Torrid (CURV) Q1 2026 Earnings Transcript

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DATE

Thursday, June 4, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Lisa Harper
• Chief Financial Officer — Paula Dempsey
• Chief Commercial Officer — Ashlee Wheeler

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TAKEAWAYS

• Net Sales -- $246 million, a decline from $260 million, but slightly above internal guidance.
• Comparable Sales -- Decreased 1.7%; would have been +1.2% excluding footwear, which remains a headwind until the second half.
• Gross Margin -- 35.3%, down from 38.1%, attributed to combined effects of tariffs and anticipated targeted promotions.
• SG&A Expenses -- Declined by $6.3 million to $63.7 million; as a percentage of net sales, leveraged 40 basis points to 25.9%.
• Adjusted EBITDA -- $17.6 million, or a 7.2% margin, compared to $27.1 million and 10.2% previously.
• Net Income -- $414 thousand, or $0.00 per share, versus $5.9 million, or $0.06 per share.
• First Quarter Store Closures -- 20 closures completed, totaling 171 since program inception; 7 to 8 more planned for the following quarter.
• Sub Brands Growth -- Sub brands increased by 75%; full-year plan targets approximately 60% growth, to reach about $110 million and rise from 7% to 12% of net sales.
• Opening Price Point (OPP) Strategy -- Represented about 30% of apparel sales; contributed directly to dress, knit top, and non-denim bottom performance.
• Inventory -- Ended at $143 million, down 4.6%, reflecting controlled receipts and intentional store reductions.
• Liquidity -- $22.8 million in cash and cash equivalents; $32.8 million drawn on revolving credit facility; total liquidity is $100 million.
• Marketing Spend -- Lower by $800 thousand, at $14.5 million, achieved through data-driven targeting and channel reallocation.
• Expense Savings -- Achieved $11 million toward a $40 million full-year target via store optimization in fiscal 26.
• Customer Metrics -- "double digit growth in conversion," and "low single digit growth in our units per transaction," indicating improved product acceptance and resilience.
• Guidance for Year -- Net sales expected at $940 million to $960 million; adjusted EBITDA forecasted between $65 million and $75 million with planned margin expansion of up to 140 basis points.
• Q2 Outlook -- Sales forecasted at $232 million to $240 million; adjusted EBITDA guided to $12 million to $16 million.
• Tariff Refunds -- Initial portion received, with first phase expected at $9 million to $11 million and second phase at $1.5 million to $2.5 million; neither is included in current guidance.
• Capital Expenditures -- Planned at $8 million to $10 million; roughly half focused on store fleet maintenance and modernization, with significant spend already completed.
• Marketing Initiatives -- Relaunched direct mail and reoriented organic social; new AI-driven CRM platform; expanded "Casting Call" program to accelerate customer file growth.
• Footwear -- Restructured sourcing mix causing first-half comp headwind; expected to return as a "tailwind" for the back half, historically enhancing attachment rates and spend.
• Customer Retention -- "remained strong." through store optimization, with effective marketing redirecting traffic online and to nearby locations.

SUMMARY

Torrid Holdings (NYSE:CURV) prioritized customer file growth for the year, advancing targeted retention, reactivation, and acquisition initiatives. The company completed most of its store optimization, channeling cost savings into strategic marketing and omnichannel programs. Management anticipates returning to comparable sales growth in the second half, driven by the restored footwear assortment, an expanded Casting Call campaign, and improved marketing efficiencies using AI and data-driven channels. Liquidity and inventory controls remain central, while guidance excludes the impact of upcoming tariff refunds expected later in the year.

• Ashlee Wheeler emphasized, "paid media revenue on less spend in Q1, driving significant ROAS," highlighting efficiencies in marketing investment.
• Capital spending is weighted toward store upgrades already underway, setting up for greater operational benefits across ensuing quarters.
• Sub brand expansion, planned at an approximate 60% annual growth rate, continues scaling as a core element of the evolving merchandise strategy.
• Sourcing contracts for about 70% of goods ensure cost visibility and protection against most freight fluctuations through year-end.

INDUSTRY GLOSSARY

• OPP (Opening Price Point): Entry-level product offerings at the lowest price tier designed to attract value-oriented shoppers and drive conversion without eroding overall margins.
• ROAS (Return on Advertising Spend): A performance marketing metric quantifying revenue generated per dollar spent on advertising, used to evaluate media channel efficiency.
• Casting Call: Torrid's annual branded event and marketing platform for customer acquisition and engagement, leveraging customer-ambassador content and experiential activations.

