Torrid (US:CURV)2025-06-09 20:05PART I — FINANCIAL INFORMATION Financial Statements (Unaudited) Unaudited Q1 2025 financial statements show decreased net sales and net income, with negative operating cash flow Condensed Consolidated Balance Sheets Total assets decreased to $451.4 million due to lower cash, while total liabilities fell and stockholders' deficit improved Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | May 3, 2025 | February 1, 2025 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $23,693 | $48,523 | ($24,830) | | Inventory | $149,570 | $148,493 | $1,077 | | Total Assets | $451,378 | $488,441 | ($37,063) | | Total current liabilities | $232,008 | $263,132 | ($31,124) | | Noncurrent debt, net | $268,373 | $272,409 | ($4,036) | | Total Liabilities | $635,199 | $679,530 | ($44,331) | | Total stockholders' deficit | ($183,821) | ($191,089) | $7,268 | Condensed Consolidated Statements of Comprehensive Income Q1 2025 net sales decreased 4.9% to $266.0 million, resulting in a 51.2% drop in net income to $5.9 million Q1 2025 vs. Q1 2024 Income Statement (in thousands, except per share data) | Metric | Q1 2025 (ended May 3) | Q1 2024 (ended May 4) | YoY Change | | :--- | :--- | :--- | :--- | | Net sales | $265,965 | $279,771 | -4.9% | | Gross profit | $101,402 | $115,421 | -12.1% | | Income from operations | $16,027 | $26,143 | -38.7% | | Net income | $5,940 | $12,172 | -51.2% | | Diluted EPS | $0.06 | $0.12 | -50.0% | Condensed Consolidated Statements of Cash Flows Q1 2025 operating activities used $18.0 million cash, a significant shift from prior year's positive flow, mainly due to working capital changes Cash Flow Summary (in thousands) | Activity | Q1 2025 (ended May 3) | Q1 2024 (ended May 4) | Change | | :--- | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($18,015) | $27,624 | ($45,639) | | Net cash used in investing activities | ($2,547) | ($7,008) | $4,461 | | Net cash used in financing activities | ($4,674) | ($11,859) | $7,185 | | (Decrease) increase in cash | ($24,830) | $8,730 | ($33,560) | Notes to Condensed Consolidated Financial Statements Notes detail revenue by product, debt structure including $288.75 million outstanding, and $4.0 million accrued for a class action settlement - Apparel sales constitute the vast majority of revenue, totaling $239.8 million in Q1 2025, down from $252.6 million in Q1 202442 - As of May 3, 2025, total debt outstanding under the Amended Term Loan Credit Agreement was $288.75 million, with an interest rate of approximately 10%. Availability under the ABL Facility was $117.3 million586062 - The company has accrued a $4.0 million estimated loss for a proposed settlement in a class action lawsuit regarding pricing and sales practices. Two other class action lawsuits are pending, one related to a data breach and another concerning website terms and pricing practices, for which potential losses are not yet determinable666768 Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 net sales decreased 4.9% due to lower transactions, gross profit margin contracted to 38.1%, and Adjusted EBITDA declined to $27.1 million Key Financial and Operating Metrics Comparable sales declined 4% in Q1 2025, an improvement from prior year, while Adjusted EBITDA fell to $27.1 million and store count decreased to 632 Key Metrics Comparison | Metric | Q1 2025 (ended May 3) | Q1 2024 (ended May 4) | | :--- | :--- | :--- | | Number of stores | 632 | 658 | | Comparable sales | (4)% | (9)% | | Net income (in thousands) | $5,940 | $12,172 | | Adjusted EBITDA (in thousands) | $27,128 | $38,227 | Results of Operations Q1 2025 saw net sales fall 4.9%, gross profit decrease 12.1%, and income from operations drop 38.7%, despite an 8.4% decrease in SG&A - Net sales decreased by $13.8 million (4.9%) primarily due to decreases in sales transactions and transaction values. The total store count also decreased by 26 stores year-over-year109 - Gross profit margin decreased by 3.2 percentage points to 38.1%, driven by the decrease in net sales and an increase in merchandising payroll costs110 - SG&A expenses decreased by $6.5 million (8.4%), mainly from lower payroll, bonus, and store operating costs111 - Marketing expenses increased by $2.5 million (19.9%) due to higher spending on social media, retargeting, and photographic production112 Liquidity and Capital Resources The company's liquidity relies on cash from operations and its ABL Facility, with $23.7 million cash and $117.3 million available credit as of May 3, 2025 - As of May 3, 2025, the company had $23.7 million in cash and cash equivalents117 - The company has access to an additional $117.3 million in liquidity from its ABL Facility, net of outstanding letters of credit117 - Primary cash needs include merchandise inventories, payroll, rent, capital expenditures, and debt service payments124 Quantitative and Qualitative Disclosures About Market Risk The company's market risk profile has not materially changed from its prior fiscal year 2024 Annual Report on Form 10-K - There have been no material changes to the company's market risk profile as of May 3, 2025135 Controls and Procedures Management, including CEO and CFO, concluded disclosure controls were effective as of May 3, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the quarter137 - No changes occurred during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting138 PART II — OTHER INFORMATION Legal Proceedings The company is not party to any legal proceedings expected to have a material adverse effect on its business - The company is subject to legal proceedings in the ordinary course of business but does not believe any will have a material adverse effect141 Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's 2024 Form 10-K - No material changes to the risk factors disclosed in the 2024 Form 10-K have occurred142 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None143 Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2025 - During the fiscal quarter ended May 3, 2025, no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement147 Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and Interactive Data Files (Inline XBRL)