Torrid Holdings Inc. ( CURV Quick Quote CURV - Free Report) released second-quarter fiscal 2023 results, wherein the top line met the Zacks Consensus Estimate, while the bottom line missed the same. Both metrics declined year over year. The soft performance compelled management to revisit its guidance. Lisa Harper, the chief executive officer of the company, said, "Our second quarter results were in line with our guidance, reflecting our commitment to disciplined expense and inventory management even amidst a challenging market.” Let’s Delve Deeper
Torrid Holdings posted earnings of 6 cents per share in the fiscal second quarter, which missed the Zacks Consensus Estimate of 11 cents per share. The company recorded earnings of 22 cents per share in the year-ago period.
Net sales were $289.1 million, down 18.2% year over year. Also, comparable sales decreased 18% year over year, beating the Zacks Consensus Estimate of a decline of 18.8%. Gross profit amounted to $102.7 million, down 21.9% from the $131.5 million reported in the year-ago quarter. Also, the gross margin contracted 168 basis points to 35.5% from the prior-year period. The contraction in the gross margin can be attributed to a decrease in private label credit card funds, the deleverage of store occupancy costs due to lower net sales, and higher store depreciation expenses and merchandising payroll costs. These were partly mitigated by improved pricing strategies. Selling and administrative expenses declined 11.5% to $69.6 million. As a percentage of net revenues, selling and administrative expenses increased 180 bps to 24.1% in the second quarter of fiscal 2023. Adjusted EBITDA amounted to $32.2 million, down 38.2% from the $52.1 million reported in the year-ago quarter. Also, the adjusted EBITDA margin contracted 360 bps to 11.1% from the prior-year period.
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Torrid Holdings ended the quarter with cash and cash equivalents of $18.5 million. Total liquidity at the end of the second quarter, including available borrowing capacity under its revolving credit agreement, was $148.8 million. Cash flow from operations was $31.7 million.
Total stockholders' deficit was $207.7 million at the end of the quarter under review. Store Update
In the quarter, the company opened three and closed two Torrid stores. The total store count at the end of the period was 639 stores.
Fiscal 2023 is regarded as a crucial 'rebuild year,' with a focus on balancing merchandise assortment through exceptional value and product offerings. Also, the company is committed to expanding its customer base through a stellar omnichannel strategy.
Torrid Holdings anticipates third-quarter net sales of $242-$252 million compared with the $290 million reported in the year-ago period. It expects an adjusted EBITDA of $11-$15 million. For fiscal 2023, the company anticipates net sales of $1.08-$1.12 billion. In the last fiscal year, the company reported net sales of $1,288.1 million. It projects adjusted EBITDA between $90 million and $100 million. Capital expenditure is projected at $35-$40 million, reflecting infrastructure and technology investments, and 30-40 new stores for the fiscal year. Shares of this Zacks Rank #4 (Sell) company have fallen 77.1% in the past year as compared with the industry's decline of 1.8%. Stocks to Consider
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