Full Conference Call Transcript

Lisa Harper: Thank you, Chinwe. Good afternoon, everyone, and thank you for joining us today as we discuss Torrid's financial results for the first quarter of fiscal 26. With me on today's call are Paula Dempsey, our Chief Financial Officer and Ashlee Wheeler, who was recently appointed chief commercial officer. Prior to her appointment, Ashlee served as our chief planning and strategy officer. She joined the company in 2011 and has spent the better part of 15 years building expertise across many dimensions of the business. In her expanded role, Ashlee now unifies performance marketing, ecommerce, pricing and promotional strategies, and commercial analytics under a single leadership mandate. Connecting the functions most critical to our growth agenda.

She also continues to oversee merchandise planning and allocations. Congratulations, Ashlee. On today's call, I will open with a review of our first quarter performance and speak to the continued progress we are making against the strategic transformation initiatives we outlined in 2025. Channel optimization, and assortment and pricing architecture. With these platforms established, I will turn to our primary focus for 2026, customer file growth through acquisition, reactivation, and retention. Ashlee will then share a detailed update on our marketing initiatives and Paula will close with the financials and our outlook for the remainder of the year.

For the first quarter, we reported net sales of 246 million slightly above our guidance, and adjusted EBITDA of 17.6 million at the high end of our guidance range. These results reflect disciplined execution across our strategic initiative and, importantly,, signal progress in positioning us for comparable sales growth in the back half of the year and beyond. Total company comparable sales declined 1.7% in Q1. Excluding footwear, Q1 comparable sales would have been +1.2%. As we communicated on the Q4 call, fundamentally restructured footwear sourcing strategy and assortment mix is creating the first half comp headwind that we expect to resolve and turn positive in the second half of the year.

Early reads on the reintroduced footwear assortments are encouraging. From a category standpoint, knit tops, bottoms, and true, our activewear concept, were standouts in the first quarter. These categories delivered year over year volume growth despite operating fewer stores. This success reflects the broader product work we have done to sharpen our assortment and better serve our customer. Shifting to our portfolio of sub brands. They are off to a good start in the new fiscal year. With the first quarter growth of 75% over last year.

We continue to plan sub brand growth at approximately 60% for the full year, reaching roughly $110 million up from $70 million in 2025 and expanding from approximately 7% of total net sales to 12%. We entered 2026 with our sub brand platform established and built to scale. Q1 is validation that our data informed approach to chasing winners and refining our assortment mix is working. We are pleased with the performance of our opening price points strategy, which has proven to be both a conversion driver and a basket building lever. Scaled in Q1, OPP delivers a clear, consistent everyday message across all channels, 1 that has resonated well with value oriented customers.

As a reminder, we are balancing our customer demand for accessible price points with 2 non-negotiables. Margin discipline, and product quality. Maintaining our quality standards while delivering accessible value remains imperative. The program represented approximately 30% of apparel sales in the quarter. At healthy product margins supported by a cost-engineered sourcing model. Opening price points are strategically present across all major apparel categories and contributed directly to the outsized performance in dresses, knit tops, and nondenim bottoms. Turning to our store optimization initiative. In Q1, we substantially completed our store optimization program with an additional 20 closures of structurally unproductive locations, bringing the total to 171 closures since we initiated the program. That work is now largely behind us.

We have strategically rightsized our store fleet to 1 that is more productive, aligned, and better positioned to serve our customer where and how she prefers to shop with us. Customer retention through this transition has remained strong. With our marketing efforts successfully redirecting traffic both online and to nearby stores. Equally important, the cost savings generated by the closure program are being reinvested directly and strategically. Into the initiatives designed to reignite growth in our customer file. Every strategic decision we have made over the past 18 months has served a single objective, positioning Torrid to grow. In 2026, that objective has a specific and measurable form. Strengthening our customer file through targeted retention, reactivation, and acquisition strategies.

The foundation is set, investments are aligned, and the work is underway. We have built a strong foundation for 2026 and our strategy is well aligned with today's consumer mindset. Our customer is shopping with intention, making deliberate choices about where she invests her dollars. The good news is she continues to choose Torrid with engagement and loyalty from our core customers remaining strong. We have designed our business model specifically for this environment. Our opening price point strategy delivers the accessible value she's looking for. Our assortment architecture gives her choices at every price level. And our target marketing reaches her with the right message at the right time.

