Torrid Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
June 12, 2024

There are 8 speakers on the call.

Operator

Holdings, Inc. 1st Quarter Fiscal 20 24 Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Operator

It is now my pleasure to introduce your host, Chin Wei Aboulou, Chief Accounting Officer. Thank you. You may begin.

Speaker 1

Good afternoon, everyone, and thank you for joining Torrid's call today to discuss our financial results for the Q1 of fiscal 2024, which we released this afternoon and can be found on our website at investors. Torrid.com. With me today on the call are Lisa Harper, Torrid's Chief Executive Officer Ashley Wheeler, Torrid's new Chief Planning Officer and Paula Dempsey, Ford's Chief Financial Officer. Before we get started, I would like to remind you of the company's safe harbor language, which I'm sure you're familiar with. Management may make forward looking statements, including guidance and underlying assumptions.

Speaker 1

Forward looking statements may include, but are not limited to, statements containing the words expect, believe, plan, anticipate, will, may, should, estimate and other words and terms of similar meaning. All forward looking statements are based on current expectations and assumptions as of today, June 12, 2024. These statements are subject to risks and uncertainties that could cause actual results to differ materially. For further discussion of risks related to our business, see our filings with the SEC. This call will contain non GAAP financial measures such as adjusted EBITDA.

Speaker 1

Reconciliations to these non GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC and available on our website. With that, I will turn the call over to Lisa.

Speaker 2

Thank you, Chin Wei. Good afternoon and thank you for joining us to discuss our Q1 results. Today, I'll start with some important announcements about our executive leadership team, followed by an overview of our Q1 performance and our strategies for 2024. I am thrilled to announce that Han Park has been promoted to Chief Operating Officer. Han joined Torit in 2022 as the Chief Technology Officer.

Speaker 2

He has been instrumental in stabilizing our systems and executing an IT strategy that supports the growth of our business. We also announced that Ashley Wheeler has been promoted to Chief Planning Officer. Ashley has been with Torrid since 2011, serving in a number of merchandising and planning roles, most recently as Senior Vice President of Planning. She played a key role in driving improvements in our inventory management and optimizing our pricing strategy over the past year and will now lead the entire planning and allocation group. And finally, we announced that Mark Mazzico, our Chief Commercial Officer is retiring.

Speaker 2

Mark has a long history with Torrid and I'm very grateful to him for coming out of retirement after working as a consultant to join us as a member of the Torrid leadership team. We appreciate all that Mark has done for Torrid and are grateful that he is staying on as a consultant and wish him the very best second retirement. Turning to our results. We are pleased with our start to fiscal 2024. In the Q1, we delivered higher than expected adjusted EBITDA driven by strong gross margin expansion and disciplined expense management.

Speaker 2

For the quarter, we generated $280,000,000 in sales $38,000,000 in adjusted EBITDA. We remain focused on tightly controlling our inventory

Speaker 3

our inventory and

Speaker 2

ended the quarter with healthy inventory levels, which were down 17% compared to a year ago. Our first quarter results reflect continued progress on our key initiatives. In stores, we saw traffic trends improve as we move through the quarter and we had a very successful Torrid Cash event. Customers responded to our balanced merchandise assortment both in terms of breadth of styles as well as price points. During the quarter, we experienced strong regular price comp sales in mid tops, graphics and denim.

Speaker 2

While our overall comp declined for the quarter, it was primarily due to a decline in clearance sales relative to last year's strategic decision to significantly reduce inventory levels and promotions. We drove positive comp sales at regular price towards the end of the quarter and into the Q2, demonstrating the strength of our new collection. We expect that clearance sales comps will be less of a drag on our top line as we move through the year. We remain focused on executing our strategic priorities, improving our merchandising assortment, strengthening our marketing message and optimizing profitability and working capital through cost and inventory management. We were pleased with the response to our spring collections, which reflect a better balance of casual and dressy styles.

Speaker 2

The reintroduction of our Sally fabrication as well was well received and supported a more casual look and feel to our stores. We saw a positive response to woven tops, dresses and non denim bottoms. In addition to balancing our assortments, we improved the pricing architecture of our collections. We offered more opening price points across categories. As part of our efforts to evolve and enhance our assortment, we recently visited our factories in Asia.

Speaker 2

We worked with our key factories to source new fabrications for TOR to position us to get back into the chase and react model that we are known for. More to come on this in the future. Turning to marketing, our new digital platform is beginning to deliver results in the form of improved customer acquisition and engagement. During the quarter, we launched our Casting Call model search contest and the response thus far has been incredible. Ashley will provide more details in a few minutes.

