Dive Brief:
- Torrid saw its third-quarter net sales decrease 8.3% year over year to $275.4 million, according to a Thursday press release. Comps declined 8% and gross margin dropped from 34% the year before to 33.2%.
- The direct-to-consumer apparel brand swung from a net income of $7.3 million in Q3 2022 to a net loss of $2.7 million. Torrid updated its full-year net sales outlook, now expecting between $1.13 billion and $1.14 billion compared to the previously projected range of $1.08 billion and $1.12 billion.
- Torrid also permanently appointed Paula Dempsey as its chief financial officer on Monday, after the executive was made interim CFO earlier this year when Tim Martin exited the role.
Dive Insight:
Torrid’s leadership sounded upbeat on its third-quarter results, but remained cautious of macroeconomic pressures.
“Our third quarter results came in ahead of our expectations on both the top and bottom lines,” Torrid CEO Lisa Harper said in a statement. “While we know we have more work to do, we are encouraged by the trends in our business. However, given the current environment, which is promotional and dynamic, we are planning our business accordingly. We will remain focused on controlling expenses and inventory to position us to continue to deliver improvement in our results."
Attributing the quarter’s performance partly to Torrid’s renewed marketing and assortment strategy, Harper also noted on a call with analysts that the brand’s new clearance store pilot has been a success. The clearance store concept launched in September.
“By utilizing clearance stores, we are moving through markdowns more profitably and facilitating greater regular price assortment exposure in the feeder stores,” Harper said on the call, per a Seeking Alpha transcript.
During the quarter, the brand opened five stores and closed one, ending the period with a total store count of 643. Marketing expenses increased less than 1% year over year while SG&A grew nearly 4%.
Torrid’s latest results come after the company reduced its workforce by 5% at the beginning of Q3 as part of an effort to optimize its cost structure.
“While we're encouraged by the trends in our business and believe that we're well positioned for the holiday season with our new marketing strategies and latest new collections, we remain mindful of the pressure consumers are under today,” Dempsey said on the call. “The current macro environment creates a heightened level of uncertainty, which causes us to be prudent in our guidance. We will remain focused on carefully managing expenses and expect our headcount reduction initiatives will yield favorable results.”
