Torrid (CURV) - 2026 Q2 - Quarterly Results

Executive Summary Introduction and CEO Commentary Torrid's Q2 FY2025 results met expectations, driven by sub-brand focus, with updated guidance reflecting increased marketing and tariff impacts - Second quarter sales and Adjusted EBITDA were in line with expectations[2] - Strategic focus on sub-brands continues to drive positive market response and product innovation[2] - Increased marketing investment in the second half aims to boost awareness and consideration[2] - Updated full-year guidance incorporates incremental marketing and new tariffs, projecting an estimated $15 million headwind to Adjusted EBITDA[2] - $40 million of tariff costs were mitigated through disciplined sourcing and expense optimization[2] - Future priorities include elevating assortment with innovative sub-brands, expanding digital marketing, and optimizing the store fleet[2] - Initiatives are projected to increase Adjusted EBITDA margin by 150 to 250 basis points starting in fiscal 2026[2] - Disciplined capital allocation strategy includes debt reduction and share repurchases[2] Second Quarter Fiscal 2025 Financial Highlights Key Financial and Operating Metrics Q2 FY2025 saw decreased net sales, comparable sales, net income, and Adjusted EBITDA, alongside a reduced store count Key Financial and Operating Metrics | Metric | August 2, 2025 | August 3, 2024 | | :-------------------------- | :------------- | :------------- | | Net sales (in thousands) | $262,806 | $284,638 | | Comparable sales | (7)% | (1)% | | Number of stores | 575 | 657 | | Net income (in thousands) | $1,567 | $8,328 | | Adjusted EBITDA (in thousands) | $21,525 | $34,592 | Balance Sheet and Cash Flow Summary Q2 FY2025 ended with $21.5 million cash, $111.7 million liquidity, and $2.3 million net cash used in operations - Cash and cash equivalents totaled $21.5 million at Q2 FY2025 end[5] - Total liquidity, including available borrowing capacity, was $111.7 million at quarter-end[5] - Net cash used in operating activities for the six months ended August 2, 2025, was $2.3 million, a shift from $68.4 million provided last year[5] Q2 Fiscal 2025 Performance Summary Q2 FY2025 net sales decreased 7.7% to $262.8 million, with comparable sales down 6.9%, and Adjusted EBITDA at $21.5 million - Net sales decreased 7.7% to $262.8 million from $284.6 million in the prior year's second quarter[7] - Comparable sales decreased 6.9% in the second quarter[7] - Gross profit margin was 35.6%, down from 38.7% in the prior year's second quarter[7] - Net income was $1.6 million ($0.02 per share), down from $8.3 million ($0.08 per share) last year[7] - Adjusted EBITDA was $21.5 million (8.2% of net sales), compared to $34.6 million (12.2% of net sales) in the prior year[7] - 59 Torrid stores were closed year-to-date, bringing the total store count to 575[7] Company Overview About Torrid Torrid is a direct-to-consumer brand offering stylish, comfortable, and affordable apparel for curvy women in sizes 10 to 30 - Torrid is a direct-to-consumer brand in North America offering stylish apparel, intimates, and accessories for women sizes 10 to 30[11] - Primary focus is on providing fashionable, comfortable, and affordable options for curvy customers[11] - Exclusive, meticulously crafted products aim to build meaningful connections with curvy customers[11] Outlook and Guidance Third Quarter Fiscal 2025 Outlook Q3 FY2025 net sales are projected between $235 million and $245 million, with Adjusted EBITDA between $16 million and $21 million Third Quarter Fiscal 2025 Outlook | Metric | Q3 Fiscal 2025 Outlook | | :----------- | :--------------------- | | Net sales | $235 million - $245 million | | Adjusted EBITDA | $16 million - $21 million | Full Year Fiscal 2025 Outlook Full-year FY2025 guidance projects net sales of $1.015-1.030 billion, Adjusted EBITDA of $80-90 million, and up to 180 store closures Full Year Fiscal 2025 Outlook | Metric | Full Year Fiscal 2025 Outlook | | :-------------------- | :---------------------------- | | Net sales | $1.015 billion - $1.030 billion | | Adjusted EBITDA | $80 million - $90 million | | Capital expenditures | $10 million - $15 million | | Store closures | Up to 180 | | Tariff impact (net) | Up to $10 million exposure (after $40 million mitigation) | Financial Statements Condensed Consolidated Statements of Comprehensive Income Q2 FY2025 unaudited comprehensive income statements show declines in net sales, gross profit, and net income year-over-year Condensed Consolidated Statements of Comprehensive Income (in thousands, except per share data) | Metric (in thousands) | August 2, 2025 | August 3, 2024 | | :---------------------------------- | :------------- | :------------- | | Net sales | $262,806 | $284,638 | | Cost of goods sold | $169,318 | $174,380 | | Gross profit | $93,488 | $110,258 | | Selling, general and administrative expenses | $70,511 | $76,838 | | Marketing expenses | $12,817 | $13,007 | | Income from operations | $10,160 | $20,413 | | Interest expense | $8,119 | $9,142 | | Income before provision for income taxes | $2,054 | $11,395 | | Provision for income taxes | $487 | $3,067 | | Net income | $1,567 | $8,328 | | Net earnings per