Speaker 2

Moving to working capital. We've successfully implemented a number of initiatives to reduce our inventory levels both in terms of cost and units. Our inventory was down 17% due to cost at the end of the quarter compared to a year ago and we expect to end the year with inventory down double digits. This has led and will continue to lead to a significant improvement in our working capital efficiency evaluate our current store fleet. We are working on a comprehensive analysis of our store base to optimize our store footprint.

Speaker 2

We are reevaluating our stores based on center characteristics, market conditions and profitability. While only a handful of stores perform below our standards, we are looking at all stores to make sure we are in the right location for our customers. We have found that stores in lifestyle centers perform better on average than our enclosed mall based stores. We are in the early stages of this process and look forward to updating you on our findings later in the year. In closing, we've made tremendous progress over the past year and we are beginning to realize the benefits of this work in our financial results.

Speaker 2

This marks another consecutive quarter of delivering on our expectations and we believe that we are well positioned to continue to execute and deliver consistent growth and improve financial results for our shareholders. Before I turn the call over to Ashley, I would like to thank our amazing team of associates who are at the heart of everything we do. I will now welcome Ashley to the call who will review our merchandising strategies and marketing plans. Paula will then review our financials and our outlook for fiscal 2024.

Speaker 4

Thanks, Lisa. I appreciate the confidence you have in me and I'm excited to take on additional responsibilities and lead the planning organization. I will begin today by discussing our merchandising and margin optimization initiatives and then provide an update on our marketing strategies. We are pleased with the sequential improvement in our regular price business during the quarter and our expanding product margins, which are attributable to lower product costs as well as reduced discounting and promotion. Our tops and denim businesses in particular saw positive regular price sales and margin comps, which were supported by a shift in opening price points and diversity in leg shape.

Speaker 4

We continue to build on the success of expanding in store assortments by adding in our best performing e commerce exclusives, which have yielded higher overall sell throughs and higher margins. This initiative is allowing us to maximize the sales and margin potential of our inventory investments, while also promoting a greater cross channel shopping experience for our customers. Our clearance store initiative continues to be accretive in allowing us to sell store markdowns more effectively and profitably, while also supporting the expansion of greater regular price assortments in our feeder stores, contributing to our gross margin expansion this quarter. We will have 15 clearance stores by the end of the second quarter and approximately 150 seater stores, which we believe is the optimal balance for our total fleet. In further support of our commitment to growth and margin maximization, we are in the process of implementing a merchandise assortment, financial planning and allocation system.

Speaker 4

We successfully launched the 1st module of this suite, which allows for much more robust and multidimensional hindsight of our assortment productivity to help inform our investment decisions and improve our overall buy accuracy. Additionally, this will be the first step in helping form the basis for the future of regional and store specific assortment. We believe this will further build upon and optimize the success of our current in store assortment expansion. We will see the launch of the remaining modules throughout the balance of this year and early 2025. Turning to marketing.

Speaker 4

In April, we launched our taurid casting call, a nationwide model search to find the face of taurid for 2025. The last time we ran this popular campaign was in 2019 and our customers loved it. We've seen a remarkable response to our first four events so far. Customer sentiment has been fantastic and the energy incredibly high. These events are driving significant traffic and we have observed a 6 point positive swing in new customer acquisition comps and 9 point positive swing in reactivated customer comps since the campaign launch.

Speaker 4

We will host our final full scale casting call event and 100 in store casting party this summer before the ultimate winner is chosen in September. We continue to see improving trends in our customer file with accelerating growth we were able to leverage valuable insights from our data platform to take quick decisive action in allocating our media spend throughout the quarter. We also conducted a digital media upspend test during the Q1 to help us understand the most optimal level of investment for maximizing both near term ROI and long term enterprise value. We will apply our learnings from this test as we approach future marketing investments. Lastly, we are evaluating ways to enhance our loyalty program and private label credit card value propositions.

Speaker 4

We believe there are opportunities in each that will drive long term accretive growth. We look forward to seeing the results of these initiatives and sharing more with you next quarter. With that, I will now pass the call to Paula. Thank you, Ashley, and congratulations on the new role as Chief Planning Officer. Good afternoon, everyone, and thank you for joining us today.

