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Torrid Holdings Inc. (CURV), with a market capitalization of $508 million, reported its first-quarter 2025 earnings, revealing a mixed financial performance. The company achieved an earnings per share (EPS) of $0.06, surpassing the forecasted $0.05, but fell short on revenue with $266 million against the expected $278.83 million. Following the announcement, Torrid’s stock fell by 2.16% in after-hours trading, reflecting investor concerns over the revenue miss despite the EPS beat. According to InvestingPro analysis, the stock appears undervalued compared to its Fair Value, presenting a potential opportunity for value investors.
Key Takeaways
- Torrid’s EPS exceeded expectations by 20%, but revenue missed forecasts by 4.6%.
- The stock price dropped 2.16% in after-hours trading, settling at $4.99.
- New sub-brands outperformed, with further launches planned to capture a broader market.
- The company is closing 180 stores in 2025, aligning with its digital transformation strategy.
- Torrid’s guidance projects full-year net sales between $1.03 billion and $1.055 billion.
Company Performance
Torrid Holdings navigated a challenging retail landscape in Q1 2025, marked by a decline in net sales to $266 million from $279.8 million the previous year. The company is focusing on digital sales, which are nearing 70% of total revenue, as part of its strategic shift. Despite a decrease in gross profit and margin, Torrid’s sub-brands showed promising growth, suggesting potential for future revenue streams.
Financial Highlights
- Revenue: $266 million, down from $279.8 million YoY
- Earnings per share: $0.06, compared to $0.12 YoY
- Gross Profit: $101.4 million, down from $115.4 million YoY
- Gross Margin: 38.1%, a decline of 320 basis points
- Net Income: $5.9 million, down from $12.2 million YoY
Earnings vs. Forecast
Torrid’s Q1 2025 EPS of $0.06 surpassed the forecast by 20%, marking a positive surprise for investors. However, the revenue shortfall of $12.83 million, or 4.6% below expectations, tempered the overall financial performance. This mixed result reflects the company’s ongoing challenges in a price-sensitive market.
Market Reaction
In response to the earnings report, Torrid’s stock experienced a 2.16% decline in after-hours trading, closing at $4.99. This movement is indicative of investor caution, particularly due to the revenue miss. The stock remains within its 52-week range, with a high of $9.14 and a low of $2.18. With a beta of 1.79 and significant price movements over the past six months (+39.84%), InvestingPro data suggests higher-than-market volatility, requiring careful monitoring by investors.
Outlook & Guidance
Torrid has provided a full-year net sales guidance of $1.03 billion to $1.055 billion, with adjusted EBITDA expected to be between $95 million and $105 million. The company plans to expand its sub-brand portfolio, aiming to increase their contribution to 30% of the overall business by 2026. Additionally, Torrid is set to close 180 stores this year as part of its digital transformation strategy.
Executive Commentary
CEO Lisa Harper emphasized the shift towards online sales, stating, "The customer continues to tell us that she prefers to shop online." Chief Strategy Officer Ashley Wheeler highlighted the success of sub-brands in attracting younger customers, noting, "We are seeing really positive movement in the customer file related to these sub brands." CFO Paula Dempsey reiterated the company’s strategic focus, saying, "We are operating with discipline and a clear strategic framework."
Risks and Challenges
- Store Closures: The planned closure of 180 stores could disrupt revenue streams and customer access.
- Revenue Miss: The Q1 revenue shortfall highlights ongoing challenges in meeting market expectations.
- Competitive Market: Torrid faces a competitive retail environment, requiring effective customer acquisition strategies.
- Digital Shift: The transition to a digital-first model may present operational challenges and require significant investment.
- Economic Conditions: Broader economic pressures could impact consumer spending and affect sales performance.
Q&A
During the earnings call, analysts inquired about the performance of sub-brands and their impact on customer acquisition. Torrid executives confirmed a strong cross-category shopping trend and a 90% attachment rate for sub-brand purchases. Questions also focused on the strategic rationale for the store closures and the expected benefits of the digital transformation, to which the management reaffirmed their commitment to enhancing customer experience through online channels.
