Why Plus-Size Fashion Retailer Torrid Shares Are Surging Today

Torrid Holdings Inc CURV shares are trading higher by around 17% after reporting Q3 FY23 results.

Net sales fell 8.3% Y/Y to $275.4 million, beating the consensus of $245.8 million. Comparable sales were down 8% in the third quarter.

Gross profit margin contracted to 33.2% from 34.0% a year ago due to a decrease in PLCC Funds and a deleveraging of store occupancy costs.

Adjusted EBITDA was $19.4 million, or 7.0% of net sales, versus $32.1 million, or 10.7% of net sales last year.

EPS loss of $(0.03) came above the consensus of $(0.05).

In Q3, the company opened five Torrid stores and closed one Torrid store, with a total store count at quarter end of 643 stores.

As of October 28, 2023, cash and equivalents stood at $16 million.

Lisa Harper, Chief Executive Officer, said, "Our third quarter results came in ahead of our expectations on both the top and bottom lines. Our customers responded to our new collections, as well as to our new marketing initiatives, which drove improvements in our traffic trends in our stores and online, leading to sequential improvement in our comparable store sales."

Outlook: For Q4, the company expects net sales of $267 million-$283 million vs. consensus of $266.72 million and adjusted EBITDA of $9 million-$13 million.

For FY23, CURV raised guidance for net sales to $1.125 billion-$1.140 billion (from $1.080 billion and $1.115 billion) vs. $1.09 billion estimate and adjusted EBITDA to $99 million-$103 million (from $90 million-$100 million).

The company now projects capital expenditures of $25 million-$30 million for the year, reflecting infrastructure and technology investments and new stores between 34 and 36 for the year.

CFO Appointment: CURV disclosed the promotion of Paula Dempsey to the CFO role. Dempsey assumed the interim role in May when Tim Martin resigned to pursue other opportunities. 

Price Action: CURV shares are up 16.63% at $4.84 premarket on the last check Friday.