- Delivered Net Sales and Adjusted EBITDA within our
expectations
- Updates Fiscal 2022 Net Sales and Adjusted EBITDA
Outlook
Torrid Holdings Inc. (“Torrid” or the “Company”) (NYSE: CURV), a
direct-to-consumer apparel, intimates, and accessories brand in
North America for women sizes 10 to 30, today announced its
financial results for the quarter ended October 29, 2022.
Lisa Harper, Chief Executive Officer, stated, “For the third
quarter, we delivered net sales and adjusted EBITDA that were
within our expectations, all while navigating a challenging and
promotional macroenvironment. Customers responded favorably to our
new merchandise offerings, including our Studio collection. Similar
to other retailers, we experienced a slowdown in sales trends
during October. This deceleration coincided with our comparable
Torrid Cash event, which significantly impacted our overall
performance. We continue to focus on right-sizing our inventories,
improving the balance of our assortments, and offering innovative
products. Looking ahead, we believe that our strategic priorities
will position us to deliver consistent profitable sales and margin
growth over the long term.”
Financial Highlights for the Third Quarter
- Net sales decreased 5.3% to $290.0 million compared to the
third quarter of last year. Comparable sales1 decreased 8% in the
third quarter.
- Gross profit margin was 31.6% compared to 40.9% in the third
quarter of last year. Approximately 850 basis points of the decline
was due to higher discounts and promotions related to inventory
clearance activity compared to last year. The remainder of the
decline was inflationary and related to higher product and
transportation costs which were partially offset by pricing
actions.
- Net income was $7.3 million, or $0.07 per share, compared to
net loss of $58.9 million, or a loss of $0.54 per share in the
third quarter of last year. There was no adjustment to net income
in the third quarter of fiscal 2022, but for comparison purposes,
adjusted net income2 for the third quarter of last year was $27.8
million, or $0.25 per share.
- Adjusted EBITDA2 was $32.1 million, or 11.1% of net sales,
compared to $55.2 million, or 18.0% of net sales, in the third
quarter of last year.
- Opened three Torrid stores and two Curv stores in the third
quarter and closed three stores. The total store count at quarter
end was 629 stores.
Cash Flow
Cash and cash equivalents at the end of the third quarter
totaled $18.6 million. Total liquidity at the end of the third
quarter, including available borrowing capacity under our revolving
credit agreement, was $159.4 million.
Outlook
For the fourth quarter of fiscal 2022 the Company
expects:
- Net sales between $285 million and $300 million.
- Adjusted EBITDA2 between $9 million and $14 million.
For the full year fiscal 2022 the Company now
expects:
- Net sales between $1.244 billion and $1.259 billion.
- Adjusted EBITDA2 between $145 million and $150 million.
- Capital expenditures of between $27 and $30 million reflecting
infrastructure and technology investments as well as approximately
27 new stores for the year.
The above outlook is based on several assumptions, including,
but not limited to, the macro challenges in the industry continuing
into fiscal 2022 as well as higher raw material and labor costs,
which are expected to be more pronounced this year. While
COVID-19-related restrictions have eased in recent months, a level
of uncertainty remains regarding potential supply chain disruption
during fiscal 2022. See “Forward-Looking Statements” for additional
information.
Conference Call Details
A conference call to discuss the Company’s third quarter fiscal
2022 results is scheduled for December 8, 2022, at 4:30 p.m. ET.
Those who wish to participate in the call may do so by dialing
(877) 407-9208 or (201) 493-6784 for international callers,
conference ID 13733736. The conference call will also be webcast
live at investors.torrid.com in the Events and Presentations
section. A recording will be available shortly after the conclusion
of the call. To access the replay, please dial (844) 512-2921 or
(412) 317-6671 for international callers, conference ID 13733736.
An archive of the webcast will be available on Torrid’s investor
relations website.
