Torrid (US:CURV)2022-06-08 00:37Financial Data and Key Metrics Changes - Net sales for Q1 2022 were $328 million, a 1% increase year-over-year and a 30% increase compared to pre-pandemic 2019 [8][22] - Adjusted EBITDA was $52 million, representing a margin of 15.8% of sales, exceeding guidance [8][26] - Gross profit was $125 million, or 38.1% of net sales, down from 44.5% in the previous year due to higher discounts and increased product and transportation costs [22][26] Business Line Data and Key Metrics Changes - Comparable sales declined 2% year-over-year, but adjusting for event and shipment timing, net sales growth would have been 6% [22][23] - The Curve business has normalized growth, with no longer expecting to reach $500 million in sales by 2023, but plans to open up to 10 standalone Curve stores [13][14] Market Data and Key Metrics Changes - The customer demographic has a household income of approximately $85,000, indicating resilience in shopping patterns [35] - The company is seeing positive traffic trends in stores, which remain the primary vehicle for customer acquisition [12][46] Company Strategy and Development Direction - The company aims to enhance promotional and marketing strategies to balance margin and sales growth, focusing on product franchises and launches [9][10] - Plans to develop a more efficient organization by realigning resources and investing in technology to support e-commerce and order fulfillment [16][55] - The company is committed to sustainable growth in both its core business and Curve, with a focus on innovative product launches [15][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's ability to deliver sustainable and profitable growth despite macroeconomic headwinds [19][30] - The company anticipates net sales for Q2 2022 to be between $350 million and $360 million, with adjusted EBITDA expected between $53 million and $58 million [30][31] Other Important Information - The company ended the quarter with $25 million in cash and cash equivalents, and total liquidity of $145 million [27] - Inventory at the end of the quarter was $179 million, up from $112 million the previous year, with plans to better position inventory levels going into the second half of the year [28][29] Q&A Session Summary Question: Resilience of the Torrid customer - Management noted that the customer demographic is resilient, with a stable shopping pattern and higher household income contributing to stability [35] Question: Marketing and promotional strategy adjustments - Management indicated that there will not be a sales reset but a more surgical approach to promotions, focusing on product benefits and storytelling [38][40] Question: Performance of the Curve business - Management clarified that while there are challenges in certain categories, they remain optimistic about the long-term potential of Curve and are focusing on profitable growth [42][48] Question: Gross margin expectations - Management expects more promotions in the short term but anticipates a moderation in gross margin in the back half of the year [50] Question: Efficiency and resource allocation - Management emphasized the importance of investing in infrastructure and technology to support long-term growth while maintaining marketing investments to build a high-quality customer file [53][56] Question: Pricing strategy - Management believes there is room to increase prices in certain categories while ensuring the value proposition remains strong [69]