Torrid Holdings Inc. Q2 FY2026 earnings call

• Strategic Focus: The primary 2026 objective is customer file growth through acquisition, reactivation, and retention, supported by the 'Customer Growth Agenda'.
• Operational Pivot: Q2 showed a significant inflection point starting in July, with positive comparable sales returning after difficult June conditions driven by macro factors.
• Marketing Engine Rebuild: Implemented a systematic rebuild of marketing channels with strict ROAS accountability; all 11 marketing channels improved sequentially in July.
• Paid Media Efficiency: Paid revenue grew double-digits on significantly less spend than the prior year, expanding ROAS; paid media now represents 12% of digital revenue.
• Sub-Brand Scaling: Sub-brands are accelerating, with Festi as the strongest performer; True activewear leaned into leisure aesthetics; Built to Scale platform delivering strong results.
• Opening Price Point (OPP): OPP comprises ~35% of assortment, supporting conversion and basket growth via cost-engineered sourcing.
• Store Optimization: Completed store optimization program with 177 closures YTD; remaining 457 stores optimized for efficiency while maintaining customer retention.
• Marketplace Expansion: Launched on Macy’s (mid-July) and Target, with Walmart launch later this year; operates on a model where Torrid owns and fulfills inventory.
• Mobile App Growth: Mobile app is the fastest-growing channel, converting ~7x higher than desktop/web; generated nearly 40% of digital revenue in July/August.
• Casting Call Community: Relaunched nationwide casting calls to drive community engagement and authentic content; 80% of attendees joined loyalty program; applications trending 9% ahead of 2024.

The provided transcript does not break down net sales or revenue contribution by specific product segments (e.g., Apparel, Footwear, Sub-brands) in absolute dollar terms or percentage of total revenue. It notes that sub-brands delivered year-over-year growth of approximately 74% and are on track to reach $110 million in 2026, representing approximately 12% of total net sales (up from 7% last year). Total company comparable sales declined 6.3% in Q2.

• Full-Year Net Sales: Maintained at $940 million to $960 million.
• Full-Year Adjusted EBITDA: Raised to $76 million to $86 million (reflecting $11.1 million tariff refund benefit); excluding this benefit, outlook remains unchanged at $65 million to $75 million.
• Third Quarter Net Sales: Expected between $230 million and $235 million.
• Third Quarter Adjusted EBITDA: Expected between $15 million and $20 million.
• Fourth Quarter Outlook: Expects EBITDA margin improvement vs. prior year, split evenly between gross margin expansion and SG&A leverage.
• Tariffs: Assumes 12% to 15% tariff rates in H2; no further volatility contemplated in guidance.
• Capital Expenditures: Expected $8 million to $10 million, focused on store refreshes and marketing systems.

• Macro Economic Sensitivity: June performance was negatively impacted by elevated gas prices and seasonal factors weighing on discretionary spending.
• Tariff Volatility: Future tariff policies remain uncertain; guidance assumes 12-15% rates but does not contemplate further volatility.
• Execution Risk: Success depends on continued effectiveness of marketing channel rebuilds, CRM initiatives, and marketplace integration.
• Inventory Management: Requires tight receipt management to maintain inventory levels down 3.6% YoY while supporting growth.

Q: Cory Carlo asked for details on the July sales inflection, specifically whether it was driven by traffic, conversion, AUR, or acquisition, and sought insight on rebuilding merchandise margins over the next 12-24 months. / A: Ashlee Wheeler confirmed the inflection was driven by positive movement across all 11 marketing channels, including digital customer reactivation and improved frequency within the active file. Lisa Harper and Ashlee Wheeler added that margin improvement will come from tariff benefits, robust multi-country sourcing strategies, and reduced discounting pressure due to increased new customer acquisition and reactivation, which allows for healthier pricing power without heavy promotions.