Women’s plus-size apparel retailer Torrid Holdings (NYSE: CURV) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, but sales fell by 7.7% year on year to $262.8 million. On the other hand, next quarter’s revenue guidance of $240 million was less impressive, coming in 7.2% below analysts’ estimates. Its GAAP profit of $0.02 per share was in line with analysts’ consensus estimates.
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Torrid (CURV) Q2 CY2025 Highlights:
- Revenue: $262.8 million vs analyst estimates of $260.5 million (7.7% year-on-year decline, 0.9% beat)
- EPS (GAAP): $0.02 vs analyst estimates of $0.02 (in line)
- Adjusted EBITDA: $21.53 million vs analyst estimates of $23.13 million (8.2% margin, 6.9% miss)
- The company dropped its revenue guidance for the full year to $1.02 billion at the midpoint from $1.04 billion, a 1.9% decrease
- EBITDA guidance for the full year is $85 million at the midpoint, below analyst estimates of $96.75 million
- Operating Margin: 3.9%, down from 7.2% in the same quarter last year
- Free Cash Flow Margin: 5.6%, down from 13.2% in the same quarter last year
- Locations: 575 at quarter end, down from 657 in the same quarter last year
- Same-Store Sales fell 6.9% year on year (-0.8% in the same quarter last year)
- Market Capitalization: $248 million
Company Overview
Promoting a message of body positivity and inclusiveness, Torrid Holdings (NYSE: CURV) is a plus-size women’s apparel and accessories retailer.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $1.07 billion in revenue over the past 12 months, Torrid is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
As you can see below, Torrid grew its sales at a sluggish 1.3% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) as it didn’t open many new stores.
This quarter, Torrid’s revenue fell by 7.7% year on year to $262.8 million but beat Wall Street’s estimates by 0.9%. Company management is currently guiding for a 9% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 5% over the next 12 months, a deceleration versus the last six years. This projection doesn't excite us and implies its products will see some demand headwinds.
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Store Performance
Number of Stores
A retailer’s store count influences how much it can sell and how quickly revenue can grow.
Torrid operated 575 locations in the latest quarter, and over the last two years, has kept its store count flat while other consumer retail businesses have opted for growth.
When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.
Torrid’s demand has been shrinking over the last two years as its same-store sales have averaged 5.6% annual declines. This performance isn’t ideal, and we’d be concerned if Torrid starts opening new stores to artificially boost revenue growth.
In the latest quarter, Torrid’s same-store sales fell by 6.9% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.
Key Takeaways from Torrid’s Q2 Results
It was good to see Torrid narrowly top analysts’ revenue expectations this quarter. On the other hand, its full-year EBITDA guidance missed and its revenue guidance for next quarter fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 11.7% to $2.11 immediately after reporting.
Torrid may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