In short, we are positioned where we expect it to be. Now let me pass it to Ashlee for an update on the comprehensive work she is leading.

Ashlee Wheeler: Thank you, Lisa. I am thrilled to step into this role at such a pivotal moment. As Lisa mentioned, the work of optimizing our channels, product assortments, and pricing architecture is set. And that foundation is solid. What you will hear from me today is about what comes next: a deliberate full funnel shift into growth. Our mandate is clear, acquire new customers, reactivate those who have stepped away, and deepen the loyalty and purchase frequency of existing customers. Here's what that looks like in practice. This is not about spending more, but being more efficient with our marketing dollars and building on the community we have built.

We have reinvigorated our CRM strategy with a sharper emphasis on segmentation and personalization. In paid media, we have a renewed focus on ROAS efficiency. Scaling the highest performing channels while maintaining disciplined spend across all paid channels. We relaunched direct mail in February as a reactivation engine. We have reoriented organic social to be a genuine community platform focused on engagement, not just impressions. And we have engaged a PR partner to amplify our earned media presence positioning Torrid at the center of cultural conversation in women's plus size fashion. We grew paid media revenue on less spend in Q1, driving significant ROAS. A proof point that efficiency and growth are complementary, not competing.

We are managing our agency partnerships with greater rigor and building internal data science capabilities. That will give us a stronger foundation for media mix investment decisions going forward. In our CRM channel, we have implemented AI capabilities to power smarter segmentation, personalization, and optimization across email and SMS. This work is moving quickly, and I am encouraged by early results. Direct mail, relaunched in February and programmed throughout the year, is proving to be a productive reactivation and retention lever. And an essential touch point for our most loyal customers. We have seen a substantive incremental lift in retained and reactivated customers attributable to direct mail.

Beyond the numbers, it gives us a powerful vehicle to reintroduce Torrid to last audiences. To show them how our product assortment has evolved, and introduce our sub brand. We will continue to scale this channel deliberately and productively throughout the year. We are working systematically through the marketing funnel. Optimizing for efficiency, deploying capital where it drives positive ROAS, and making every investment accountable to file growth and customer lifetime value. There is meaningful work still ahead, but the early indicators give me confidence in our strategies. Beyond the discipline of traditional marketing metrics, there is something equally important and perhaps more defining, what makes Torrid unique. It is the depth of connection this brand has with its community.

With a loyalty program that captures over 90% of our customer base, and a product advantage that goes far beyond fit, it changes the way she feels about herself. To scale that connection, we are relaunching an expanded reconceived casting call in July. Not as a seasonal campaign, but as a year round platform purpose built to drive acquisition, reactivation, and retention. Casting call is more than a model search. It is a mechanism for identifying and elevating customer brand ambassadors. In 2024, Casting Call drove 10 thousand new customers, reactivated over 14 thousand and produced a 9 percentage point increase in unaided brand awareness. This year, we are thinking bigger.

A Times Square activation is planned for August, followed by 4 mall-based casting events and more than 30 in-store casting parties throughout Q3, culminating in the announcement of our 2026 winner, in November. This is a 5-month engagement arc by design. Mall events and in store casting parties are by every measure, our highest converting new customer acquisition moments. They are fitting room experiences at scale. The place where a woman who has never worn Torrid discovers that it was made for her. For a lapsed customer, an invitation to a casting call event is a fundamentally different reactivation signal. Than a promotional offer. And for the women who are deeply loyal already, amplifying their voices only deepens that loyalty.

Driving increased lifetime value. Casting Call is 1 of the most powerful content engines we have. It inverts the traditional influencer model entirely by investing in the women who have already chosen this brand at the highest level, and let their stories do the work. Real customers, real sizes, real fit moments, and testimonials. That content flows into our marketing channels year round with an authenticity that paid media cannot replicate. This is community ambassadorship at scale, and it is 1 of Torrid's most durable competitive advantages. To summarize, we entered this year with a clear view of the work required. And we are executing against it with focus and conviction. The marketing foundation has been reset.

Channel efficiency is improving. Funnel channels are smarter and more personalized. Direct mail is reactivating customers. And casting call is being reimagined as a platform. We are executing against a fully integrated marketing strategy. Every channel, every investment, every activation is pointed at the same outcome. Growing the file, deepening loyalty, and making Torrid more commercially powerful than it has ever been. With that, I will turn the call over to Paula.