Notes
(1)
Comparable sales for any given period are
defined as the sales of Torrid’s e-Commerce operations and stores
that it has included in its comparable sales base during that
period. The Company includes a store in its comparable sales base
after it has been open for 15 full fiscal months. If a store is
closed during a fiscal year, it is only included in the computation
of comparable sales for the full fiscal months in which it was
open. The computation of comparable sales includes results from
stores that were temporarily closed due to COVID-19. Partial fiscal
months are excluded from the computation of comparable sales.
Comparable sales allow the Company to evaluate how its unified
commerce business is performing exclusive of the effects of new
store openings. The Company applies current year foreign currency
exchange rates to both current year and prior year comparable sales
to remove the impact of foreign currency fluctuation and achieve a
consistent basis for comparison.
(2)
Adjusted EBITDA and Adjusted net income
(loss) are non-GAAP financial measures. See “Non-GAAP Financial
Measures” for additional information on non-GAAP financial measures
and the accompanying tables for a reconciliation to the most
comparable GAAP measures. The Company does not provide
reconciliations of the forward-looking non-GAAP measures of
Adjusted EBITDA to the most directly comparable forward-looking
GAAP measure because the timing and amount of excluded items are
unreasonably difficult to fully and accurately estimate. For the
same reasons, the Company is unable to address the probable
significance of the unavailable information, which could be
material to future results.
About Torrid
Torrid is a direct-to-consumer brand of apparel, intimates and
accessories in North America targeting the 25- to 40-year old woman
who wears sizes 10 to 30. Torrid is focused on fit and offers high
quality products across a broad assortment that includes tops,
bottoms, denim, dresses, intimates, activewear, footwear and
accessories.
Non-GAAP Financial Measures
In addition to results determined in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”), management utilizes certain non-GAAP performance measures
such as Adjusted EBITDA, Adjusted net income (loss), and Adjusted
earnings (loss) per share for purposes of evaluating ongoing
operations and for internal planning and forecasting purposes. We
believe that these non-GAAP operating measures, when reviewed
collectively with our GAAP financial information, provide useful
supplemental information to investors in assessing our operating
performance.
Adjusted EBITDA, Adjusted net income (loss), and Adjusted
earnings (loss) per share are supplemental measures of our
operating performance that are neither required by, nor presented
in accordance with, GAAP and our calculations thereof may not be
comparable to similarly titled measures reported by other
companies. Adjusted EBITDA represents GAAP net income (loss) plus
interest expense less interest income, net of other expense
(income), plus provision for income taxes, depreciation and
amortization (“EBITDA”), and share-based compensation, non-cash
deductions and charges, and other expenses. Adjusted net income
(loss) represents GAAP net income (loss) plus remeasurement
adjustments for share-based compensation, net of tax. Adjusted
earnings (loss) per share represents Adjusted net income (loss)
divided by the diluted weighted average number of shares
outstanding at the end of the period.
We believe Adjusted EBITDA, Adjusted net income (loss), and
Adjusted earnings (loss) per share facilitate operating performance
comparisons from period to period by isolating the effects of
certain items that vary from period to period without any
correlation to ongoing operating performance. We also use Adjusted
EBITDA as one of the primary methods for planning and forecasting
the overall expected performance of our business and for evaluating
on a quarterly and annual basis actual results against such
expectations.
Further, we recognize Adjusted EBITDA as a commonly used measure
in determining business value and, as such, use it internally to
report and analyze our results and as a benchmark to determine
certain non-equity incentive payments made to executives. We use
Adjusted net income (loss) and Adjusted earnings (loss) per share
to facilitate operating performance comparisons by isolating the
effects of share-based compensation that vary from period to period
and across our peer companies without any correlation to ongoing
operating performance.
Adjusted EBITDA, Adjusted net income (loss), and Adjusted
earnings (loss) per share have limitations as analytical tools.
These measures are not measurements of our financial performance
under GAAP and should not be considered in isolation or as
alternatives to or substitutes for net income (loss), income (loss)
from operations, earnings (loss) per share or any other performance
measures determined in accordance with GAAP or as alternatives to
cash flows from operating activities as a measure of our liquidity.
Our presentation of Adjusted EBITDA, Adjusted net income (loss),
and Adjusted earnings (loss) per share should not be construed as
an inference that our future results will be unaffected by unusual
or non-recurring items.