Full transcript - Torrid Holdings Inc (CURV) Q1 2026:
Conference Operator: Greetings and welcome to the Torrid Holdings Inc. First Quarter Fiscal twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Jemweh Abeleu, Chief Accounting Officer and Senior Vice President. Thank you, and you may begin.
Jemweh Abeleu, Chief Accounting Officer and Senior Vice President, Torrid Holdings Inc.: Good afternoon, everyone, and thank you for joining Torrid’s call today to discuss our financial results for the first quarter of fiscal twenty twenty five, which we released this afternoon and can be found on our website at investors.torrid.com. With me on the call today are Lisa Harper, Chief Executive Officer of Torrid Paula Dempsey, Chief Financial Officer Ashley Wheeler, our Chief Strategy and Planning Officer, is also present and will be participating in the Q and A session. Before we get started, I would like to remind you of the company’s safe harbor language, which I’m sure you’re familiar with. Management may make forward looking statements, including guidance and underlying assumptions. Forward looking statements may include, but are not limited to, statements containing the words expect, believe, plan, anticipate, will, may, should, estimate and other words and terms of similar meaning.
All forward looking statements are based on current expectations and assumptions as of today, 06/05/2025. These statements are subject to risks and uncertainties that could cause actual results to differ materially. For further discussion of risks related to our business, see our filings with the SEC. This call will contain non GAAP financial measures such as adjusted EBITDA. Reconciliations to these non GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC and available on our website.
With that, I will turn the call over to Lisa.
Lisa Harper, Chief Executive Officer, Torrid Holdings Inc.: Thank you, Chinwei. Hello, everyone, and thanks for joining us today. I’m excited to update you on the progress we are making across our strategic business initiatives, namely enhancing our product assortment, driving customer growth and executing our store optimization plan. I’m also pleased to report that we delivered on our first quarter sales and EBITDA guidance. Now an update on our strategic business initiative.
The performance of our sub brands continue to reinforce our belief that the strategy is working. Festi, Belle Isle, Nightfall and Retro Chic have all had multiple deliveries at this point, and they are overachieving our expectations from two to six times what we had originally planned. These sub brands are designed and marketed for distinctive lifestyles, targeting a broader range of plus size consumers, and they are revolutionizing our collections to embrace diverse fashion sensibilities and deliver truly differentiated options. This calculated expansion has attracted new clientele and has deepened relationships with our current customers, increased spending across our portfolio. Importantly, our sub brands are attracting new and younger customers, reactivating lapsed customers, while also creating a halo effect for our mainline Torrid offerings.
With the margin structure higher than our core Torrid product, we are doubling down on our efforts to further expand our strategy with planned launches of new sub brands throughout the year, while also increasing the delivery frequency on existing sub brands from the current six to eight times a year to 12 times annually, growing their penetration from approximately 10% this year to up to 30% of our portfolio in 2026. We will continue to fund the growth of our sub brands through reductions and less productive towards SKUs enabling us to deliver compelling high margin product. Now shifting to our channel optimization initiative. Our customers continue to send a strong message that they prefer an online experience which better supports our internal marketplace strategy that showcases the entire breadth of our assortment. Our website experience is powerful, and the perceived value to the customer is high across this channel.
She loves that she can see and explore everything we offer, view outfitting options, and see herself. This is supported by our consistent sizing expertise and overall customer satisfaction, which continues to drive our industry leading low return rates. Our online sales demand continues to grow and is approaching 70% of total sales. We expect web demand to reach penetration in 2026. As part of our digital transformation long term, we see the business model evolving to an approximate demand mix of 75% online and 25 in store.
