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On Tuesday, Goldman Sachs analyst Brooke Roach downgraded Torrid Holdings Inc (NYSE: CURV) from Neutral to Sell, adjusting the price target to $4.00, a decrease from the previous target of $5.50. The downgrade stems from concerns about the company’s heightened vulnerability to a slowing US economic growth, particularly affecting Torrid’s core consumer base. According to InvestingPro data, the company’s revenue declined 4.2% in the last twelve months, with three analysts recently revising their earnings expectations downward for the upcoming period.
Roach notes that while Torrid’s management has taken strategic steps to rejuvenate the business, the brand’s net purchase intent trends have already shown a decline year to date. This suggests that customers are reprioritizing their spending, potentially moving away from self-purchases which could impact the company’s sales. Despite these challenges, InvestingPro data shows the company maintains a healthy gross profit margin of 37.5% and generated positive free cash flow over the past year.
The analyst also highlighted risks to Torrid’s profitability, citing potential impacts from tariffs. Although the tariff situation is currently changeable and outcomes are uncertain, Roach acknowledged that Torrid might have some flexibility to navigate these challenges. However, the risks associated with tariffs add another layer of uncertainty to the company’s financial outlook. InvestingPro analysis indicates that Torrid’s current ratio of 0.86 suggests potential liquidity challenges, with short-term obligations exceeding liquid assets.
Goldman Sachs’ position reflects a broader concern that the emerging risks within the sector are not yet fully accounted for in Torrid’s stock valuation. The market has not adjusted to these potential challenges, indicating that the stock price may not fully reflect the risks identified by Goldman Sachs.
The new sell rating and lowered price target indicate a cautious stance on Torrid Holdings Inc by Goldman Sachs, based on the analysis of current consumer trends and the potential for increased costs due to tariffs. This move by Goldman Sachs suggests investors may need to be mindful of the possible headwinds facing the company.
In other recent news, Torrid Holdings Inc. reported a better-than-expected performance for the fourth quarter of 2025. The company’s earnings per share stood at -$0.03, surpassing the forecast of -$0.06, while revenue reached $275.6 million, slightly above the anticipated $262.85 million. Torrid Holdings’ adjusted EBITDA also showed a slight improvement, rising to $16.7 million from $16.4 million the previous year. The company has launched three new sub-brands targeting younger demographics and plans further store closures as part of its optimization strategy. Torrid Holdings aims to close 40-50 stores while opening a few new locations in high-performing markets. This strategic move is expected to enhance operational efficiencies and align with customer preferences for outdoor shopping centers. The company has also improved its cash position significantly, ending the year with $48.5 million, a substantial increase from $11.7 million last year. Looking forward, Torrid Holdings provided full-year sales guidance of $1.08 billion to $1.1 billion and adjusted EBITDA guidance of $100 million to $110 million.
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