Torrid Holdings(CURV 0.85%) reported second quarter 2025 outcomes on Aug. 4, 2025, with web gross sales of $262.8 million and adjusted EBITDA of $21.5 million, in step with inner expectations however reflecting a 6.9% year-over-year comparable gross sales decline. Administration highlighted a strategic pivot towards digital-led progress, accelerated retailer closures, elevated advertising funding, and speedy enlargement of higher-margin sub-brands, whereas navigating tariff headwinds and sustaining liquidity for capital returns. The next insights element essentially the most important strategic and monetary developments from the decision.
Retailer closures speed up Torrid Holdings’ digital transition
In the course of the second quarter, the corporate closed 57 underperforming shops and stays on monitor to shut roughly 180 places in fiscal 2025, with digital gross sales now nearing 70% of whole demand. This retailer rationalization is designed to pay attention assets on extra worthwhile digital and omni-channel operations, whereas a revamped retention technique goals to protect buyer relationships because the bodily footprint shrinks.
“With digital gross sales approaching 70% of whole demand, we’re executing a complete realignment that capitalizes on this elementary shift whereas strengthening buyer relationships throughout all contact factors. To that finish, now we have been carefully monitoring buyer retention all through the course of our retailer closures, and the outcomes stay in step with our aims. Our goal is to retain not less than 60% of shoppers, per historic efficiency following closures. Encouragingly, retention tendencies from the 2025 closures are outperforming fiscal 2024 with a better share of shoppers migrating to our on-line platform.”
— Lisa Harper, Chief Govt Officer
This digital migration, coupled with secure buyer retention, demonstrates the corporate’s potential to adapt its enterprise mannequin and preserve engagement regardless of a shrinking retailer base.
Sub-brands drive margin enlargement and progress for Torrid Holdings
Sub-brand penetration is predicted to double within the third quarter and attain 25%-30% of the assortment in fiscal 2026, already delivering “lots of of foundation factors” increased product margins than legacy classes. Massive-scale refixturing—135 shops yr to this point—has enabled expanded in-store sub-brand presence, and launches have proven constructive halo results on core denim and intimates.
“we’re nonetheless very proud of the margin profile that we’re seeing in sub-brands. And it is delivering lots of of foundation factors increased in product margins than the majority of the enterprise. And we’re seeing that constantly carry out as we roll out an increasing number of deliveries of those. I feel there are just a few ways in which we ponder enlargement previous 2026 on this enterprise, whether or not there are — and we’ll take a look at a few of these concepts subsequent yr, whether or not there are shops that we convert to extra of a deal with sub-brands.”
— Lisa Harper, Chief Govt Officer
The incremental margin from sub-brands allows reinvestment in scale initiatives and helps the corporate’s objective of 150-250 foundation factors of adjusted EBITDA margin enlargement in fiscal 2026, at the same time as advertising spend rises.
Capital allocation shifts prioritize shareholder returns and debt discount
The corporate repurchased roughly 6 million shares at $3.50 per share utilizing $20 million in money as a part of its $100 million buyback authorization, lowering the remaining authorization to roughly $45 million. Whole liquidity, together with out there borrowing, stood at $111.7 million, and the corporate proactively prolonged its asset-based mortgage (ABL) maturity to 2030.
“We at present have an lively $100 million authorization for share repurchase, of which now we have roughly $45 million remaining. We additionally intend to deploy free money move to additional cut back our debt, fortifying our steadiness sheet for long-term monetary flexibility. On the similar time, we stay dedicated to investing selectively in initiatives that drive worthwhile progress and enhance buyer retention, guaranteeing that our capital choices not solely present rapid returns, but in addition strengthen the muse for future progress.”
— Lisa Harper, Chief Govt Officer
Simultaneous share buybacks and debt discount, even throughout a interval of EBITDA and web earnings compression, sign administration’s confidence in future money era and intrinsic fairness worth.
Wanting Forward
Administration revised fiscal 2025 steering to web gross sales of $1.015 billion to $1.030 billion and adjusted EBITDA of $80 million to $90 million, reflecting elevated tariffs and a $5 million increase in digital advertising spend, now forecast at 6% of gross sales. The corporate is concentrating on 150-250 foundation factors of adjusted EBITDA margin enlargement and substantial free money move uplift in fiscal 2026, pushed primarily by retailer closures and sub-brand progress. Capital allocation priorities for 2026 are centered on additional share repurchases and debt discount, supported by ongoing stock self-discipline, with year-end comparable inventories anticipated to say no by mid-to-high single digits year-over-year.
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