• Revenue: $275.6 million for the fourth quarter.
• Adjusted EBITDA: $16.7 million for the fourth quarter.
• Comparable Sales: Decreased by 0.8% for the quarter.
• Cash Position: $48.5 million at the end of fiscal 2024, up from $11.7 million a year ago.
• Gross Margin: 33.6%, a decline of 90 basis points year-over-year.
• SG&A Expenses: $73.8 million, representing 26.8% of net sales.
• Net Loss: $3 million or $0.03 per share for the fourth quarter.
• Operating Cash Flow: Increased to $77.4 million from the previous year.
• Total Liquidity: $158 million, including available borrowing capacity.
• Total Debt: Reduced to $288.6 million from $312 million a year ago.
• Inventory: $148.5 million, a 4% increase from the previous year.
• Store Closures: 35 stores closed in fiscal 2024, with plans to close an additional 40 to 50 stores in fiscal 2025.
• Fiscal 2025 Sales Guidance: Expected to range between $1.080 billion and $1.100 billion.
• Fiscal 2025 Adjusted EBITDA Guidance: Projected between $100 million and $110 million.

• Warning! GuruFocus has detected 3 Warning Sign with CURV.

Release Date: March 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Torrid Holdings Inc (NYSE:CURV) exceeded expectations on both the top and bottom line for the fourth quarter, generating sales of $275.6 million and adjusted EBITDA of $16.7 million.
• The company successfully launched three new sub-brands, which drove significant excitement and engagement among both new and existing customers.
• Torrid Holdings Inc (NYSE:CURV) improved its cash position significantly, ending fiscal 2024 with $48.5 million in cash, an increase of $36.8 million compared to the previous year.
• The company is focused on optimizing its store fleet, closing underperforming locations, and reinvesting savings into growth initiatives, which is expected to enhance profitability.
• Torrid Holdings Inc (NYSE:CURV) is expanding its product assortment with new sub-brands, which are attracting younger customers and are expected to comprise 7% to 10% of total receipt investment for the year.

Negative Points

• The company experienced some choppiness in business during the early weeks of the quarter due to macroeconomic uncertainty and adverse weather conditions.
• Comparable sales were down 0.8% for the quarter, indicating challenges in maintaining sales momentum.
• Gross margin declined by 90 basis points to 33.6%, primarily due to lower volume relative to the previous year.
• Torrid Holdings Inc (NYSE:CURV) plans to close an additional 40 to 50 stores in fiscal 2025, which may impact short-term revenues.
• The company is operating in an uncertain consumer and macro environment, which could pose challenges to achieving consistent growth.

Q & A Highlights

Q: Lisa, could you elaborate on the health of the Torrid consumer and the expected contribution from scaling successful sub-brands? A: Lisa Harper, CEO, noted that the Torrid consumer remains fundamentally strong with high engagement in their loyalty program. While traffic trends are positive, conversion is slightly conservative. The strategy focuses on modernizing core elements like denim and expanding product aesthetics, which is showing positive momentum. The sub-brand excitement is attracting traffic, indicating a solid customer appetite for diverse products.

Q: Can you quantify the impact of the 40 to 50 additional store closures this year on revenues and EBITDA margins? A: Paula Dempsey, CFO, explained that most closures will occur in Q4, with minimal impact this year but more significant effects expected next year. The benefits from last year's 35 closures will reflect in this year's financials, improving margins and G&A.

Q: Do you anticipate a prolonged campaign of store closures, and is there potential to re-engage customers in closed markets? A: Paula Dempsey stated that while they have the opportunity to review 60% of their store fleet, not all will close. The focus is on optimizing locations, particularly moving from enclosed malls to outdoor centers. Lisa Harper added that they are testing new store formats to align with customer preferences and enhance the shopping experience.

Q: How did new products perform during the period of softer traffic? A: Lisa Harper mentioned that new product lines launched in late December and January, with improvements in traffic and engagement following initial weeks. Upcoming launches, like Belle Isle and new deliveries of existing sub-brands, are expected to provide further insights and drive engagement.

Q: What is your guidance embedding on the tariff impact for the year? A: Lisa Harper stated that the guidance includes known tariffs, with a flexible sourcing structure to navigate changes. They have diversified sourcing away from China to countries like Vietnam, Cambodia, and Bangladesh, maintaining strong vendor relationships to manage potential tariff impacts.

Q: What impact are you seeing from promotions and clearance sales, and what is embedded in the outlook? A: Lisa Harper noted that clearance sales are moderating, with expectations for more promotional activity due to macro uncertainties. They anticipate solid margin results for the year, with some pressure on first margins due to potential increased promotions.

Q: How sizable could the new sub-brands be, and how does this affect inventory growth? A: Ashlee Wheeler explained that sub-brands represent about 10% of the business and receipt investments, funded by reducing inventory in less productive core lines. Overall inventory is expected to remain flat, with timing differences quarter to quarter.

Q: What are the other categories of sub-brands you are excited about for 2025? A: Lisa Harper mentioned upcoming launches like Belle Isle, Lovesick, True by Torrid, and studio concepts. These aim to fulfill diverse customer needs, leveraging Torrid's understanding of its customer base to drive new customer acquisition and frequency among existing customers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.