Speaker 4

I will now begin with a detailed discussion of our Q1 performance followed by our outlook for fiscal 2024. We're pleased with our Q1 results. Our sales were in line with our expectations as customers responded to our product offering, enabling us to reduce promotions, which combined with improved products led to 3 60 basis points of gross margin expansion. Adjusted EBITDA was $38,000,000 exceeding our guidance. We ended the quarter with healthy inventory levels down 17% to a year ago.

Speaker 4

For the Q1, net sales came in at $280,000,000 compared to $294,000,000 last year. Comparable store sales declined 9%, primarily due to lower levels of clearance sales relative to a year ago. We expect the negative comp impact of clearance to abate as we move through the year, while continuing to see improvement in regular price comp sales. Gross profit increased to $115,000,000 from $111,000,000 last year, reflecting a gross margin increase of 360 basis points to 41.3 percent driven by lower product cost and fewer markdowns. SG and A expenses in the quarter were $76,500,000 or 27.3 percent of net sales compared to $71,200,000 or 24.3 percent of net sales last year.

Speaker 4

The increase is primarily driven performance bonuses and technology investments, partially offset by improved labor productivity, both in store and e commerce fulfillment. As a reminder, we did not incur performance bonus expense last year. Marketing expenses in the quarter were $12,800,000 compared to $13,400,000 in the Q1 of last year. As a percentage of net sales, marketing increased 10 basis points to 4.6% compared to 4.5% in the Q1 of last year. Our net income for the quarter was $12,200,000 or $0.12 per share versus a net income of $11,800,000 or $0.11 per share for the same period last year.

Speaker 4

In addition to GAAP measures, we believe that adjusted EBITDA is an important measure that we use to evaluate and manage our business. Adjusted EBITDA was $38,000,000 and adjusted EBITDA margin increased 70 basis points to 13.7 percent of net sales. Moving to the balance sheet. Our cash and cash equivalents were $21,000,000 at the end of the quarter and no borrowings on our revolving credit agreement. Our total liquidity, including available borrowing capacity under our revolving agreement was 137,000,000 dollars Total debt at the end of the quarter was $301,000,000 compared to $329,000,000 in the Q1 of 2023.

Speaker 4

Our inventory levels continue to improve, ending the quarter with inventory down 17% to 145 $1,000,000 compared to $175,000,000 a year ago. Looking ahead to the rest of 2024, we expect the quarterly cadence of sales growth to improve with sequential expansion in regular price comp and less negative clearance comp. We remain focused on executing our strategy to improve gross margins and increase adjusted EBITDA through effective pricing, cost initiatives and enhanced productivity across our stores and online channels. We project net sales for the fiscal year to range between 1 point $135,000,000,000 $1,155,000,000 Our adjusted EBITDA guidance has been tightened to $109,000,000 to $116,000,000 reflecting margin benefits from our recent Q1 results that will carry through the year. We expect gross margins to remain robust, driven by improvements in product costs, better opening price points and fewer promotions due to sustained reductions in inventory levels.

Speaker 4

SG and A expenses are expected to remain consistent with Q1 levels, owing to incentive compensation and technology investments. Marketing investments are projected to align with last year's as a percentage of sales. Capital expenditure is expected to be between $20,000,000 to $25,000,000 which include investments in new systems and technology as well as the opening of 15 to 20 new stores. Let me provide some comments on our expectations for the Q2 of fiscal 2024. For the Q2, we project net sales to be in the range of $280,000,000 to $285,000,000 and adjusted EBITDA to be between $30,000,000 $34,000,000 Due to the launch of our Casting Call initiative, we anticipate marketing expenses as a percentage of sales to increase 30 to 50 basis points versus the same period last year.

Speaker 4

To conclude, our solid Q1 results for 2024 highlight the ongoing improvements across our business. This year, our priorities have not changed and include expanding margins, making strategic investments in technology and our workforce and delivering strong working capital results. Now I will turn the call over to the operator to begin the question and answer portion of our call.

Operator

Thank you. We will now be conducting a question and answer session. Our first question comes from the line of Alex Stratton with Morgan Stanley. Please proceed with your question.

Speaker 5

Perfect. Thanks so much. Congrats on a nice quarter. I just wanted to focus in on the top line guidance for the year. It looks like there's a relatively large improvement assumed

Speaker 2

in the back half. So I

Speaker 5

just want to understand what assumptions are driving that? And then also just higher level, would love your input on kind of consumer outlook now maybe compared to when we talked 2 to 3 months ago? Thanks a lot.

Speaker 4

Hey, Alex, it's Paula. Yes, absolutely. And I have with me here also Ashley Wheeler. She is our new Chief Planning Officer. So, you're correct.

