Torrid (CURV) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net sales grew 31% to $1.3 billion in fiscal 2021 compared to $974 million in 2020, and increased 23% from 2019 [40] - Adjusted EBITDA was $246 million or 19.2% of net sales, compared to $101 million or 10.4% in 2020 [42] - Net loss for the year was $30 million or $0.27 per share compared to net income of $25 million or $0.22 per share in the previous year [43] Business Line Data and Key Metrics Changes - Curve revenue grew 42% in 2021, with expectations of becoming a $1 billion business [11] - Active customer count increased by 20% to 3.8 million, a record high [10] - E-commerce growth was 18%, while stores remained the primary method for acquiring new customers [10] Market Data and Key Metrics Changes - Comparable sales grew 5% in Q4, driven primarily by an increase in transactions [31] - Gross profit in Q4 was $99 million or 31.6% of net sales, down from $114 million or 38.2% in the previous year [33] - Inventory at the end of the quarter was $171 million, compared to $106 million last year [45] Company Strategy and Development Direction - The company aims to enhance brand awareness and customer acquisition through targeted marketing investments [14] - Plans to launch a Curve dedicated online tab experience and expand Curve assortment to one-third of the store fleet [13] - The company is focused on increasing wallet share with existing customers by expanding product offerings and enhancing customer experience [16] Management's Comments on Operating Environment and Future Outlook - Management remains confident in achieving high single-digit annual net sales growth and low double-digit operating income growth over the long term despite macroeconomic challenges [26] - The company is addressing supply chain challenges and has formed a speed committee to analyze production cycles [24] - Management acknowledges inflationary pressures but believes customers will focus on value-driven products [71] Other Important Information - The company opened 22 stores in 2021, with strong performance exceeding expectations [46] - A new technology in the distribution center is expected to improve throughput and efficiency [23] - The Torrid Foundation raised and distributed over $2.5 million to various organizations [26] Q&A Session Summary Question: Sales guidance for the year and revenue shifts - The shift primarily in Q1 was a $30 million event related to the Torrid cash event shifting into Q2, with confidence in sales ramping up in the second half of the year [56] Question: Momentum behind Curve and occasion-oriented styles - Management is excited about Curve, noting that only 50% of customers have purchased from this line, indicating significant growth potential [58] Question: Customer acquisition trends and distribution center performance - Customer base and spend are expected to continue growing, with improved productivity in the distribution center noted as a positive surprise [62] Question: Pricing strategies and promotional environment - The company has increased prices to mitigate inflation and will continue to review pricing strategies while maintaining promotional activities that drive customer engagement [67] Question: E-commerce performance versus stores - E-commerce performed well in Q4, with a penetration rate of around 63% for 2021, expected to remain stable in 2022 [77] Question: Customer health and purchasing behavior - No evidence of customers trading down has been observed, with a focus on value-driven products as they return to work [71]