Shares of Torrid Holdings Inc., which says it’s North America’s largest direct-to-consumer provider of women’s plus-size clothing and intimates by sales, soared 15% after the stock began trading on Thursday .
Based in City of Industry, Calif., in eastern Los Angeles county, Torrid is listing its shares on the New York Stock Exchange under the ticker “CURV.”
The company sold 11 million shares priced at $21 each , the high end of a proposed range of $18 to $21, after upsizing the deal from an earlier plan to offer 8 million shares . The company raised $231 million at a valuation of $2.3 billion, based on 110 million shares expected to be outstanding after the deal closes.
There were eight banks underwriting the deal, led by Morgan Stanley, BofA Securities, Goldman Sachs and Jefferies.
Torrid /zigman2/quotes/202460173/composite CURV -4.70% is an emerging growth company, which means it does not have to make the same disclosures required of bigger public companies. A business remains an emerging growth company until it reaches a number of milestones, including annual revenue of more than $1.07 billion.
Torrid’s Chief Executive Elizabeth Muñoz has served in the role since 2018. Chief Financial Officer George Wehlitz, Jr. has been in the position since January 2021, though he has led the company’s finance operations since 2013, when he became chief financial officer of legacy parent company Hot Topic.
Sycamore Partners Management has about $10 billion in aggregate in committed capital. After the offering, Sycamore will hold more than 50% of the voting power and Torrid will be a controlled company. Hot Topic is part of Sycamore’s portfolio.
Torrid’s target market are women between the ages of 25 and 40. More than half (58%) of Torrid’s customers in 2020 were younger than 40 and the average size worn was 18. The company also says the ethnic composition of its customers is in line with the U.S. population.
Data furnished by Torrid puts the U.S. women’s plus-size apparel and intimates market at $85 billion. This includes 90 million plus-size women wearing sizes 10 and up. Data from market intelligence platform Edited forecasts that this category will grow to $697 billion by 2027.
Torrid served 3.2 million active customers in 2020, ringing up sales totaling $974 million. In 2019, Torrid served 3.4 million customers with sales totaling $1.037 billion.
Between 2017 and 2020, the net sales compound annual growth rate (CAGR) for the company was 8%.
Net income in 2020 was $25 million, down from $42 million in 2019. In 2018, net income was $87 million.
For the 12 months ending May 1, 2021, sales were $1.143 billion and net income was $25 million.
For a category in which finding on-trend merchandise is a challenge, Torrid says in its prospectus that its “style is unapologetically youthful and sexy.”
With so few plus-size options, Torrid says these customers underspend by billions of dollars, putting the total addressable market at $104 billion. With less than 4% penetration among U.S. plus-size women and 78,000 plus-size women for every plus-size store versus 700 women for other women’s specialty apparel stores, Torrid sees a big growth opportunity.