Speaker 4

We will see we will experience improvement in the second half of the year. And it's going to come primarily from having lesser and lesser of that clearance comp impact that we have had. But Ashley can provide a little bit more color. Yes. So we expect to see sequential improvement in our regular price business, which we've already observed.

Speaker 4

We saw that in the latter part of the Q1. We're continuing to see it now and expect that to continue. At the same time, expecting the drag from clearance comps to abate as we progress through the latter half of the year. And the combination of those two things will yield higher top line.

Speaker 2

And then on hey, Alex, on customer sentiment, it's essentially, as we're innovating with products and becoming more casual, we're seeing better receptivity to the lines. What we are happy about is even with opening price point and less clearance that we're able to generate profitable sales. As we've said, we think that the comp will improve as we move forward and have lots of a drag on clearance. And if she likes the product, she's voting on it. And I think because of our very stringent inventory practices that we're able to optimize margins, while still providing her with compelling product.

Speaker 1

Thanks a lot. Good luck, ladies.

Speaker 2

Thanks, Ellen.

Operator

Thank you. Thank you. Our next question comes from the line of Cory Tarlow with Jefferies. Please proceed with your question.

Speaker 3

Great. Thanks. Lisa, you'd mentioned a store reevaluation. I was curious to get your perspective as to what some of the early reads of that are, what the reasoning behind it is and what your expectations are for the store fleet as you think about driving growth or just profitability there? And maybe just remind us what some of the unit economics are of the fleet at present as well?

Speaker 2

Sure. So, we opened a lot of stores in 2015 2016. So we're starting to lap a pretty aggressive store growth history where we were opening around 90 to 100 stores a year in 2015 2016. And a lot of our we're right now balanced with about 65% of our stores in mall and 35% in outdoor centers. And we'd like, we think, ultimately over time to move that to a bit more of a fifty-fifty split between mall and outdoor centers.

Speaker 2

We as we've talked about before, we really consider stores to be toward the overall enterprise. In terms of customer acquisition, we've seen enormous response with the store activations that we've had surrounding the model search. And Ashley mentioned the expansion and customer acquisition and reactivation there. So we're watching that happen. We have 100 events like that.

Speaker 2

We have 100 in store events planned for the balance of the summer related to that. So we are still seeing that store activation. We think we're going to improve on that and take the learnings from this experience and really drive that. So we still feel stores are critical. We do, as I mentioned, believe that there's an opportunity to shift somewhat from a mix of even more of an even mix between mall and strip.

Speaker 2

Our strips deliver higher EBITDA margins of about, I would say, 500 basis points and with higher sales. And so we just think it's more of an overall fleet evaluation with the opportunity to focus on the enterprise experience for the customer as well as shifting her to where she's choosing to shop more often now, which is in the strip the outdoor center environment. And that's really all it is. And it's part and parcel of kind of the 10 year aging of the fleet, an appropriate time to kind of think about and work on the analysis to redistribute the fleet more appropriately.

Speaker 3

Very helpful. And then one of the I think, trends that we've been asked about more has been the shift to wide leg. Could you talk a little bit, I mean, I know maybe, Ashley, this would probably be in your wheelhouse, what that means for Taured and how you think about the ability to use that trend within denim to then maybe upsell into a top or other attachment opportunities?

Speaker 2

I'll start, Corey, and then Ashley. Those have a lot of information. But one of the things that we are seeing with innovation in our product are leg shapes in denim and leg shapes in non denim as well. And one of the successes that we've had going into this year is the breadth that we offer. So wide leg is critical.

Speaker 2

Straight leg obviously is still core. We're a little bit behind on the straight leg, but I think we've been very good in delivering wide as well as flare and boot have all worked. So what's great about the cycle right now, both in denim and in non denim, more prevalent in denim, is the variety of leg shapes. And we've certainly seen our customer respond very positively to that. And to your point, you're exactly right.

Speaker 2

I think the opportunity to change the shape of the tops that work with that proportion has been something that we're focused on and offering into the mix. That and the shift to more casual product, I think, has been very positive for us. Ashley can talk a little bit more about the category specifically.

Speaker 4

Yes. We've seen great response to our tops businesses. As I noted in the prepared remarks, we've seen positive comps at regular price in our knit tops, graphic tops. We're seeing wovens turn and we're actually starting to see dresses turn positive too. So across the board we're seeing receptivity to our more casual product.

Speaker 3

Great. Thank you so much.