This brings me to an update on the optimization of our retail footprint. As we mentioned on our Q4 call, we closed 35 stores in 2024 and we were targeting 40 to 50 closures in 2025 with the potential for additional closures as approximately 60% of our store fleet is up for lease renewals this year. With our customers increasingly preferring to shop our online experience, we are accelerating our fleet optimization efforts with a plan to now close approximately 60 stores in the first half of this year. We believe we have an opportunity to close-up to an additional 120 stores in the back half of this year, bringing the total number of targeted closures for the year to approximately 180. Paula will provide more detail on the net impact of these closures, but importantly given many of these stores have lower productivity and we continue to experience sales and customer retention rates from closed stores of approximately 60%, the projected impact to net sales is expected to be negligible.
With the annualization of these closures, we would expect to see from 150 to two fifty basis points of EBITDA margin benefit net of increased marketing investment. We are planning to allocate a portion of the cost savings from the store closures to customer acquisition marketing as well as a more expansive effort to retain and transfer existing customers to the web or neighboring stores. As a reminder, 95% of our customers are in our loyalty program, so we have a large amount of data on their shopping patterns. Our physical stores will continue to represent an important touch point to complement our omnichannel go to market strategy. They serve as community hubs and immersive brand building experiences, introducing customers to our brand and sub brands, offering the dressing room experience, and acting as service centers for purchases made online or in stores.
Most importantly, our passionate sales associates bring the brand to life, delivering personalized service that deepens customer connection and drives long term loyalty. As we mentioned on the Q4 call, we see opportunities to enhance the expression of our brand in stores to better align with the online experience and we remain committed to refreshing 135 stores in the third quarter. These are low capital investments with an expected fast return. In summary, the optimization of our retail store fleet represents a strategic shift to better align our distribution with customer demand, which is expected to dramatically enhance our customer experience and deliver healthier sales growth while improving our overall profitability and cash flow. Now to tariffs.
Let me start with the punch line. Our current exposure to China sourced goods will be in the low single digits for the balance of the year, down from the mid teens. Improving our sourcing has been a key area of focus for several years and I’m proud of the robust sourcing infrastructure we have in place today. Our team has worked to reduce our exposure to China by diversifying into other countries and cultivating strong relationships with a broad range of vendor partners who in many cases had developed manufacturing capabilities in multiple countries. In addition to shifting production out of China, our tariff mitigation playbook also includes sharing the increased costs with our vendor partners, exploring cost saving fabric opportunities such as using Egyptian denim instead of Turkish denim, and strategically and selectively making low single digit price adjustments where we see a value proposition opportunity.
As it stands today after these actions, we expect the net impact of tariffs to be approximately $20,000,000 for the remainder of the year calculated based on current tariff rates, which we will offset primarily through discretionary expense reductions, store optimization and prioritization of projects across the business. We have also made the strategic decision to temporarily pause and reevaluate shoe offerings, which are 100% sourced out of China. This strategy shift will result in a neutral EBITDA impact in 2025 and an expected revenue loss of approximately $40,000,000 to $45,000,000 On a go forward basis, we are actively exploring opportunities to reenter this new category in a way that adds profitability and aligns with our broader sourcing strategy. Looking ahead, our goal is to keep any individual country, Vietnam included, to under 20 of apparel sourcing penetration. Turning to marketing, our strategy this quarter focused on creating momentum through bold storytelling, elevated community engagement, and agile execution.
We leaned heavily into messaging around newness supported by more frequent site refreshes. This not only resonated with customers but helped set the stage for strong performance during our Torrid Cash and after party events. While consumer sensitivity to promotions remain elevated in the current macro environment, our strategic messaging helped capture demand and drove conversion during key moments. One of the most exciting highlights of the quarter was our Coachella activation under the Festi by Torrid sub brand. The campaign sparked remarkable engagement, generating millions of impressions and expanding our social following significantly in just one week.
Beyond the numbers, it demonstrated the power of showing up in cultural moments where size women are often underrepresented. The response from our community was overwhelmingly positive, reaffirming our strategy to lead with authenticity. We saw meaningful success in evolving our approach across channels. In digital, we prioritized spend toward customer acquisition, which contributed to solid performance in both new and reactivated customer segments. SMS and push campaigns benefited from thoughtful timing and dynamic content leading to successful push revenue during the quarter.
