- Initiates Fiscal 2024 Guidance
- Delivered Fourth Quarter Net Sales above guidance
- Fourth Quarter Net Loss of $4.1 million
- Exceeded Fourth Quarter Adjusted EBITDA(1) guidance
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 February 3, 2024.
Lisa Harper, Chief Executive Officer, stated, “In fiscal 2023 we
improved the fundamentals of our business by enhancing our
assortment while reducing overall inventory levels, improving
product costs, and optimizing our marketing investments. We are
encouraged by the improving trends in sales and margins as
customers responded to our new merchandise collections. For the
fourth quarter we delivered results that exceeded our guidance,
providing a strong foundation for the future. As we move into
fiscal 2024, we will continue to build on our core strategic
initiatives, which we believe will position us to deliver
consistent results and generate meaningful cash flow.”
Financial Highlights for the Fourth Quarter of Fiscal
2023
- Net sales decreased 2.6% to $293.5 million compared to $301.3
million for the fourth quarter of last year. Comparable sales(2)
decreased 9% in the fourth quarter.
- Gross profit margin was 34.5% compared to 31.9% in the fourth
quarter of last year. The 250-bps improvement was primarily driven
by improved product margins.
- Net loss of $4.1 million, or ($0.04) per share, compared to a
net loss of $3.8 million, or ($0.04) per share in the fourth
quarter of last year.
- Adjusted EBITDA(1) was $16.4 million, or 5.6% of net sales,
compared to $16.4 million, or 5.4% of net sales, in the fourth
quarter of last year.
- In the fourth quarter, we opened 23 Torrid stores and closed 11
Torrid stores. The total store count at quarter end was 655
stores.
Financial Highlights for the Full Year of Fiscal 2023
- Net sales decreased 10.6% to $1,151.9 million compared to
$1,288.1 million last fiscal year. Comparable sales(2) decreased
12% compared to last fiscal year.
- Gross profit margin was 35.2% compared to 35.7% last fiscal
year.
- Net Income of $11.6 million, or $0.11 per share, compared to
net income of $50.2 million, or $0.48 per share last fiscal
year.
- Adjusted EBITDA(1) was $106.2 million, or 9.2% of net sales,
compared to $152.4 million, or 11.8% of net sales, last year.
- Opened 36 Torrid stores and closed 20 Torrid stores. The total
store count at year end was 655 stores.
Full Year Fiscal 2023 Financial and Operating Metrics
Fiscal Year Ended
(in thousands, except net
sales per active customer, number of stores and
percentages)
February 3, 2024
January 28, 2023
Year over Year Change
Net sales
$
1,151,945
$
1,288,144
(11
)%
Comparable sales(A)
(12
)%
(3
)%
Number of stores (as of end of period)
655
639
Net income (loss)
$
11,619
$
50,209
(77
)%
Adjusted EBITDA(B)
$
106,219
$
152,350
(30
)%
(A) Comparable sales in fiscal year 2023 compares sales in fiscal
year 2023 to sales in the 53-week period ended February 4, 2023. In
fiscal year 2022, comparable sales include results from stores that
were temporarily closed due to COVID-19. (B) Please refer to
"Non-GAAP Reconciliation" below for a reconciliation of net income
(loss) to Adjusted EBITDA.
Balance Sheet and Cash
Flow
Cash and cash equivalents at the end of fiscal 2023
totaled $12.1 million. Total liquidity at the end of the year,
including available borrowing capacity under our revolving credit
agreement, was $114.8 million.
Cash flow from operations for the twelve-month period
ended February 3, 2024 was $42.8 million, compared to $53.3 million
for the twelve-month period ended January 28, 2023.
Outlook
For the first quarter of fiscal 2024 the Company
expects:
- Net sales between $277 million and $282 million.
- Adjusted EBITDA(1) between $31 million and $34 million.
For the full year fiscal 2024 the Company expects:
- Net sales between $1.135 billion and $1.155 billion.
- Adjusted EBITDA(1) between $106 million and $116 million.
- Capital expenditures between $20 million and $25 million
reflecting infrastructure and technology investments as well as
between 15 and 20 new stores for the year.
The above outlook is based on several assumptions, including,
but not limited to, the macroeconomic challenges in the industry in
fiscal 2024 as well as higher labor costs. The above outlook does
not take into consideration the recent Consumer Financial
Protection Bureau ruling which mandates, among other things,
decreases in credit card late fees, and could alter the
profitability of our agreements with our private label credit card
financing company. See “Forward-Looking Statements” for additional
information.