Operator

Our next question comes from the line of Brooke Roach with Goldman Sachs. Please proceed with your question.

Speaker 6

Good afternoon and thank you for taking our question. Lisa, can you elaborate on the new customer acquisition and lapse customer reactivation results that you're seeing in your business today? As you look ahead, what actions are you planning to take to keep those new customers and expand your share of wallet with those customers?

Speaker 7

Sure. Hey, Brooke, thank you for the question.

Speaker 2

That we saw basically the minute we started the model search reactivation. It's been what we believe and what we're seeing is what I was talking about earlier, but the enterprise value of the store as a place to acquire customers. I would say some of the tactics that we're using beyond that, we're going to focus and expand our store activation calendar so that we are providing more, activities and special opportunities in the stores for not just our loyalty customers, but for a broader base as well. We're very focused on kind of dressing room activity in the store. We know that dressing room conversion is very positive atorabove50%.

Speaker 2

And we know that by rebuilding that culture of dressing room behaviors and dressing room sales and service behaviors is has had a positive impact and we expect it to continue to have a positive impact. We are I would say that starting in Q4, we started to see kind of an improvement in our customer file with new customer, but particularly reactivated customers. And then the event, the activation of the stores, I think, popped our new customers and continued the trend that we saw in reactivated. So we felt that that was a very positive reaction to that event and to the initiatives brought more the more broad initiatives that we have in the store environment. Do you want to talk about anything, Ashley, I think?

Speaker 4

No. I would just reiterate or confirm that we are seeing stabilization in the customer file. We're adding more customers to the file than we were a year ago, which is very encouraging, attributable to reactivation as very positive direction. We have more flexibility and I think more intelligence than we had a year ago with the partnership of our 3rd party digital marketing agency that's allowing us to be more responsive in the way that we allocate and really maximize EBITDA ROI on our digital marketing investments, driving enterprise value, so both to the store channel and the e commerce channel.

Speaker 2

And I think adding to that, we also are in the midst of we've done the work and now we're going through the testing phases of enhancements to our loyalty program that will drive frequency. And so we think that there are some we brought in a group to really evaluate where we are with loyalty. And we're in good shape with loyalty, but there are some core things that we can change in terms of bonus points and special events that help drive, frequency, and we'll be rolling that out in the back half of the year.

Speaker 6

Great. And then maybe for Paula, can you quantify the gross margin benefit that you saw this quarter between markdowns relative to the lower product costs? And then can you elaborate on the magnitude of the benefit that you expect for each of those two drivers for the remainder of the year?

Speaker 4

Yes, absolutely. I would say the majority of our gross margin benefit that you saw coming through in Q1, Brooke, was truly coming through the regular priced items, right? So we saw a great benefit from that. And we're going to continue to see that benefit in Q2 and Q3 and tempering down a little bit in Q4 as we progress through the year. But I would say that we're happy with our margins.

Speaker 4

We're ecstatic with it. And again, the expansion should be for Q2 fairly similar to what we've seen in Q1. Yes. I would add to that, that in Q1 specifically about 2 thirds of what we experienced from a product margin expansion, so truly just products not fully baked gross margin was from benefit of cost of goods, the other third from reduced discounting and markdown. We'll see that relationship continue through the Q2 and then we'll start to see that invert as we progress further into the balance of the year where we start to lap some of the product cost benefit that we saw, but we will have benefit from reduced discounting that continues with our inventory levels remaining far reduced.

Speaker 6

Great. Thanks so much. I'll pass it on.

Speaker 2

Thanks.

Operator

Thank you. Our next question comes from the line of Marni Shapiro with Retail Tracker. Please proceed with your question.

Speaker 7

Thank you. Hey, guys, congrats on some great improvements and also congrats on hitting 1,000,000 on Instagram. That's like a big milestone, I feel like. Can we just get a quick update on Curve? And then also, I wanted to just dig in a little bit to the product a little bit more.

Speaker 7

Some of the edgier, maybe sexier product that I feel like is very towards seems to be turning very, very quickly. And I'm curious if that's bringing in a younger shopper, if what I'm seeing is happening everywhere or just the stores I'm in. And then just a follow-up on the stores that you talked about the planning and merchandising. Sometimes I walk in the stores and I'm just blown away the sets are amazing and then they're proof gone. Like what's good is gone so fast.

Speaker 7

So is part of the implementation of the planning and merchandising to sort of get a better handle on when to replenish, when to bring things into stores, so there's a little more consistency there?

