Torrid Holdings Inc. Q3 FY2024 earnings call

• Lisa Harper noted sales trends softened in late September and October, with fall assortments lacking newness. Delivered 285 basis points of gross profit expansion. Ended quarter with clean inventory levels down 19% and $44 million in cash. • Ashlee Wheeler mentioned regular price sales comp increased 1% year-over-year, inventory down 19% year-over-year, and impact of hurricanes on Torrid Cash. Positive comps in Denim and sweaters. • Paula Dempsey provided financial details, including net loss improvement, adjusted EBITDA increase, inventory reduction, and store optimization plan to close 30-40 stores by fiscal 2024 end.

Net sales for the third quarter were $263.8 million compared to $275.4 million last year. Comparable sales declined 6.5%, with regular price comp positive 1% and clearance comp down 47%. Growth profit grew by 4% to $95.2 million. Denim showed continued growth in positive comps driven by freshness and innovation. Sweaters offered variety of newness and novelty. Intimate apparel foundations categories delivered strong regular price comps.

• Q4 sales expected to range from $255 million to $270 million and adjusted EBITDA between $9 million and $15 million. • Full year sales expected between $1.083 billion and $1.098 billion and adjusted EBITDA $101 million to $107 million. • Fiscal 2025 expects low to mid-single digit comparable sales growth and improvement in EBITDA margins.

• Macro trends including hurricanes in October impacting sales, consumer spending constraints, and customer behavior changes around election time. • Volatility in sales trends throughout the quarter due to various external factors.

Q: What is the proportion of newness in the assortment planned in the first half of 2025 compared to the third quarter and marketing strategies?

A: Lisa Harper mentioned impacting every category, launching sub-brands like Festi, Nightfall, Retro Chic, and using influencers and increased marketing spend.

Q: How does EBITDA margin expansion work even if comps don't return to growth?

A: Paula Dempsey said EBITDA margin expansion can still occur through store footprint optimization.

Q: Thoughts on macro vs micro factors in Q3 performance?

A: Lisa Harper noted substantial macro impact on traffic and sales trends in October, but product issues were micro controllable.

Q: Inventory shape for remainder of year and into 2025?

A: Ashlee Wheeler said expected to end year flat to down low single digits, return to growth in 2025 with relatively flat inventory.

Q: Price points, talent, and marketing for new products?

A: Lisa Harper discussed price point mix, added Laura and Kate to teams, and increased marketing spend with influencer engagement.

Q: Return to growth in 2025 and clearance sales lap?

A: Lisa Harper said 2025 is for both comp and top line growth, clearance sales lap in Q1 2025.

Q: Product shift and usefulness?

A: Lisa Harper mentioned shifting to be more youthful, balancing core and new products.