Forward-Looking Statements
Certain statements made in this release are “forward looking
statements” within the meaning of the “safe harbor” provisions of
the United States Private Securities Litigation Reform Act of 1995.
When used in this press release, the words “estimates,”
“projected,” “expects,” “anticipates,” “forecasts,” “plans,”
“intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,”
“propose” and variations of these words or similar expressions (or
the negative versions of such words or expressions) are intended to
identify forward-looking statements. You can identify
forward-looking statements by the fact that they do not relate
strictly to historical or current facts. For example, all
statements we make relating to our expected fourth quarter of
fiscal 2022, our full year fiscal 2022 performance and our plans
and objectives for future operations, growth or initiatives are
forward-looking statements. These forward-looking statements are
not guarantees of future performance, conditions or results, and
involve a number of known and unknown risks, uncertainties,
assumptions and other important factors, many of which are outside
Torrid’s control, that could cause actual results or outcomes to
differ materially from those discussed in the forward-looking
statements, including: successful management of risks relating to
the spread of COVID-19, including any adverse impacts on our supply
chain, workforce, facilities, customer services and operations;
changes in consumer spending and general economic conditions;
inflationary pressures with respect to labor and raw materials and
global supply chain constraints that could increase our expenses;
our ability to identify and respond to new and changing product
trends, customer preferences and other related factors; our
dependence on a strong brand image; damage to our reputation
arising from our use of social media, email and text messages;
increased competition from other brands and retailers; our reliance
on third parties to drive traffic to our website; the success of
the shopping centers in which our stores are located; our ability
to adapt to consumer shopping preferences and develop and maintain
a relevant and reliable omni-channel experience for our customers;
our dependence upon independent third parties for the manufacture
of all of our merchandise; availability constraints and price
volatility in the raw materials used to manufacture our products;
interruptions of the flow of our merchandise from international
manufacturers causing disruptions in our supply chain; our sourcing
a significant amount of our products from China; shortages of
inventory, delayed shipments to our e-Commerce customers and harm
to our reputation due to difficulties or shut-down of our
distribution facilities (including as a result of COVID-19); our
reliance upon independent third-party transportation providers for
substantially all of our product shipments; our growth strategy;
our leasing substantial amounts of space; our failure to attract
and retain employees that reflect our brand image, embody our
culture and possess the appropriate skill set; our reliance on
third-parties for the provision of certain services, including
distribution and real estate management; our dependence upon key
executive management; our reliance on information systems; system
security risk issues that could disrupt our internal operations or
information technology services; unauthorized disclosure of
sensitive or confidential information, whether through a breach of
our computer system or otherwise; our failure to comply with
federal and state laws and regulations and industry standards
relating to privacy, data protection, advertising and consumer
protection; payment-related risks that could increase our operating
costs or subject us to potential liability; claims made against us
resulting in litigation; changes in laws and regulations applicable
to our business; regulatory actions or recalls arising from issues
with product safety; our inability to protect our trademarks or
other intellectual property rights; our substantial indebtedness
and lease obligations; restrictions imposed by our indebtedness on
our current and future operations; changes in tax laws or
regulations or in our operations that may impact our effective tax
rate; the possibility that we may recognize impairments on
long-lived assets; our failure to maintain adequate internal
controls; and the threat of war, terrorism or other catastrophes
that could negatively impact our business, including as a result of
the current conflict between Russia and Ukraine.
The outcome of the events described in any of our
forward-looking statements are also subject to risks, uncertainties
and other factors described in the sections entitled “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in our Annual Report on Form 10-K filed
with the Securities and Exchange Commission (“SEC”) on March 30,
2022 and in our other filings with the SEC. You should evaluate all
forward-looking statements made in this communication in the
context of these risks and uncertainties.
We derive many of our forward-looking statements from our
operating budgets and forecasts, which are based upon many detailed
assumptions. While we believe that our assumptions are reasonable,
we caution that it is very difficult to predict the impact of known
factors, and, it is impossible for us to anticipate all factors
that could affect our actual results. We caution you that the
important factors referenced above may not contain all of the
factors that are important to you. In addition, we cannot assure
you that we will realize the results or developments we expect or
anticipate or, even if substantially realized, that they will
result in the consequences or affect us or our operations in the
way we expect.