Conference Call Details
A conference call to discuss the Company’s fourth quarter and
fiscal 2023 results is scheduled for March 28, 2024, 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. The
conference call will also be webcast live at
https://investors.torrid.com. For those unable to participate, a
replay of the conference call will be available approximately three
hours after the conclusion of the call until April 4, 2024.
Notes
(1)
Adjusted EBITDA is a non-GAAP financial measure. See “Non-GAAP
Financial Measures” and “Non-GAAP Reconciliation” for additional
information on non-GAAP financial measures and the accompanying
table for a reconciliation to the most comparable GAAP measure. 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.
(2)
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. Partial fiscal months are
excluded from the computation of comparable sales. Comparable sales
in fiscal year 2023 compares sales in fiscal year 2023 to sales in
the 53-week period ended February 4, 2023. In fiscal year 2022,
comparable sales include results from stores that were temporarily
closed due to COVID-19. 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.
About Torrid
TORRID is a direct-to-consumer brand of apparel, intimates and
accessories in North America aimed at fashionable women who are
curvy and wear 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, 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 is a supplemental measure of our operating
performance that is 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
We believe Adjusted EBITDA facilitates 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.
Adjusted EBITDA has limitations as an analytical tool. This
measure is not a measurement of our financial performance under
GAAP and should not be considered in isolation or as an alternative
to or substitute for net income (loss), income (loss) from
operations, earnings (loss) per share or any other performance
measures determined in accordance with GAAP or as an alternative to
cash flows from operating activities as a measure of our liquidity.
Our presentation of Adjusted EBITDA 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 Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, and are subject to the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995.
All statements other than statements of historical or current fact
included in this press release are forward-looking statements. 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 first quarter of fiscal
2024, our full year fiscal 2024 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: changes in consumer spending and general
economic conditions, including as a result of rising interest
rates; 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; 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 facility (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 failure to attract and retain employees that reflect our brand
image, embody our culture and possess the appropriate skill set;
damage to our reputation arising from our use of social media,
email and text messages; our reliance on third-parties for the
provision of certain services, including real estate management;
our dependence upon key members of our executive management team;
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 of long-lived assets;
our failure to maintain adequate internal control over financial
reporting; and the threat of war, terrorism or other catastrophes
that could negatively impact our business.
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 28,
2023 and in our other filings with the SEC and public
communications. 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
effect 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 include 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 outcomes 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 except to the extent
required by law. 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 (LOSS)
INCOME
(UNAUDITED)
(In thousands, except per
share data)
Three Months Ended
Twelve Months Ended
February 3, 2024
January 28, 2023
February 3, 2024
January 28, 2023
Net sales
$
293,539
$
301,228
$
1,151,945
$
1,288,144
Cost of goods sold
192,382
205,049
745,967
828,605
Gross profit
101,157
96,179
405,978
459,539
Selling, general and administrative
expenses
80,631
77,837
293,331
297,973
Marketing expenses
16,511
15,827
55,499
59,941
Income from operations
4,015
2,515
57,148
101,625
Interest expense
10,372
8,385
39,203
29,736
Interest income, net of other (income)
expense
(328
)
(16
)
(90
)
207
(Loss) income before (benefit from)
provision for income taxes
(6,029
)
(5,854
)
18,035
71,682
(Benefit from) provision for income
taxes
(1,959
)
(2,010
)
6,416
21,473
Net (loss) income
$
(4,070
)
$
(3,844
)
$
11,619
$
50,209
Comprehensive (loss) income:
Net (loss) income
$
(4,070
)
$
(3,844
)
$
11,619
$
50,209
Other comprehensive income (loss):
Foreign currency translation
adjustment
162
143
(52
)
(337
)
Total other comprehensive income
(loss)
162
143
(52
)
(337
)
Comprehensive (loss) income
$
(3,908
)
$
(3,701
)
$
11,567
$
49,872
Net (loss) earnings per share:
Basic
$
(0.04
)
$
(0.04
)
$
0.11
$
0.48
Diluted
$
(0.04
)
$
(0.04
)
$
0.11
$
0.48