In email, we tested new creative formats and editorial storytelling such as day to night looks and curated collections, which performed well and confirmed the value of continually refreshing our content pipeline. Across paid and owned channels, we continued balancing performance with brand building, testing new creative formats and placements to drive long term value while maintaining short term efficiency. Our loyalty program played a critical role with strategic bonus points events and targeted rewards helping drive frequency, retention and cross category migration. Toward Cash in particular was a strong traffic and revenue driver during the quarter and our after party events sustained momentum with additional customer engagement. Lastly, our mobile app reached a new revenue high supported by timely push notifications, exclusive offers and seamless loyalty integration.
The app continues to grow as a key touch point for high value customers and plays an important role in omni channel retention. Our marketing performance this quarter reflected a disciplined, creative and community first approach. We remain focused on amplifying what works while continuing to evolve with our customers, stay culturally relevant and drive sustainable growth ahead. Let me wrap up with a brief review of our first quarter results. As I mentioned, our performance for the quarter was in line with expectations for both net sales and EBITDA.
We registered net sales of $266,000,000 and EBITDA of $27,100,000 at the high end of our guidance. Our comparable sales were down 3.5%. Although consumers remain price and value conscious, our customers are responding well to newness highlighted by the sub brand. As I noted earlier, our online demand once again outpaced stores and we are encouraged to see a high percentage of customers who made a sub brand product purchase are also picking up items from our core line. Overall, apparel performance in Q1 showed encouraging signs of momentum as the quarter progressed.
While February proved to be the most challenging month, we meaningfully improved in March with further stabilization in April. We saw strength in key categories including dresses, denim and non denim bottoms each of which delivered positive comps for the quarter reflecting strong consumer response to refreshed assortments and trend right product. We remain in a strong financial position ending the quarter with $23,700,000 in cash and we have access to $117,300,000 of additional liquidity from our revolving credit facility. Our inventory position and composition are in excellent shape and we are managing all aspects of the business with a prudent approach to the controllables while playing offense focused on profitable growth. In closing, I’d like to recognize our exceptional Torrid team.
Their relentless commitment to elevating our merchandise, driving innovation and streamlining operations has been transformative. We’ve made remarkable strides in our strategic initiatives establishing the foundation for sustainable profitable growth with an eye towards creating value for all of our stakeholders. With that, I’ll turn it over to Paula.
Paula Dempsey, Chief Financial Officer, Torrid Holdings Inc.: Thank you, Lisa. Good afternoon, everyone, and thank you for joining us today. I will walk through our first quarter financial performance, discuss progress against our strategic priorities and share our outlook and guidance for fiscal twenty twenty five, along with how we’re positioning the business for long term value creation. We delivered results in line with expectations for both net sales and adjusted EBITDA in Q1. After a slow start to the quarter in February, we saw improving sales momentum as the quarter progressed.
Importantly, we began to realize tangible benefits from our store optimization initiative launched last year, which supported a reduction in SG and A and reinforced our focus on profitability and disciplined cost control. Net sales for the first quarter were $266,000,000 compared to $279,800,000 in the prior year. Comparable store sales declined 3.5%, reflecting continued pressure in our physical retail locations, partially offset by strength in our digital channel. Our performance reflects the continued evolution of our consumer shopping behavior and we remain focused on adapting accordingly. Gross profit was $101,400,000 down from $115,400,000 last year with gross margin declining three twenty basis points to 38.1%.
The decline in margin rate was driven by planned promotional initiatives to improve conversion rates. We maintained an effective approach to expense management. SG and A was favorable by $6,500,000 resulting in $70,000,000 in Q1 compared to $76,500,000 in the prior year. As a percentage of sales, SG and A leveraged 100 basis points to 26.3% versus last year. This expense discipline remains a critical lever as we navigate the current environment.
