Bulletin
Investor Alert

New York Markets Close in:

Dec. 8, 2021, 4:11 p.m. EST

10-Q: TORRID HOLDINGS INC.

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

(EDGAR Online via COMTEX) -- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the section entitled "Risk Factors." Overview Torrid is a direct-to-consumer brand of apparel, intimates and accessories in North America, targeting the 25- to 40-year old woman who is curvy and wears sizes 10 to 30. Torrid is focused on fit and offers high quality products across a broad assortment that includes tops, bottoms, denim, dresses, intimates, activewear, footwear and accessories. Our proprietary product offering delivers a superior fit for the curvy woman that makes her love the way she looks and feels. We offer a broad assortment of high quality products including tops, denim, dresses, intimates, activewear, footwear and accessories. Our style is unapologetically youthful and sexy. We believe our customer values the appeal and versatility of our curated product assortment that helps her look her best for any occasion, including weekend, casual, work and dressy, all at accessible price points. We specifically design for stylish curvy women and are maniacally focused on fit. Through our product and brand experience we connect with customers in a way that other brands, many of which treat plus-size customers as an after-thought, have not. Key Financial and Operating Metrics We use the following metrics to assess the progress of our business, inform how we allocate our time and capital, and assess the near-term and longer-term performance of our business. October 31, 2020 October 30, 2021 Number of stores (as of end of period) 608 619 Three Months Ended Nine Months Ended (in thousands, except percentages) October 31, 2020 October 30, 2021 October 31, 2020 October 30, 2021 Comparable sales(A) 4 % 14 % (12) % 42 % Net income (loss) $ 4,251 $ (58,902) $ 33,297 $ (7,190) Adjusted EBITDA(B) $ 30,768 $ 55,178 $ 56,815 $ 217,406 Adjusted EBITDA margin(B) 11 % 18 % 8 % 23 %

(A)The computation of comparable sales includes results from stores that were temporarily closed due to COVID-19.

Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA margin are supplemental measures of our operating performance that are neither required by, nor presented in accordance with GAAP and our calculations thereof may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA represents GAAP net income (loss) plus interest expense less interest income, net of other (income) expense, plus provision for less (benefit from) income taxes, depreciation and amortization ("EBITDA"), and share-based compensation, non-cash deductions and charges and other expenses. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of our total net sales. We believe Adjusted EBITDA and Adjusted EBITDA margin facilitate operating performance comparisons from period to period by isolating the effects of certain items that vary from period to period without any correlation to ongoing operating performance. We also use Adjusted EBITDA and Adjusted EBITDA margin as two of the primary methods for planning and forecasting the overall expected performance of our business and for evaluating on a quarterly and annual basis actual results against such expectations. Further, we recognize Adjusted EBITDA and Adjusted EBITDA margin as commonly used measures in determining business value and, as such, use them internally to report and analyze our results and we additionally use Adjusted EBITDA as a benchmark to determine certain non-equity incentive payments made to executives.

interest expense;

Demographic Changes. Our business has experienced growth over recent periods due, in part, to an increase in the plus-size population. Slower or negative growth in this demographic, in particular among women ages 25 to 40, specific to certain geographic markets, income levels or overall, could adversely affect our results of operations.

Gross Profit. Gross profit is equal to our net sales less cost of goods sold. Our cost of goods sold includes merchandise costs, freight, inventory shrinkage, payroll expenses associated with the merchandising department, distribution center expenses and store occupancy expenses, including rent, common area maintenance charges, real estate taxes and depreciation. Merchandising payroll costs and store occupancy costs included within cost of goods sold are largely fixed and do not necessarily increase as volume increases. We review our inventory levels on an ongoing basis in order to identify slow-moving merchandise and generally use markdowns to clear that merchandise. The timing and level of markdowns are driven primarily by customer acceptance of our merchandise. The primary drivers of our merchandise costs include the raw materials, labor in the countries where we source our merchandise, customs duties, and logistics costs.







                                                                                      Three Months Ended
                                                        October 31,            % of Net             October 30,            % of Net
                                                           2020                  Sales                 2021                  Sales
        Net sales                                      $  270,129                   100.0  %       $  306,241                   100.0  %
        Cost of goods sold                                174,601                    64.6  %          181,094                    59.1  %
        Gross profit                                       95,528                    35.4  %          125,147                    40.9  %
        Selling, general and administrative expenses       66,706                    24.7  %           66,399                    21.7  %
        Marketing expenses                                 14,091                     5.2  %           15,023                     4.9  %
        Income from operations                             14,731                     5.5  %           43,725                    14.3  %
        Interest expense                                    4,666                     1.7  %            6,104                     2.0  %
        Interest income, net of other income                  (12)                    0.0  %              (12)                    0.0  %
        Income before provision for income taxes           10,077                     3.8  %           37,633                    12.3  %
        Provision for income taxes                          5,826                     2.2  %           96,535                    31.5  %
        Net income (loss)                              $    4,251                     1.6  %       $  (58,902)                  (19.2) %
        


The following table provides a reconciliation of net income to Adjusted EBITDA for the periods presented (dollars in thousands):







                                                           Three Months Ended
                                                October 31, 2020       October 30, 2021
        Net income (loss)                      $           4,251      $         (58,902)
        Interest expense                                   4,666                  6,104
        Interest income, net of other income                 (12)                   (12)
        Provision for income taxes                         5,826                 96,535
        Depreciation and amortization(A)                   8,477                  8,482
        Share-based compensation(B)                        7,124                  2,450
        Non-cash deductions and charges(C)                   424                    306
        Other expenses(D)                                     12                    215
        Adjusted EBITDA                        $          30,768      $          55,178
        


(A)Depreciation and amortization excludes amortization of debt issuance costs and original issue discount that are reflected in interest expense. (B)Prior to the consummation of our IPO on July 6, 2021, share-based compensation was determined based on the remeasurement of our liability-classified incentive units.

Marketing Expenses







                                                                                       Nine Months Ended
                                                        October 31,            % of Net             October 30,            % of Net
                                                           2020                  Sales                 2021                  Sales
        Net sales                                      $  675,832                   100.0  %       $  964,858                   100.0  %
        Cost of goods sold                                459,381                    68.0  %          545,059                    56.5  %
        Gross profit                                      216,451                    32.0  %          419,799                    43.5  %
        Selling, general and administrative expenses      124,057                    18.4  %          355,353                    36.9  %
        Marketing expenses                                 37,946                     5.6  %           35,276                     3.6  %
        Income from operations                             54,448                     8.1  %           29,170                     3.0  %
        . . .
        


Dec 08, 2021

COMTEX_398558030/2041/2021-12-08T16:11:04

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

(c) 1995-2021 Cybernet Data Systems, Inc. All Rights Reserved

This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.