Weighted average number of
shares:
Basic
104,137
103,693
103,990
104,342
Diluted
104,137
103,693
104,400
104,489
TORRID HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
(In thousands, except share
and per share data)
February 3, 2024
January 28, 2023
Assets
Current assets:
Cash and cash equivalents
$
11,735
$
13,569
Restricted cash
399
366
Inventory
142,199
180,055
Prepaid expenses and other current
assets
22,229
20,050
Prepaid income taxes
2,561
2,081
Total current assets
179,123
216,121
Property and equipment, net
103,516
113,613
Operating lease right-of-use assets
162,444
177,179
Deposits and other noncurrent assets
14,783
8,650
Deferred tax assets
8,681
3,301
Intangible asset
8,400
8,400
Total assets
$
476,947
$
527,264
Liabilities and stockholders’
deficit
Current liabilities:
Accounts payable
$
46,183
$
76,207
Accrued and other current liabilities
107,750
108,847
Operating lease liabilities
42,760
45,008
Borrowings under credit facility
7,270
8,380
Current portion of term loan
16,144
16,144
Due to related parties
9,329
12,741
Income taxes payable
2,671
—
Total current liabilities
232,107
267,327
Noncurrent operating lease liabilities
155,825
172,103
Term loan
288,553
304,697
Deferred compensation
5,474
4,246
Other noncurrent liabilities
6,705
9,115
Total liabilities
688,664
757,488
Commitments and contingencies
Stockholders’ deficit:
Common shares: $0.01 par value;
1,000,000,000 shares authorized; 104,204,554 shares issued and
outstanding at February 3, 2024; 103,774,813 shares issued and
outstanding at January 28, 2023
1,043
1,038
Additional paid-in capital
135,140
128,205
Accumulated deficit
(347,587
)
(359,206
)
Accumulated other comprehensive loss
(313
)
(261
)
Total stockholders’ deficit
(211,717
)
(230,224
)
Total liabilities and stockholders’
deficit
$
476,947
$
527,264
TORRID HOLDINGS INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED) (In
thousands)
Fiscal Year Ended
February 3, 2024
January 28, 2023
January 29, 2022
OPERATING ACTIVITIES
Net income (loss)
$
11,619
$
50,209
$
(29,944
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Write down of inventory
4,577
2,297
696
Operating right-of-use assets
amortization
41,366
41,839
41,648
Depreciation and other amortization
38,002
37,592
36,748
Write off of unamortized original issue
discount and deferred financing costs for Amended Term Loan Credit
Agreement
—
—
5,231
Share-based compensation
8,042
9,980
159,754
Deferred taxes
(5,670
)
1,863
1,266
Other
(2,436
)
(1,209
)
(457
)
Changes in operating assets and
liabilities:
Inventory
33,182
(12,028
)
(65,709
)
Prepaid expenses and other current
assets
(2,179
)
(5,364
)
(1,949
)
Prepaid income taxes
(480
)
4,264
(5,928
)
Deposits and other noncurrent assets
(6,296
)
(1,712
)
(3,058
)
Accounts payable
(30,293
)
(1,241
)
5,639
Accrued and other current liabilities
(1,721
)
(29,659
)
28,090
Operating lease liabilities
(43,532
)
(42,912
)
(49,597
)
Other noncurrent liabilities
(1,897
)
3,900
1,222
Deferred compensation
1,228
(2,627
)
342
Due to related parties
(3,412
)
(1,881
)
6,562
Income taxes payable
2,671
—
(9,336
)
Net cash provided by operating
activities
42,771
53,311
121,220
INVESTING ACTIVITIES
Purchases of property and equipment
(26,002
)
(23,369
)
(17,552
)
Net cash used in investing activities
(26,002
)
(23,369
)
(17,552
)
FINANCING ACTIVITIES
Capital distribution to Torrid Holding
LLC
—
—
(300,000
)
Proceeds from revolving credit
facility
592,775
832,635
5,700
Payments on revolving credit facility
(593,885
)
(824,255
)
(5,700
)
Deferred financing costs for revolving
credit facility
—
—
(688
)
Principal payments on the New Term Loan
Credit Agreement and repayment of Amended Term Loan Credit
Agreement and related costs
(17,500
)
(21,875
)
(212,775
)
Proceeds from the New Term Loan Credit
Agreement, net of original issue discount and deferred financing
costs
—
—
340,509
Proceeds from issuances under share-based
compensation plans
399
746
569
Withholding tax payments related to
vesting of restricted stock units and awards
(306
)
(668
)
(2,072
)
Repurchases and retirement of common
stock
—
—
(31,700
)
(23,352
)
Net cash used in financing activities
(18,517
)
(45,117
)
(197,809
)
Effect of foreign currency exchange rate
changes on cash, cash equivalents and restricted cash
(53
)
(177
)
213
(Decrease) increase in cash, cash
equivalents and restricted cash
(1,801
)
(15,352
)
(93,928
)
Cash, cash equivalents and restricted cash
at beginning of period
13,935
29,287
123,215
Cash, cash equivalents and restricted cash
at end of period
$
12,134
$
13,935
$
29,287
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest
related to the revolving credit facility and term loan
$
34,195
$
29,564
$
24,120
Cash paid during the period for income
taxes
$
11,154
$
15,601
$
58,134
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Property and equipment purchases included
in accounts payable and accrued liabilities
$
4,524
$
3,959
$
3,338
Reclassification of Certain Statements of Operations and
Comprehensive Income Items
In the fourth quarter of fiscal 2022, we made a voluntary change
in our accounting policy regarding the classification of royalties,
profit-sharing and marketing and promotional funds ("PLCC Funds")
we receive pursuant to our private label credit card agreement.