Paula Dempsey: Thank you, Ashlee. Good afternoon, everyone, thank you for joining us today. I will begin with a review of our first quarter financial performance, then provide an update on our outlook for fiscal 26. We are pleased with our performance this quarter as our sales exceeded our expectations, and adjusted EBITDA came in at the high end of our guidance range. Net sales for the quarter were $246 million compared to $260 million in the prior year. Comparable sales declined 1.7%. As Lisa highlighted earlier, excluding footwear, first quarter comparable sales were +1.2% reflecting continued strength across the core business. Gross profit was $86.8 million versus $101 million last year.

And gross margin was 35.3% compared to 38.1% in the prior year. Reflecting a combination of tariffs and planned targeted promotions. SG&A expenses declined by $6.3 million to $63.7 million compared to $70 million a year ago. As we continue to see tangible benefits from our store optimization program. As a percentage of net sales, SG&A leveraged 40 basis points to 25.9%. Marketing investment decreased by $800 thousand to $14.5 million driven by more effective channel allocation and data driven targeting. Allowing the company to achieve its marketing objectives with lower spend. Net income for the quarter was $414 thousand or $0.00 per share, compared to a net income of $5.9 million or $0.06 per share last year.

Adjusted EBITDA was $17.6 million a 7.2% margin, versus $27.1 million and 10.2% a year ago. We ended the quarter with $22.8 million in cash and cash equivalents and $32.8 million drawn on our revolving credit facility. Total liquidity at the end of the quarter including available borrowing capacity under our revolving credit agreement was $100 million. Inventory totaled $143 million down 4.6% from the first quarter of last year, reflecting both tighter receipt management and the intentional reduction of our store base. During the first quarter, we closed 20 stores as part of our store optimization program. We expect to close an additional 7 to 8 stores in the second quarter.

At which point the program will be substantially complete. We remain pleased with the customer retention rates which are in line with the historical level. Turning to our outlook. We remain on track to deliver approximately $40 million of expense savings in fiscal 26 through our store optimization initiative. During the first quarter, we realized approximately $11 million of these savings. Reinforcing our confidence in achieving the full year target. For the full year, we continue to expect net sales of $940 million to $960 million and adjusted EBITDA of $65 million to $75 million representing margin expansion up to 140 basis points compared to fiscal 25.

We expect marketing to be approximately 5.5% of sales, reflecting continued focus on optimizing marketing effectiveness and maximizing return on investment across our customer acquisition and retention initiatives. Capital expenditures are expected to range from $8 to $10 million supported by our disciplined approach to capital allocation. Approximately half of our planned spend is dedicated to maintaining and modernizing the store fleet. Through selective refreshes, fixture replacements, and point of sale infrastructure upgrades. Importantly, a significant portion of these investments were completed during the first quarter. Resulting in a more front loaded capital profile and positioning us to realize the benefits of these investments throughout the remainder of the year.

For the second quarter, we expect sales of $232 million to $240 million and adjusted EBITDA of $12 million to $16 million Our outlook also contemplates continued investment in marketing and levels more consistent with the first quarter spending. Supporting customer file growth initiatives, including the return of casting call this summer. Looking to the back half of the year, we anticipate improved performance supported by 3 key growth drivers. Continued momentum in our customer growth initiatives, progress in our opening price point strategy to drive conversion, and value perception, and the return to of our footwear program to full strength. Which has historically enhanced attachment rates, and overall customer spend. Turning to tariffs.

As of May, we have received an initial portion of the tariff refund due to us. with additional recoveries expected as the claims process progresses. We have filed for the first phase of refunds, with an expected recovery in the range of $9 to $11 million A second phase of refunds is forthcoming. The submission portals are not yet open. We anticipate an additional $1.5 to $2.5 million for that tranche. Neither phase of tariff refunds is contemplated in our current guidance we will provide updates as those processes advance.

In terms of our guidance, for the first half of the year, we contemplated tariffs at the current rate of 10%, and for the second half, our assumption steps up to 15%, Reflecting the possibility of further escalation later in the summer. It is worth noting that should tariffs remain at 10% for the full year, that outcome would provide an offset against potential freight related headwinds. As we close out the first quarter, we are encouraged by the early progress of our strategic initiatives including store optimization, merchandising enhancements, expanded opening price points to enhance our customer value, growth in our sub brands, and customer growth initiatives, which are beginning to drive improved operating performance.