Speaker 2

Okay. Hey, Marni. Hey. I would say that we are deep into a frame rework and curve. Our best selling bra has pads that are too old.

Speaker 2

We haven't really launched the core bra in about 4.5 years now. We do have some bra launches in the back half of this year going into Q1 of next year. And we're developing a robust pipeline for bras that you'll start really to see accelerate as we go in to early 2025 throughout the year throughout 2025. So it's a little bit longer of a ramp up, but we're doing the work and we're very encouraged that there's some core frames that we exited that we are going to be able to reactivate, minimizer's full coverage, kind of basic core bras that we eliminated from the assortment that have a lot of opportunity in terms of sales and I think consistency for the curve customer. In terms of kind of edgy, sexy, what I'll tell you is the most important thing for us, I think, as we've moved through this time period is to rebalance our assortment into a more casual vein and to add the pricing structure that we've put in that we think has worked really well for us, and really hasn't had any negative impacts over AUR as we've been balanced with less promotions.

Speaker 2

It's kind of worked out really as we anticipated it. We do deliver about every 3 weeks. So I think that we actually have more room to pull back in inventory. As we mentioned, we expect the end of the year to be down still double digits on a year over year basis because we do we are happy with our churn improvement in all channels, but particularly in the stores. I think the stores really over performed in the Q1.

Speaker 2

And we are focused more on, and Ashley alluded to this, but getting more breadth of assortment into the stores. And so there are about 3 50 stores in our fleet that can hold additional choices.

Speaker 1

As we

Speaker 2

are turning faster, it allows to have more options for the customer. And we're really going back to the thesis that we can provide everything in our closets and trying to have, a focus on a younger mindset in the store while not firing our existing customers. So all of those things are in play and there's a lot of great work that the teams are doing, a lot of innovation in terms of fabric and shape and ease and kind of fashionability that I think is we're seeing the early results of now and expect continue as we balance the year. Then I'll throw the last one over to Ashley. I'm trying to remember what the last part of the question is.

Speaker 2

No, you sort of actually answered

Speaker 7

the last one, which is if the planning

Speaker 2

and merchandise systems were sort of in place to kind of

Speaker 3

Yes.

Speaker 7

Exactly. Can I just do ask a follow-up on that? As I think forward about your business, Tory to me always had a significant win in denim and graphics, which are now have it seems like have turned the corner. So is the forward thinking that there are things that need to always be in stock, even if the graphics that the actual graphic is turning, that she should walk in and there should always be a very strong and in stock denim and, say, graphics assortment. And then the fashion turns much faster and if it's sold out and you missed it too bad, here's something new that's just as good.

Speaker 7

Is that sort of where the headset is a little bit?

Speaker 4

Yes. I think you nailed it. I think that's exactly what we're aiming for.

Speaker 7

That's great. And then just one last one if I sneak it in. On your real estate off mall, who are your favorite co tenants?

Speaker 2

It works a lot of places, Marni. I mean, so almost every outdoor center that we put it into, it works. And so co tenants aren't as critical as just being in the right centers.

Speaker 7

That's great. Best of luck. You know, Lisa, that I'm cheering for you guys. So best of luck.

Speaker 2

I know. Thank you. I appreciate it. Thanks.

Operator

We have reached the end of our question and answer session. And with that, I would like to turn the floor back over to Lisa Harper for any closing comments.

Speaker 2

Yes. Thanks everyone for joining us today. We look forward to sharing progress in the next call for the Q2. Take care.

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Key Takeaways

  • Promoted Han Park to Chief Operating Officer, Ashley Wheeler to Chief Planning Officer, and announced the retirement of Chief Commercial Officer Mark Mazzico.
  • Generated Q1 net sales of $280 million and adjusted EBITDA of $38 million, with gross margin expanding 360 basis points thanks to lower product costs and fewer markdowns.
  • Reduced inventory by 17% year-over-year, improving working capital efficiency and targeting a double-digit inventory decline by fiscal year-end.
  • Scaled up merchandising and digital marketing—highlighted by the Torrid Cash event and Casting Call model search—driving stronger regular-price comps and a notable lift in new and reactivated customer acquisition.
  • Maintained fiscal 2024 guidance of $1.135 billion–$1.155 billion in net sales and $109 million–$116 million in adjusted EBITDA, with Q2 sales expected at $280 million–$285 million and adjusted EBITDA of $30 million–$34 million, and capex of $20 million–$25 million.
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Earnings Conference Call
Torrid Q1 2025
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