The forward-looking statements included in this press release
are made only as of the date hereof. We undertake no obligation to
publicly update or revise any forward-looking statement as a result
of new information, future events or otherwise. Our forward-looking
statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, joint ventures or
investments.
TORRID HOLDINGS INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(LOSS)
(UNAUDITED)
(In thousands, except per
share data)
Three Months Ended
October 29, 2022
Three Months Ended
October 30, 2021
Net sales
$
290,034
$
306,241
Cost of goods sold
198,263
181,094
Gross profit
91,771
125,147
Selling, general and administrative
expenses
59,180
66,399
Marketing expenses
12,638
15,023
Income from operations
19,953
43,725
Interest expense
8,390
6,104
Interest income, net of other expense
(income)
147
(12
)
Income before provision for income
taxes
11,416
37,633
Provision for income taxes
4,139
96,535
Net income (loss)
$
7,277
$
(58,902
)
Comprehensive income (loss):
Net income (loss)
$
7,277
$
(58,902
)
Other comprehensive (loss) income:
Foreign currency translation
adjustment
(465
)
45
Total other comprehensive (loss)
income
(465
)
45
Comprehensive income (loss)
$
6,812
$
(58,857
)
Net earnings (loss) per share:
Basic
$
0.07
$
(0.54
)
Diluted
$
0.07
$
(0.54
)
Weighted average number of
shares:
Basic
103,623
110,078
Diluted
103,805
110,078
TORRID HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
(In thousands, except share
and per share data)
October 29, 2022
January 29, 2022
Assets
Current assets:
Cash and cash equivalents
$
18,559
$
29,025
Restricted cash
318
262
Inventory
199,877
170,608
Prepaid expenses and other current
assets
23,464
14,686
Prepaid income taxes
1,153
6,345
Total current assets
243,371
220,926
Property and equipment, net
115,745
127,565
Operating lease right-of-use assets
181,701
209,637
Deposits and other noncurrent assets
10,234
7,100
Deferred tax assets
4,873
4,873
Intangible asset
8,400
8,400
Total assets
$
564,324
$
578,501
Liabilities and stockholders'
deficit
Current liabilities:
Accounts payable
$
109,336
$
77,448
Accrued and other current liabilities
102,085
138,708
Operating lease liabilities
46,211
45,716
Borrowings under credit facility
2,150
—
Current portion of term loan
16,144
20,519
Due to related parties
15,486
14,622
Income taxes payable
3,093
—
Total current liabilities
294,505
297,013
Noncurrent operating lease liabilities
176,721
207,049
Term loan
308,733
320,841
Deferred compensation
4,172
6,873
Other noncurrent liabilities
9,277
5,044
Total liabilities
793,408
836,820
Commitments and contingencies
Stockholders' deficit
Common shares: $0.01 par value;
1,000,000,000 shares authorized; 103,641,356 shares issued and
outstanding at October 29, 2022; 107,857,625 shares issued and
outstanding at January 29, 2022
1,036
1,078
Additional paid-in capital
125,646
118,286
Accumulated deficit
(355,362
)
(377,759
)
Accumulated other comprehensive (loss)
income
(404
)
76
Total stockholders' deficit
(229,084
)
(258,319
)
Total liabilities and stockholders'
deficit
$
564,324
$
578,501
TORRID HOLDINGS INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
Nine Months Ended
October 29, 2022
Nine Months Ended
October 30, 2021
OPERATING ACTIVITIES
Net income (loss)
$
54,053
$
(7,190
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Write down of inventory
1,750
510
Operating right-of-use assets
amortization
31,209
31,010
Depreciation and other amortization
28,120
26,790
Write off of unamortized original issue
discount and deferred financing costs for Amended Term Loan Credit
Agreement
—
5,231
Share-based compensation
7,568
157,238
Deferred taxes
—
1,534
Other
(603
)
106
Changes in operating assets and
liabilities:
Inventory
(31,341
)
(53,347
)
Prepaid expenses and other current
assets
(8,778
)
(2,448
)
Prepaid income taxes
5,192
(26,813
)