While the consumer environment remains dynamic, we remain focused on disciplined execution growing and engaging our customer file. Enhancing our value proposition, and expanding profitability. We believe these initiatives will continue to support our performance and drive long term value creation for our shareholders. Now we will open the call to answer your questions. Operator?

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. Participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. 1 moment, please, while we poll for a question. Our first question comes from the line of Janine Stichter with BTIG. Please proceed with your question.

Ethan: Hey, you have got Ethan on for Janine. Thanks for taking our questions. Just want to start you mentioned promotions in the Q1 gross margin. Just how did promotions play out in the quarter compared to your prior expectations? And what are you expecting for the rest of the year?

Ashlee Wheeler: Hi, Ethan. This is Ashlee. So promotional activity in the first quarter was planned and actualized according to plan. In terms of forward view, we expect very much the same. So certain level of promotion is embedded within our guidance, and consistent with prior years. That said, opening price point has allowed us to be less dependent on promotion to drive behavior or acceleration in product. So in terms of elevated levels of promotion, not in excess of plan or what we have seen previously.

Ethan: Got it. that is very helpful. And then can you just give some more color on overall TOP's performance in Q1 and to date so far? Thanks.

Lisa Harper: Overall tops, first of all, the knit top business, as we mentioned in our comments, positives revenue comp as well as margin expansion. Driven by the OPP product, as well as the entire knit complex has done very, very well and had a dramatic turnaround and is continuing to perform and exceeding our expectations. Our graphics business specifically, is back on track in terms of margin performance. So an outsized margin expansion there, a little bit less top line, but that was purposeful. Our sweater business has been good in the first quarter, and our woven top business, we think, is customer shift, out of what we have been to.

And so and in general, we are happy with the progress that we have seen in the tops complex. Primarily driven by OPP and knits. Got it.

Ethan: that is very helpful. I will pass it on.

Lisa Harper: Thank you.

Operator: And we have reached the end of the question and answer session. This product-- Oh, and therefore I do see 1 question I do have-- we have 1 question from the line of Brooke Roach with Goldman Sachs. Please proceed with your question.

Brooke Roach: Good afternoon. This is [Inaudible] for Brooke Roach. Thank you for taking our question. You guided to comparable sales growth in the back half of the year. Can you speak to the drivers of your confidence in stronger comp delivery and the second half as a follow-up, how is the current macro environment affecting your customer spending behavior? Are you seeing any trade-down in your assortment? Thank you.

Ashlee Wheeler: We are guiding to a positive comp in the back half of the year. If you recall, the footwear business which has historically been upwards of $50 million business annually with a pretty strong attachment rate, we paused that in order to resource and restructure it in an elevated tariff environment. That business remains a headwind for us. Throughout the first half of this year, which we have shared previously. The back half of the year, it becomes a tailwind for us, and it provides sizable comp benefit to the back half of the year.

In addition to that, the casting call expansion that I spoke about we do expect to start seeing growth in the customer file attributable to the reignited marketing focus as well as the casting call effort. And then as far as trends in the business, we are on plan for the second quarter within our guidance as communicated in terms of customer behavior, I can tell you that in the first quarter from a KPI standpoint, we are very pleased with the conversion metrics we are seeing. We saw double digit growth in conversion, as well as low single digit growth in our units per transaction. Both of those KPIs strong indicators of product acceptance. And the customer's resilience.

Brooke Roach: Perfect. Thank you. I will pass it.

Operator: Thank you. And our next question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed with your question.

Analyst: Hey, guys. This is Mary on for Lorraine. Just wondering a little bit if you could talk about what you are seeing in terms of freight pressure and the impact to margins. Thanks.

Paula Dempsey: Hi, Lorraine. This is Paula. So currently, we are not-- we are able to mitigate any pressure that we are seeing right now in our guidance does contemplate that impact.

Ashlee Wheeler: But I would tell you that at this point, it is nothing substantial to the business. it is also worth noting that from a sourcing base, we are 70% DDP, so we have fully negotiated costs for 70% of our goods for the balance of the year. So we are, you know, protected from any type of variability on the freight side for at least 70% of the goods on order.

Analyst: Thank you.

Operator: Thank you. And it looks like we have now reached the end of the question and answer session. And, therefore, I would like to turn the floor back to CEO Lisa Harper for closing comments.

Lisa Harper: Thanks so much for joining us today. We look forward to sharing the second quarter results at our next call.

Operator: Thank you. And this concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.

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