Torrid (CURV) - 2025 Q2 - Quarterly Report

Part I - Financial Information Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements for Torrid Holdings Inc. as of August 3, 2024, and for the three and six-month periods then ended Condensed Consolidated Balance Sheets | Balance Sheet Highlights (In thousands) | August 3, 2024 | February 3, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $53,940 | $11,735 | | Inventory | $128,431 | $142,199 | | Total current assets | $217,199 | $179,123 | | Total assets | $487,489 | $476,947 | | Liabilities & Stockholders' Deficit | | | | Accounts payable | $68,371 | $46,183 | | Total current liabilities | $245,627 | $232,107 | | Term loan (noncurrent) | $280,481 | $288,553 | | Total liabilities | $676,435 | $688,664 | | Total stockholders' deficit | ($188,946) | ($211,717) | Condensed Consolidated Statements of Operations and Comprehensive Income | Income Statement (In thousands, except per share data) | Three Months Ended Aug 3, 2024 | Three Months Ended Jul 29, 2023 | | :--- | :--- | :--- | | Net sales | $284,638 | $289,144 | | Gross profit | $110,258 | $102,677 | | Income from operations | $20,413 | $20,188 | | Net income | $8,328 | $6,629 | | Diluted EPS | $0.08 | $0.06 | | Income Statement (In thousands, except per share data) | Six Months Ended Aug 3, 2024 | Six Months Ended Jul 29, 2023 | | :--- | :--- | :--- | | Net sales | $564,409 | $582,998 | | Gross profit | $225,679 | $213,319 | | Income from operations | $46,556 | $46,251 | | Net income | $20,500 | $18,437 | | Diluted EPS | $0.19 | $0.18 | Condensed Consolidated Statements of Cash Flows | Cash Flow Summary (In thousands) | Six Months Ended Aug 3, 2024 | Six Months Ended Jul 29, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $68,447 | $31,695 | | Net cash used in investing activities | ($10,180) | ($9,593) | | Net cash used in financing activities | ($15,981) | ($17,118) | | Increase in cash, cash equivalents and restricted cash | $42,205 | $4,975 | Notes to Unaudited Condensed Consolidated Financial Statements - The company is a direct-to-consumer brand of apparel, intimates, and accessories for women who wear sizes 10 to 30, operating through its e-Commerce platform and stores in the US, Puerto Rico, and Canada[27] | Revenue by Product Category (In thousands) | Six Months Ended Aug 3, 2024 | Six Months Ended Jul 29, 2023 | | :--- | :--- | :--- | | Apparel | $512,515 | $513,482 | | Non-apparel | $37,828 | $53,157 | | Other | $14,066 | $16,359 | | Total net sales | $564,409 | $582,998 | - As of August 3, 2024, the company had $296.6 million of outstanding indebtedness, net of discounts and costs, primarily from its Term Loan Credit Agreement[55][60][133] - There were no borrowings under the $150.0 million ABL Facility[55][60][133] - The company is defending a class action lawsuit alleging false and misleading statements in its IPO registration statement and subsequent filings[72][73] - A motion to dismiss was granted in August 2024, and related derivative complaints are currently stayed[72][73] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results of operations, analyzing key performance metrics, operational results for the recent three and six-month periods compared to the prior year, and its liquidity and capital resources Key Financial and Operating Metrics | Key Metrics | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Comparable sales | (1)% | (18)% | (5)% | (16)% | | Net income (in thousands) | $8,328 | $6,629 | $20,500 | $18,437 | | Adjusted EBITDA (in thousands) | $34,592 | $32,151 | $72,820 | $70,412 | - The number of stores increased to 657 as of August 3, 2024, up from 639 as of July 29, 2023[89] - Key factors affecting performance include customer acquisition and retention, overall economic trends like inflation, brand awareness growth, inventory management, and strategic investments in infrastructure and technology[95][97][98][99][100] Results of Operations - Three Months Ended Aug 3, 2024 vs. July 29, 2023: - Net Sales: Decreased 1.6% to $284.6 million, driven by fewer sales transactions, partially offset by improved pricing[110] - Gross Profit: Increased 7.4% to $110.3 million[111] - Gross margin improved by 320 basis points to 38.7%, mainly due to reduced product costs and more regular-priced sales[111] - SG&A Expenses: Increased 10.4% to $76.8 million, primarily due to higher severance costs, performance bonuses, and other store operating costs[112] - Net Income: Increased 25.6% to $8.3 million[112] - Six Months Ended Aug 3, 2024 vs. July 29, 2023: - Net Sales: Decreased 3.2% to $564.4 million, driven by fewer sales transactions[119] - Gross Profit: Increased 5.8% to $225.7 million[120] - Gross margin improved by 340 basis points to 40.0%, due to lower product and merchandising payroll costs[120] - SG&A Expenses: Increased 8.9% to $153.3 million, driven by higher headquarters expenses and performance bonuses[121] - Net Income: Increased 11.2% to $20.5 million[121] Liquidity and Capital Resources - The company's primary source of liquidity is cash from operations and its ABL Facility[126] - As of August 3, 2024, availability under the ABL Facility was $99.9 million with no borrowings outstanding[126] - Net cash from operating activities for the first six months of 2024 was $68.4 million, a significant increase from $31.7 million in the same period of 2023[130] - This increase was mainly due to higher net income and favorable changes in working capital[130] Quantitative and Qualitative Disclosures About Market Risk The company states that its market risk profile, particularly concerning interest rate risk on its variable-rate debt, has not materially changed from the disclosure in its latest Annual Report on Form 10-K - There have been no material changes to the company's market risk profile since the fiscal year ended February 3, 2024[135] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of August 3, 2024 - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the quarter[136] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[138] Part II - Other Information Legal Proceedings The company is involved in legal proceedings arising in the ordinary course of business but does not currently believe their resolution will have a material adverse effect on its financial condition or operations - The company does not expect current legal proceedings to have a material adverse effect on its business, financial condition, or cash flows[140] Risk Factors The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended February 3, 2024 - There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K[141] Unregistered Sales of Equity Securities and Use of Proceeds The company discusses its share repurchase program, which was authorized for up to $100.0 million, with approximately $44.9 million remaining available for future repurchases - No shares of common stock were repurchased during the three months ended August 3, 2024[142] - As of August 3, 2024, approximately $44.9 million remained available under the authorized $100.0 million share repurchase program[142] Other Items (Defaults, Mine Safety, Other Info, Exhibits) This section confirms there were no defaults upon senior securities, mine safety disclosures are not applicable, and provides an index of the exhibits filed with the 10-Q report - The company reports no defaults on senior securities, no mine safety disclosures, and no other information under Item 5[143]