Torrid Holdings, Inc. ((CURV)) has held its Q4 earnings call. Read on for the main highlights of the call.
Torrid Holdings, Inc. recently held its fourth-quarter earnings call, revealing a mixed sentiment of resilience and strategic growth amidst ongoing challenges. The company showcased successful initiatives such as the launch of new sub-brands and improved financial positioning, while also addressing concerns related to macroeconomic factors and a decline in net sales. Despite these hurdles, there is a cautious optimism for the future, driven by positive developments in product offerings and financial health.
Successful Launch of Sub-Brands
Torrid Holdings made significant strides in expanding its brand portfolio with the successful launch of three new sub-brands in the fourth quarter. These new ventures have generated excitement and engagement among both new and existing customers, particularly attracting a younger demographic with new buyers averaging in their mid-30s. This strategic move is expected to enhance the company’s market presence and customer base.
Improved Financial Position
The company reported a strong financial position at the end of fiscal 2024, with $48.5 million in cash, marking a substantial increase of $36.8 million year-over-year. Total liquidity reached $158 million, and operating cash flow doubled to $77.4 million compared to the previous year. These improvements highlight Torrid’s effective financial management and strategic focus on strengthening its balance sheet.
Positive Response to Product Assortments
Torrid’s product offerings received a favorable response from customers, particularly the holiday and early spring lines. The introduction of newness across the product portfolio led to improved regular price comp trends, which saw a 1.6% increase. This positive reception underscores the company’s ability to meet customer preferences and drive sales through innovative product assortments.
Strategic Store Optimization
In a bid to optimize its retail footprint, Torrid successfully closed 35 stores in fiscal 2024 and plans to close an additional 40 to 50 stores in fiscal 2025. This strategic store optimization aims to reduce fixed costs and enhance operational efficiency, positioning the company for sustainable growth in the long term.
Challenging Macro Environment
The earnings call highlighted the challenges posed by the uncertain consumer and macro environment, which led to choppy business performance in early Q4. Factors such as adverse weather conditions in February further impacted the company’s operations, underscoring the need for adaptive strategies in navigating external challenges.
Decline in Net Sales
Torrid reported a decline in net sales for the fourth quarter, totaling $275.6 million, down from $293.5 million in the previous year. The comparable sales decline of 0.8% reflects the impact of macroeconomic challenges and store closures, necessitating strategic adjustments to counteract these trends.
Impact of Store Closures
The closure of 35 stores in fiscal 2024 had a noticeable impact on sales, and the planned closures for fiscal 2025 may continue to affect revenues. However, these closures are part of a broader strategy to optimize the store fleet and focus on more profitable locations, which is expected to benefit the company in the long run.
Forward-Looking Guidance
Looking ahead, Torrid Holdings provided guidance for fiscal 2025, projecting sales between $1.080 billion and $1.100 billion and adjusted EBITDA between $100 million and $110 million. The company plans to close 40 to 50 underperforming stores while opening 4 to 8 new locations, primarily in outdoor shopping centers. Torrid aims to capitalize on its new sub-brands, which are expected to contribute 7% to 10% of total receipt investment, and continue optimizing its product assortment, customer growth, and store fleet.
In conclusion, Torrid Holdings’ earnings call painted a picture of cautious optimism, with the company demonstrating resilience through strategic initiatives and financial improvements. While challenges persist in the macro environment and sales figures, the successful launch of sub-brands and store optimization efforts provide a solid foundation for future growth. Investors and market watchers will be keen to see how Torrid navigates these dynamics in the coming fiscal year.