Dive Brief:
- Torrid’s Q4 net sales fell 2.6% year over year to $293.5 million, with comps down 9%. Margins improved in the period, with gross margin expanding by 250 basis points to 34.5%, according to a company press release. Net loss widened 5.9% to $4.1 million.
- For the year, net sales fell 10.6% to $1.2 billion, with comps down 12%. Gross margin contracted to 35.2% from 35.7% in 2022, and net income plummeted 77% to $11.6 million.
- The plus-size specialist expanded its footprint in 2023, opening 36 stores and closing 20 for a year-end total of 655 locations. Inventory ended down 13.5% from the previous year.
Dive Insight:
Despite Torrid’s declines over the holiday period and full year, the women’s plus-size apparel retailer beat its own sales expectations last quarter, CEO Lisa Harper told analysts.
While consumers were and remain careful about spending, the company maintained a focus on variables within its control, she said, adding that inventory management was key to boosting full-price sales. To rein in expenses amid sales declines, Torrid in September laid off 5% of its corporate workforce. At the time Harper said the company would look closely at its pricing strategies, marketing investments, cost structure and inventory.
“We made significant changes to improve the fundamentals of our business. We have touched just about every aspect from merchandising to marketing to sourcing,” Harper said Thursday, according to an earnings call transcript. “We are pleased to see sequential improvement in our regular price business as customers responded favorably to our holiday and early spring merchandise collections.”
Jeffries analysts led by Corey Tarlowe called the results “encouraging,” noting in particular the margin improvements and inventory discipline. In general, they see Torrid as the leader in plus size whose strengths position it to gain further market share. But the near term could remain a challenge as consumer wariness lingers, they said.
“We see further opportunity to unlock higher spend out of the plus-size customer, which represents nearly 70% of US consumers, but less than half of apparel spend,” Jeffries said. “However, we remain cautious on the company's near-term opportunity, as we believe a shift in consumer spending habits (from wants to needs) could continue to affect top-line and margin performance.”