Historically, we recorded PLCC Funds as a reduction to selling,
general and administrative expenses in the consolidated statements
of operations and comprehensive income (loss). Under the new
policy, we record PLCC Funds in net sales in the consolidated
statements of operations and comprehensive income (loss). This
reclassification does not have any impact on income from
operations, income (loss) before provision for income taxes, net
income (loss) or earnings (loss) per share and there was no
cumulative effect to stockholders’ deficit or net assets.
The recognition of PLCC Funds in net sales is preferable because
it will enhance the comparability of our financial statements with
those of many of our industry peers and provide greater
transparency into performance metrics relevant to our industry by
showing the gross impact of the funds received as net sales instead
of as a reduction to selling, general and administrative expenses.
The following tables show this change in presentation which has
been retrospectively applied to fiscal year 2022 presented in this
earnings release.
The impact of this change in accounting principle is reflected
in the table below (in thousands):
Three Months Ended January 28,
2023
Prior to PLCC Funds
Reclass
Change in
Accounting
Principle
As Reported
Net sales
$
294,817
$
6,411
$
301,228
Cost of goods sold
205,049
—
205,049
Gross profit
89,768
6,411
96,179
Selling, general and administrative
expenses
71,426
6,411
77,837
Marketing expenses
15,827
—
15,827
Income from operations
$
2,515
$
—
$
2,515
Twelve Months Ended January
28, 2023
Prior to PLCC Funds
Reclass
Change in
Accounting
Principle
As Reported
Net sales
$
1,254,136
$
34,008
$
1,288,144
Cost of goods sold
828,605
—
828,605
Gross profit
425,531
34,008
459,539
Selling, general and administrative
expenses
263,965
34,008
297,973
Marketing expenses
59,941
—
59,941
Income from operations
$
101,625
$
—
$
101,625
Non-GAAP Reconciliation
The following table provides a reconciliation of Net (loss)
income to Adjusted EBITDA for the periods presented (dollars in
thousands):
Three Months Ended
Twelve Months Ended
February 3, 2024
January 28, 2023
February 3, 2024
January 28, 2023
Net (loss) income
$
(4,070
)
$
(3,844
)
$
11,619
$
50,209
Interest expense
10,372
8,385
39,203
29,736
Interest income, net of other (income)
expense
(328
)
(16
)
(90
)
207
(Benefit from) provision for income
taxes
(1,959
)
(2,010
)
6,416
21,473
Depreciation and amortization(A)
9,381
9,093
36,484
36,074
Share-based compensation(B)
2,061
2,412
8,042
9,980
Non-cash deductions and charges(C)
462
183
816
2,493
Other expenses(D)
509
2,170
3,729
2,178
Adjusted EBITDA
$
16,428
$
16,373
$
106,219
$
152,350
_____________________________ (A) Depreciation and amortization
excludes amortization of debt issuance costs and original issue
discount that are reflected in interest expense. (B) Share-based
compensation in fiscal year 2023 includes awards that will be
settled in cash as they are accounted for as share-based
compensation in accordance with ASC 718, Compensation—Stock
Compensation, similar to awards settled in shares. (C) Noncash
deductions and charges includes losses on property and equipment
disposals and the net impact of noncash rent expense. (D) Other
expenses include severance costs for certain key management
positions, certain litigation fees, and the reimbursement of
certain management expenses, primarily for travel, incurred by
Sycamore on our behalf, which are not considered
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version on businesswire.com: https://www.businesswire.com/news/home/20240328211466/en/
Investors Lyn Walther IR@torrid.com Media Joele
Frank, Wilkinson Brimmer Katcher Michael Freitag / Arielle
Rothstein / Lyle Weston Media@torrid.com
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