The year over year favorability in SG and A was driven by our store optimization efforts as well as prioritization of company wide projects and contract renegotiations. We strategically increased marketing investments to $15,400,000 from $12,800,000 a year ago, deploying funds to support the launch and awareness of our new sub brands. This reflects a strategic shift toward customer acquisition and brand building designed to drive long term customer file growth. In the first quarter, we saw a steady customer acquisition and reactivation momentum on the web, achieving positive results, which we believe are due to our marketing strategy shift. We delivered net income of $5,900,000 or $06 per share compared to a net income of $12,200,000 or $0.12 per share in the prior year.
Adjusted EBITDA was $27,100,000 representing a 10.2% margin versus $38,200,000 and 13.7% last year. The year over year EBITDA cadence was anticipated reflecting our decision to increase the allocation of marketing investments to earlier in the year to support our sub brand momentum. We ended the quarter with a healthy liquidity position. Cash and cash equivalents stood at 23,700,000 up from $20,500,000 in the prior year, and we had no borrowings outstanding under our revolving credit facility. Total liquidity, including available borrowing capacity, remained strong at 141,000,000 Additionally, we continue to strengthen our balance sheet by reducing total debt from the prior year by $16,200,000 to 284,500,000.0 Inventory totaled $149,600,000 a 3.3% increase versus last year, primarily due to in transit timing.
We’re managing inventory with precision and expect to see temporary fluctuations throughout the year. However, we expect year end comparable store inventory to be lower by mid to high single digit percentages and with store closures expect our total inventory to be down meaningfully more. As Lisa discussed earlier, as part of our continued strategy to align our demand channels, we’re making decisive progress on our store fleet optimization. With over 60% of our store leases up for renewal in 2025, We’re accelerating our store closure efforts, and we’ll have approximately 60 stores closed by the end of Q2 and as many as 180 stores over the full year. Most of these additional 120 closures are anticipated towards the end of fiscal year, taking advantage of lease expiration dates and therefore will require little, if any, incremental cost to exit.
The stores we have identified for closure are underperforming relative to our fleet with an average of approximately $350,000 in annual sales. They are primarily situated in less attractive or lower performing areas. We expect the net sales impact from these store closures to be minimal, and we plan to offset it through more targeted marketing investments and enhancements to our customer retention strategy. Historically, we have retained approximately 60% of our customers post closure, a trend that has held true with our most recent closures. Going forward, our enhanced approach includes a multi touch communication plan with both email and SMS outreach before and after closure, along with incentives to transition customers to a nearby store or to our digital platform.
Additionally, our store optimization strategy will significantly reduce our cost structure and improve working capital, allowing us to reinvest more aggressively in customer reactivation and acquisition initiatives to support long term revenue growth. Turning to our updated guidance for fiscal twenty twenty five. We’re revising our revenue outlook to reflect the strategic decision to pause our footwear business. This will result in a revenue impact of approximately 40,000,000 to $45,000,000 this year. We now expect full year net sales in the range of 1,030,000,000.00 to $1,055,000,000 We remain committed to delivering healthy profitability and expect our adjusted EBITDA to range from $95,000,000 to $105,000,000 for the full year, which includes the net impact of tariff headwinds and our mitigation efforts.
We expect to mitigate approximately $20,000,000 of tariff impact through $20,000,000 in expense reductions for the year. Half of these reductions will come from our store optimization project, while the remainder will come from discretionary spending and reprioritization of internal projects. Our quarterly sequence will be slightly different from the past years. Over the years, we realized 60% to 65% of our full year adjusted EBITDA in the first half of the year. In fiscal twenty twenty five, we expect our quarterly adjusted EBITDA to be more evenly spread due to a shift in marketing spend from the second half into the first half of the year to support the launch of the sub brands, while cost reductions are expected to have a more significant impact in the second half of the year, leading to a more balanced strategy for profitability across the quarters.
