Although disappointed by the fiscal third quarter results, Torrid Holdings Inc. Chief Executive Lisa Harper was positive about the future of sales for the clothing retailer.
The City of Industry apparel manufacturer for plus size women is taking a prudent approach to its fourth quarter outlook while it was encouraged by its start to the holiday shopping season, Harper said during a conference call with analysts.
For the fourth quarter of fiscal 2024 the company expects net sales between $255 million and $270 million. For the full year 2024, which has 52 weeks compared to 53 weeks in full year 2023, the company expects net sales of about $1.1 billion.
“2025 is the year of products, and we are excited with the direction that we are moving with assortments that will inspire our customer,” Harper said.
On Dec. 3, after the market closed, the retailer reported a net loss of $1.2 million (-1 cent a share) in the quarter ending Nov. 2, a lower amount than the net loss of -$2.7 million (-3 cents) in the same period of the previous year. Revenue dropped by 4% from the third quarter of the prior year to $264 million.
Analysts surveyed by Zacks Investment Research expected earnings of 3 cents on revenue of $283 million.
On Dec. 3, the stock price closed at $4.58 a share and then dropped by 25% to close the following day at $3.43. More than 3.1 million shares traded that day, making it the fourth highest total for the 52-week period.
The stock price has been on a gradual growth spurt since then. It closed at $5.32 a share on Dec. 26.
Underperforming in Q3
Harper admitted to Torrid underperforming in the third quarter relative to its expectations but is confident it has put in place necessary changes to the business.
“What gives us this confidence is that when we have moved products forward by injecting more newness and innovation, those categories are already comping positive,” she said.
Torrid customers responded to products that were new and Harper said its customers are now willing to take more fashion risks.
“In the past, we relied too much on what had worked and were hesitant to push boundaries,” she said. “Our customer surveys tell us again and again that she wants more novelty and innovation from us.”
The company released its first sub-brand, Festi, on Dec. 27 in 250 stores and online, and will follow with the launch of two more niche concepts in January – Nightfall and Retro Chic.
Festi was described by Harper as being “a younger, bohemian expression of fashion” while she described Nightfall as being “a traditional legacy edgy concept for Torrid.” Retro Chic is meant to appeal to a niche customer, she said.
“We will also relaunch our active assortment in early spring, which is called True by Torrid,” Harper said. “This is more lifestyle-based rather than the historical performance focus of our activewear product.”
The company will then launch additional fashion concepts in April and June, she added.