Deposits and other noncurrent assets
(3,255
)
(3,152
)
Accounts payable
31,447
11,046
Accrued and other current liabilities
(35,824
)
29,986
Operating lease liabilities
(31,230
)
(36,945
)
Other noncurrent liabilities
4,345
189
Deferred compensation
(2,701
)
490
Due to related parties
864
354
Income taxes payable
3,093
(9,336
)
Net cash provided by operating
activities
53,909
125,253
INVESTING ACTIVITIES
Purchases of property and equipment
(17,087
)
(11,342
)
Net cash used in investing activities
(17,087
)
(11,342
)
FINANCING ACTIVITIES
Capital distribution to Torrid Holding
LLC
—
(300,000
)
Proceeds from revolving credit
facility
632,125
—
Principal payments on revolving credit
facility
(629,975
)
—
Deferred financing costs for revolving
credit facility
—
(688
)
Repurchase of common stock
(31,700
)
—
Principal payments on New Term Loan Credit
Agreement and repayment of Amended Term Loan Credit Agreement and
related costs
(17,500
)
(212,775
)
Proceeds from New Term Loan Credit
Agreement, net of original issue discount and deferred financing
costs
—
340,509
Proceeds from issuances under share-based
compensation plans
613
225
Withholding tax payments related to
vesting of restricted stock units and awards
(558
)
(1,685
)
Net cash used in financing activities
(46,995
)
(174,414
)
Effect of foreign currency exchange rate
changes on cash, cash equivalents and restricted cash
(237
)
(601
)
Decrease in cash, cash equivalents and
restricted cash
(10,410
)
(61,104
)
Cash, cash equivalents and restricted cash
at beginning of period
29,287
123,215
Cash, cash equivalents and restricted cash
at end of period
$
18,877
$
62,111
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest
related to the revolving credit facility and term loans
$
14,158
$
16,303
Cash paid during the period for income
taxes
$
15,219
$
47,133
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Property and equipment purchases included
in accounts payable and accrued liabilities
$
3,355
$
4,496
The following table provides a reconciliation of Net income
to Adjusted EBITDA for the periods presented (dollars in
thousands):
Three Months Ended
October 29, 2022
October 30, 2021
Net income (loss)
$
7,277
$
(58,902
)
Interest expense
8,390
6,104
Interest income, net of other expense
(income)
147
(12
)
Provision for income taxes
4,139
96,535
Depreciation and amortization(A)
8,849
8,482
Share-based compensation(B)
2,913
2,450
Non-cash deductions and charges(C)
375
306
Other expenses(D)
20
215
Adjusted EBITDA
$
32,110
$
55,178
_________________________ (A)
Depreciation and amortization excludes
amortization of debt issuance costs and original issue discount
that are reflected in interest expense.
(B)
Prior to the consummation of our IPO on
July 6, 2021, share-based compensation was determined based on the
remeasurement of our liability-classified incentive units.
(C)
Non-cash deductions and charges includes
losses on property and equipment disposals and the net impact of
non-cash rent expense.
(D)
Other expenses include IPO-related
transaction fees and the reimbursement of certain management
expenses, primarily for travel, incurred by Sycamore on our behalf,
which are not considered to be part of our core business.
The following table provides a reconciliation of Net loss to
Adjusted net income for the period presented (in thousands, except
per share data):
Three Months Ended
October 30, 2021
Net loss
$
(58,902
)
Remeasurement adjustments net of income
taxes
86,685
Adjusted net income
$
27,783
Basic and diluted weighted average shares
outstanding
110,078
Loss per share
$
(0.54
)
Adjusted earnings per share
$
0.25
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221208005814/en/
Investors Vince Adams IR@torrid.com Media Joele
Frank, Wilkinson Brimmer Katcher Michael Freitag / Arielle
Rothstein / Lyle Weston Media@torrid.com
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