Capital expenditures are expected to be in the range of 10,000,000 to $15,000,000 focused on technology, digital experience, store refreshes and fulfillment capabilities to support our omnichannel growth strategy. For the second quarter, we expect net sales of $250,000,000 to $265,000,000 and adjusted EBITDA between $18,000,000 and $24,000,000 This includes a projected tariff impact of approximately 5,000,000 Looking ahead to fiscal twenty twenty six, while we’re not issuing formal guidance at this time, we believe it is important to share early visibility into the expected benefits of our 2025 sales channel realignment actions. As I mentioned earlier, the stores identified for closure generate an average annual sales of approximately $350,000 significantly lower fleet average. As a result, we expect minimal impact to the top line both during the closure process and in future years. Historically, we retain roughly 60% of sales in customers following a store closure, driven by the strength of our loyalty program, which includes 95% of our customer base.
This high enrollment rate enables us to effectively redirect sales to nearby locations or our digital platform. Taking into account the net financial impact of these closures, together with incremental reinvestments into marketing and store experience, we expect a benefit of 150 to two fifty basis points of EBITDA margin expansion in fiscal twenty twenty six and beyond, supporting enhanced profitability and sustainable top line growth. This initiative also advances our fleet rebalancing strategy, shifting the mix from 65% enclosed malls and 35% outdoor centers to approximately fifty five percent and forty five percent, respectively. As
Ashley Wheeler, Chief Strategy and Planning Officer, Torrid Holdings Inc.: we
Paula Dempsey, Chief Financial Officer, Torrid Holdings Inc.: have shared in previous calls, outdoor centers typically deliver stronger productivity for our brand. In closing, we’re operating with discipline and a clear strategic framework, tightly controlling what we can while positioning the business to win in a fast evolving retail environment. Our priorities remain optimizing our footprint, investing in high ROI growth levers, and strengthening our financial foundation. We are confident that our focused execution and strategic decisions today will support sustained profitable growth over the long term. With that, I’ll turn the call back to the operator for Q and A.
Conference Operator: Thank you. We will now be conducting a question and answer session. Our first question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed with your question.
Paula Dempsey, Chief Financial Officer, Torrid Holdings Inc.: Hi, this is Mary on for Lorraine. Could you talk a little bit about how we should think about the cadence of newness for the second half?
Lisa Harper, Chief Executive Officer, Torrid Holdings Inc.: Hi. The cadence of newness for product?
Paula Dempsey, Chief Financial Officer, Torrid Holdings Inc.: Yeah. Just in terms of, like, your sub brand launches, just how we should think
Ashley Wheeler, Chief Strategy and Planning Officer, Torrid Holdings Inc.: about that for the remainder of the year.
Lisa Harper, Chief Executive Officer, Torrid Holdings Inc.: Right. We have another new sub brand launching in August, which is Lovesick, which is geared toward a younger customer at a slightly lower price point. And then we have Studio Luxe that will launch in September, which is a higher end kind of dusted drinks concept. We’ve been in the back half of the year accelerate the timing of our launches for the existing brands, Belle Isle, Festi, Nightfall, and Retro Chic. So by the end of the year, we’ll be delivering I would say into fourth quarter, we’ll be delivering all of those brands on a monthly basis.
Analyst: Thank you.
Conference Operator: Thank you. Our next question comes from the line of Brook Roach with Goldman Sachs. Please proceed with your question.
Ashley Wheeler, Chief Strategy and Planning Officer, Torrid Holdings Inc.: Hi, this is Savannah Summer on for Brookroach. Thank you so much for taking our question. It’s great to see the momentum with the sub brands. You’ve discussed them as being an avenue customer acquisition, and I’m curious if you could discuss what trends you’ve been seeing with these new customers following their initial sub brand purchase. Are you seeing them shop across the broader assortment and other sub brands?
And is there any unique differences in shopping behavior by channel or category to call out versus your legacy customer? Thank you.
