29, 2022[16] - The company employs a data-driven approach to inventory management, introducing new lines of merchandise approximately 16 times per year to maintain customer engagement[159] Miscellaneous - The company is not currently involved in any legal proceedings that would materially affect its business or financial condition[206] - There were no material changes to critical accounting policies and estimates as discussed in the Annual Report for the fiscal year ended January 29, 2022[200] - The company's disclosure controls and procedures were evaluated as effective as of October 29, 2022, ensuring timely reporting and decision-making[202] - No changes occurred in internal control over financial reporting that materially affected the company during the three months ended October 29, 2022[203]