Torrid (US:CURV)2025-06-05 21:30Financial Data and Key Metrics Changes - The company reported net sales of $266 million for Q1, down from $279.8 million in the prior year, with comparable store sales declining by 3.5% [20][24] - Gross profit decreased to $101.4 million from $115.4 million, with gross margin declining by 320 basis points to 38.1% due to planned promotional initiatives [25][26] - Adjusted EBITDA was $27.1 million, representing a 10.2% margin, compared to $38.2 million and 13.7% in the previous year [28] - Net income for the quarter was $5.9 million, or $0.06 per share, down from $12.2 million, or $0.12 per share, in the prior year [27] Business Line Data and Key Metrics Changes - The performance of sub-brands such as Festi, Belle Isle, Nightfall, and Retro Chic exceeded expectations, achieving sales 2 to 6 times higher than planned [6] - Online sales demand is approaching 70% of total sales, with expectations to reach 75% by 2026 [9] - The company plans to increase the delivery frequency of existing sub-brands from 6-8 times a year to 12 times annually, aiming for sub-brands to represent up to 30% of the portfolio by 2026 [7] Market Data and Key Metrics Changes - The company closed 35 stores in 2024 and plans to close approximately 180 stores in 2025, with 60 closures targeted in the first half of the year [10][30] - The closures are expected to have a negligible impact on net sales, as the company retains about 60% of customers post-closure [11][30] Company Strategy and Development Direction - The company is focusing on enhancing product assortment, driving customer growth, and executing a store optimization plan [5] - A strategic shift towards online sales is evident, with plans to optimize the retail footprint to better align with customer demand [12][36] - The company is diversifying sourcing to reduce exposure to China, with current exposure in the low single digits [13] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer behavior remains price and value-conscious, but there is a positive response to new product offerings [20] - The company expects to mitigate approximately $20 million of tariff impact through expense reductions and strategic marketing investments [31] - The outlook for fiscal 2025 includes net sales guidance of $1.03 billion to $1.055 billion, reflecting the pause in the footwear business [31] Other Important Information - The company ended the quarter with $23.7 million in cash and access to $117.3 million in additional liquidity [21] - Inventory totaled $149.6 million, a 3.3% increase year-over-year, with expectations for a decrease in comparable store inventory by mid to high single digits by year-end [29] Q&A Session Summary Question: Can you discuss the cadence of new product launches for the second half? - The company plans to launch a new sub-brand, Lovesick, in August and Studio Luxe in September, with existing brands launching monthly by year-end [40] Question: What trends are seen with new customers following their initial sub-brand purchase? - Positive movement in customer acquisition and reactivation is noted, with a high attachment rate of 90% for core products purchased alongside sub-brands [44][46] Question: Why is there a sizable sales growth deceleration expected in Q2? - The pause in the shoe business, primarily sourced from China, is expected to impact sales by approximately $40 million to $45 million for the year [50][51] Question: How does the promotional strategy coexist with new product launches? - The company will maintain a promotional cadence, responding to consumer value orientation while continuing to drive newness through product launches [58] Question: What is the rationale behind the acceleration of store closures? - The shift towards online shopping preferences among customers necessitates the closure of underperforming stores, allowing for resource reallocation to digital investments [62]