Ashley Wheeler, Chief Strategy and Planning Officer, Torrid Holdings Inc.: Hi. This is Ashley. We are seeing really positive movement in the customer file related to these sub brands, acquiring and reactivating new and younger customers than our average age in our existing file. Additionally, we’re seeing really positive movement among existing customers with an increased lifetime value attached to them. So I’m really seeing incremental purchase behavior from that group as well as really high transaction size.
We’re seeing a very high attachment rate as well. So about 90% of the time, those that are participating in the sub brands are adding other core toy product to their basket.
Lisa Harper, Chief Executive Officer, Torrid Holdings Inc.: And I I would add that it is performing substantially higher online than in stores. Although we’ve distributed Belle Isle particularly to 350 stores and Festi to an average of about 200 to 250 stores. We continue to see a predominance of the demand coming from the on from the digital channel. So we think it’s important to continue to bring newness to the store environment, but we’re certainly, I think, by reaching a broader audience, reactivating a broader audience, and bringing younger customers into the brand, seeing a predominance, even more than our average breakout, towards the digital channel.
Ashley Wheeler, Chief Strategy and Planning Officer, Torrid Holdings Inc.: Great. Thanks so much for the color. I’ll pass it on.
Conference Operator: Thank you. Our next question comes from the line of Alex Stratton with Morgan Stanley. Please proceed with your question.
Analyst: Hi, this is Katie on for Alex. Thank you for taking our question. I just wanted you to look at 2Q specifically. Think at the midpoint of your guidance, it implies a sizable sales growth deceleration. Is there anything going on there?
And does that reflect quarterly trends, or what should we know there?
Paula Dempsey, Chief Financial Officer, Torrid Holdings Inc.: Hi. This is Paula. How are you? Yeah. So as we had discussed earlier on our on our call, we are pausing right now our shoe business until further notice.
So the majority of that business is currently sourced from from China, and that business tends to be lower margin. So at this point, we’re pausing it and just essentially reevaluating other partners to to support the reentry into that business at a higher, more profitable margins.
Lisa Harper, Chief Executive Officer, Torrid Holdings Inc.: So that impacts about 40,000,000 $45,000,000 in sales for the year kind of spread evenly through the balance of That is correct.
Analyst: Got it. Thank you. And I don’t know if you’re giving any color on quarter day trends or if that’s in line with your guidance there.
Lisa Harper, Chief Executive Officer, Torrid Holdings Inc.: Just think through the guidance, we’re continuing to see overall the choppy customer behavior, but it’s going in both directions. We have some softer times and some stronger times. So we feel and are observing that she’s buying slightly closer to need. And so seasonal categories are coming their demand is coming in a little bit later. We can continue to see strength in our digital channel and look forward to really strong performance as we go through the back of the year with our semiannual sale, our toward cash event as well as our after party.
Analyst: Great. Thank you so much.
Paula Dempsey, Chief Financial Officer, Torrid Holdings Inc.: Thanks.
Conference Operator: Thank you. Our next question comes from the line of Dylan Carden with William Blair. Please proceed with your question.
Analyst: Appreciate it. I’m sure you covered this. Apologies, there’s a lot going on tonight. But the plan promotional or the use of promotion strategically through the quarter kind of mixed in with this flow of newness that you’re seeing. Can you just remind us where the promotional strategy from here, should those things exist or coexist?
And is that more a reflection of the current market? And then as far as the online versus retail channels, online more promotional or more promotional channels? Thanks.
Ashley Wheeler, Chief Strategy and Planning Officer, Torrid Holdings Inc.: Hi. This is Ashley. So we are continuing to be, I would say, as promotional as we typically are. Our cadence of major events, like Toward Cash, as you mentioned, will be four times a year as historically have been and as as planned, two semiannual sale events. And we’re responding to, you know, general consumer, I would say, consciousness or value orientation with promotional events, which she’s been very, very responsive to.
So that will continue, and that’s implied in our guidance.
Analyst: Okay.