share: Basic | $0.02 | $0.08 | | Net earnings per share: Diluted | $0.02 | $0.08 | | Comprehensive income | $1,583 | $8,230 | Condensed Consolidated Balance Sheets Q2 FY2025 balance sheets show decreased total assets and increased stockholders' deficit, with reduced cash and higher credit facility borrowings Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :---------------------------------- | :------------- | :--------------- | :------------- | | Cash and cash equivalents | $21,543 | $48,523 | $53,940 | | Inventory | $130,235 | $148,493 | $128,431 | | Total current assets | $189,086 | $226,166 | $217,199 | | Total assets | $414,465 | $488,441 | $487,489 | | Accounts payable | $53,198 | $72,378 | $68,371 | | Borrowings under credit facility | $7,900 | — | — | | Noncurrent debt, net | $264,337 | $272,409 | $280,481 | | Total liabilities | $615,581 | $679,530 | $676,435 | | Total stockholders' deficit | $(201,116) | $(191,089) | $(188,946) | Condensed Consolidated Statements of Cash Flows Six months ended August 2, 2025, saw $2.3 million net cash used in operations, a shift from prior year's cash provided Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | | Net income | $7,507 | $20,500 | | Net cash (used in) provided by operating activities | $(2,270) | $68,447 | | Purchases of property and equipment | $(3,671) | $(10,180) | | Net cash used in investing activities | $(3,671) | $(10,180) | | Proceeds from revolving credit facility | $171,650 | $62,780 | | Principal payments on revolving credit facility | $(163,750) | $(70,050) | | Share repurchase, including excise tax paid | $(20,000) | — | | Net cash used in financing activities | $(21,470) | $(15,981) | | (Decrease) increase in cash, cash equivalents and restricted cash | $(26,980) | $42,205 | | Cash, cash equivalents and restricted cash at end of period | $21,942 | $54,339 | Non-GAAP Financial Measures & Reconciliation Non-GAAP Financial Measures Explanation Adjusted EBITDA is a non-GAAP measure used for evaluating operations and planning, providing supplemental performance insights - Adjusted EBITDA is a non-GAAP financial measure used by management for evaluating ongoing operations and internal planning[14][16] - Adjusted EBITDA adjusts GAAP net income for interest, taxes, depreciation, amortization, share-based compensation, and other non-cash items[15] - It facilitates operating performance comparisons by isolating items unrelated to ongoing operations[16] - Adjusted EBITDA has analytical limitations and should not be considered in isolation or as a GAAP alternative[18] Non-GAAP Reconciliation This section details the reconciliation of net income to Adjusted EBITDA for the three months ended August 2, 2025, and August 3, 2024 Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric (in thousands) | August 2, 2025 | August 3, 2024 | | :---------------------------------- | :------------- | :------------- | | Net income | $1,567 | $8,328 | | Interest expense | $8,119 | $9,142 | | Interest income, net of other (income) expense | $(13) | $(124) | | Provision for income taxes | $487 | $3,067 | | Depreciation and amortization | $9,430 | $8,922 | | Share-based compensation | $1,371 | $2,188 | | Noncash deductions and charges | $23 | $125 | | Other expenses | $541 | $2,944 | | Adjusted EBITDA | $21,525 | $34,592 | Forward-Looking Statements & Risks Forward-Looking Statements This section details forward-looking statements, including financial projections and strategic initiatives, alongside associated risks and uncertainties - All statements regarding expected Q3 and full-year fiscal 2025 performance and future plans are forward-looking[20] - Key risks include changes in consumer spending, economic conditions, tariffs, supply chain interruptions, high interest rates, inflation, and regulatory changes[20] - Additional risks encompass brand image dependence, competition, third-party reliance, supply chain constraints, store optimization, employee retention, data security, legal compliance, payment risks, litigation, and geopolitical events[22] - The company undertakes no obligation to publicly update or revise forward-looking statements, except as legally required[23] Additional Information Call Details Conference call details for Q2 FY2025 results, including date, time, dial-in, webcast link, and replay information - A conference call for fiscal 2025 second quarter results is scheduled for September 4, 2025, at 4:30 p.m. ET[9] - Participants can dial (877) 407-9208 or (201) 493-6784 (international callers)[9] - The conference call will be webcast live at https://investors.torrid.com, with replay available until September 11, 2025[9] Investor Relations & Media Contacts Contact information for investor relations and media inquiries, and channels for disseminating material information - Investor relations contacts: Tom Filandro and Lyn Walther (IR@torrid.com)[25] - Media contacts: Michael Freitag, Arielle Rothstein, and Lyle Weston of Joele Frank, Wilkinson Brimmer Katcher (Media@torrid.com)[25] - Material information is disseminated via the investor relations website (https://investors.torrid.com), SEC filings, press releases, public conference calls, webcasts, and social media[24]