Torrid (US:CURV)2025-12-03 22:30Financial Data and Key Metrics Changes - For Q3 fiscal 2025, the company reported net sales of $235 million, down from $263.8 million in the prior year, reflecting an 8.3% decline in comparable sales [14][15] - Adjusted EBITDA was $9.8 million, representing a margin of 4.2%, compared to $19.6 million and a margin of 7.4% a year ago [17] - The net loss for the quarter was $6.4 million, or $0.06 per share, compared to a net loss of $1.2 million, or $0.01 per share last year [17] Business Line Data and Key Metrics Changes - Strong performance was noted in denim, non-denim, dresses, and intimates, all generating positive comparable growth, while tops and jackets categories faced significant challenges [5][6] - Tops accounted for approximately half of the year-over-year sales miss, with shoes and jackets contributing 40% and 10% respectively [23][26] - The footwear category was paused due to tariff pressures, resulting in an estimated $12.5 million in lost sales for the quarter [8][9] Market Data and Key Metrics Changes - The company is experiencing a shift in consumer preferences, with a noted decline in purchases from loyal customers, particularly in the tops category [39] - Approximately 70% of demand is now originating online, indicating a significant shift in consumer shopping behavior [18] Company Strategy and Development Direction - The company is focused on enhancing product offerings through sub-brands and an opening price point strategy, aiming to increase market share and customer acquisition [9][10] - A comprehensive review of the spring-summer 2026 buying strategy has been completed, with a commitment to balance investments across categories [7] - The store optimization strategy continues, with 15 stores closed in Q3, bringing the total to 74 closures year-to-date, with an expectation of approximately 180 closures for the full year [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with overall performance but emphasized that execution issues are within their control and are being addressed [4][5] - The company expects to see sequential improvement in knit and woven performance by the end of Q4, with a more disciplined approach to the footwear category anticipated to recapture lost sales [7][9] - Full-year net sales are now expected in the range of $995 million to $1.002 billion, with Adjusted EBITDA projected between $59 million and $62 million [19] Other Important Information - The company has implemented enhanced guardrails in the merchandising process to avoid future missteps and is actively addressing near-term assortment gaps [6][25] - Marketing investments increased by $2.7 million to $15.7 million, focusing on customer acquisition and brand visibility [16] Q&A Session Summary Question: Can you elaborate on some of the product missteps? - The merchandising missteps were primarily in the tops category, which accounted for about half of the total revenue miss for the quarter [23][24] Question: What caused the higher promotional activity in the digital channel? - The accelerated promotional activity was correlated to the miss in the tops space, leading to pressure on average unit retail [27][28] Question: What changes are being made to ensure a balanced assortment? - The company is embedding a balanced approach into the assortment architecture, with a focus on core products and solution-oriented items [34][35] Question: Have there been shifts in customer demographics? - Performance has remained consistent across demographics, but the most loyal customers have pulled back, particularly in the tops category [39] Question: What updates are there on the sub-brand strategy? - The sub-brand strategy remains unchanged, with positive momentum expected to continue into 2026 [44][45] Question: How will store closures affect the leverage profile? - Store closures will lead to a more flexible expense profile, with substantial EBITDA margin expansion expected in 2026 [46][47] Question: Can you elaborate on the expected EBITDA margin expansion? - The company anticipates significant EBITDA margin expansion due to cost reductions from store closures and improved operational efficiency [50][51]