Ashley Wheeler, Chief Strategy and Planning Officer, Torrid Holdings Inc.: And then I’m just kind of
Analyst: curious, the acceleration in closures, what’s behind that? How you’re arriving at kind of the 75, 20 5 split is the right level? Yeah. Can we sort of start there?
Lisa Harper, Chief Executive Officer, Torrid Holdings Inc.: Sure. I think that, Dylan, the customer continues to tell us that she prefers to shop online. We have talked previously. We’re in, you know, in the mid sixties in terms of penetration. That penetration keeps growing.
That business keeps comping online. We are now acquiring more customers online than we are in the store channel. So all of the trends and, you know, I think we’ve supported this with marketing strategies, with investment in digital marketing, with the sub brand strategy and the expansion of product categories. I think the web experience for us is dramatically is a dramatically powerful channel of her storytelling for our customer. And as we do that, she continues to migrate online.
We still are seeing omni power, and we feel strongly that, you know, by closing these underperforming stores, we’ll be able to move the fixed expenses associated with those stores. Some of that will go to higher level of profitability for the company, and some of that will go towards the rightsizing of the digital investment that needs to happen to continue to drive this new customer to the brand. As we see the younger customers coming in, as we see the reactivated customers coming in, the experience for the breadth it for the product categories, the being able to visualize them, outfit them, tell tell the stories about them has has I think we’ve done a the team has done a tremendous job in driving that visual representation of the brand, so it is the best expression of the brand. We’re not giving up on stores at all. We are rightsizing the portfolio.
So if you do the math, this ends up at about being 450 stores, with this round of closures, and we think we’re we’re leaving very few markets. So it’s really about thinning out of existing markets. The customers will still have a close by store. And just to reinforce, we’ve seen with the closures most recently with the fourth quarter closures that we are still transferring slightly higher than 60% of those customers and sales to nearby stores or online. So as we’re doing that, we’re just rightsizing the business to the demands of the customer and being able to reallocate our our resources, to the right channel.
I think sub brands has illustrated to us or and and substantiated our theory that this customer wants more choices and is willing to pay for them, meaning she’s willing to pay more for more fashion. And our experience with their response to the sub brands and the halo effect that it provides to the core business is best expressed online. And so that became very, very clear to us that it was time to restructure our portfolio to a digitally led perspective. I hope that answered that.
Analyst: Very much so. Thank you. And last one, can you square the circle? You mentioned it there, the 60% retention but full year negligible sales impact of closing the stores. Is that just some sort of function of when you’re closing them, the fact that retain maybe increased marketing and other online channels, just how you get to that kind of neutral impact?
Thanks.
Lisa Harper, Chief Executive Officer, Torrid Holdings Inc.: Right. So most of those stores will close toward the end of the fourth quarter and at the same time we’ll be ramping up our marketing spend in relationship to that. So based on what we’ve learned from our digital marketing investments over the last eighteen months, we are have a high confidence level in our ability to offset, the small amount that doesn’t naturally transfer with, new customer acquisition through the digital channel.
Analyst: Thank you.
Lisa Harper, Chief Executive Officer, Torrid Holdings Inc.: And those stores, by the way, are very, very low volume. It it’s a less of a hill to climb in terms of replacing those those revenue dollars.
Analyst: Great. Thank you.
Lisa Harper, Chief Executive Officer, Torrid Holdings Inc.: Thanks.
Conference Operator: Thank you. And we have reached the end of the question and answer session. I would like to turn the floor back to CEO, Lisa Harper, for closing remarks.
Paula Dempsey, Chief Financial Officer, Torrid Holdings Inc.: Great. Thanks so much for joining us today.
Lisa Harper, Chief Executive Officer, Torrid Holdings Inc.: We look forward to sharing the progress in our next call as we reflect on the Q2. Thanks so much.
Conference Operator: Thank you. And this does conclude today’s conference, and you may disconnect your line at this time. Thank you for your participation, and have a great day.
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