Dive Brief:
- In a tense time for the plus-size market due to rising use of GPL-1 medications, Torrid posted a range of year-on-year Q1 declines that nevertheless exceeded expectations, including a 7.6% net sales drop to over $245 million.
- Comps fell 1.7%, but taking out footwear sales, which the retailer had paused to avoid tariffs, comps rose 1.2%. Gross margin contracted by 280 basis points to 35.3%.
- The plus-apparel retailer closed 20 stores in Q1, ending the period with 463 locations. Torrid has thus largely completed its right-sizing initiative, which has entailed closing more than 170 stores.
Dive Insight:
Torrid has based its turnaround on closing underperforming stores and shining a light on its subbrands, and both helped the company edge past expectations in Q1.
Subbrand sales grew 75% in Q1 and are expected to be up about 60% for the year compared to 2025. Utlimately, the portfolio will expand from about 7% of total net sales to 12%, CEO Lisa Harper told analysts Thursday. Within that portfolio, subbrands with opening price points drove nearly a third of apparel sales in the period at what Harper called “healthy product margins.”
To facilitate those sales, Torrid in February relaunched a direct mail campaign, which has brought a “substantive incremental lift in retained and reactivated customers,” Harper said.
“Beyond the numbers, it gives us a powerful vehicle to reintroduce Torrid to lapsed audiences to show them how our product assortment has evolved and introduce our subbrands,” she said. “We will continue to scale this channel deliberately and productively throughout the year.”
Torrid has also expanded and revamped its “casting call” program, which Harper said is not only a search for models, but also a way to find effective brand ambassadors. In 2024, casting call brought in 10,000 new customers and reactivated more than 14,000, she said. The program will be featured in Times Square in August, followed by four mall-based events and 30 store-based casting parties.
The retailer is now operating with what executives see as an optimal footprint, but its recovery remains untested, analysts said following the company’s report.
“We believe Torrid is still in the early stages of structural change, which likely implies continued volatility as it reinvests savings from store closures into growth initiatives with still uncertain benefit and continued refinement of pricing and merchandising architecture,” William Blair analysts led by Dylan Carden said in a Friday client note.
Similarly, Jefferies analysts led by Corey Tarlowe said that, while the retailer is “positioned to pivot toward growth ... visibility into a sustained demand recovery and consistent comp inflection remains limited.”
Torrid executives didn’t comment on the effect, if any, of the rising use of weight loss medications on sales. The trend is boosting apparel sales elsewhere as people look for clothing that fits, and Wells Fargo analysts led by Ike Boruchow see that only accelerating, according to a Friday research note.
Sales of plus-size garments could suffer, though, as Macy’s this week called out that apparel was the only category with declines, they noted.
