With healthy sales, margin and profit gains, Torrid came out swinging Wednesday with its first quarterly report as a public company. Second quarter net sales rose 34% year over year and 29% from 2019 to $332.9 million, as comps rose 30% from last year and 26% from 2019.
The plus apparel retailer's 45% gross profit margin was up from 32.1% last year and 39.8% in 2019, per a company press release. Net income rose 131% year over year and 160% from 2019 to $38.8 million.
The retailer now runs more than 600 stores, and has plans to add about 25 stores annually for an unspecified number of years, mostly away from malls, executives told analysts during a conference call Wednesday.
Torrid executives on Wednesday exuded confidence in their customers, plus specialty and runway for growth.
They're not blinking in the face of rising competition in the space, either. Specialty clothing retailers like Anthropologie, athleisure brands like Athleta and mass merchandisers like Target have all moved to improve merchandising and marketing in order to address the needs of more customers of all sizes. Most recently, Old Navy made a splash with a campaign to highlight that, unlike previously when its larger sizes were only available online as select items, it will integrate all women's sizes together and make them available in stores as well as online.
But Torrid is sticking unabashedly to its plus specialization, and CEO Liz Muñoz brushed aside questions about the competition, noting that Old Navy offers lower-priced, more casual clothing.
"There are plenty of big girls to go around that are wildly underserved, you know, close to 90 million," she said. "So I personally welcome other people coming into this space, I think it excites the customer about her possibilities."
Moreover, much of the competition isn't really new, Muñoz said.
"I also will remind you that Old Navy has been doing plus for a long, long time," she said. "Before Torrid I used to wear them ... and they've had it in stores and pulled it out of stores. What I will tell you about Torrid is, we fit her head to toe. Our product fits like no one else's. We do extensive competitor research, we are and always have been aware of all the competitors in the space, and they have traditionally not had any impact on our business."
The company has found that its Curve lingerie line is bringing in new customers, enhancing loyalty and boosting basket size, so it will give the sub-brand its own website next year.
Torrid's ability to outpace expectations in the quarter "is a factor of playing retail fundamentals well," William Blair analysts Dylan Carden and Phillip Blee said in emailed comments Thursday.
"This includes strong merchandising and pricing architecture with limited fashion risk, a more relevant distribution model with close to half of sales online and now better integration between the channels, an underserved plus-size customer that Torrid is relentlessly focused on serving, and strong loyalty among its existing base," they said.
Like other retailers, Torrid is finding some difficulty getting goods into the U.S., and is experiencing delays and higher costs as a result. But the problems appear to be transitory, executives said. It could help that Torrid doesn't depend on the holiday quarter as much as other retailers do, they also said.