Torrid (CURV)

Women’s plus-size apparel retailer Torrid Holdings (NYSE:CURV) beat Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 14.3% year on year to $236.2 million. Guidance for next quarter’s revenue was better than expected at $240 million at the midpoint, 0.9% above analysts’ estimates. Its GAAP loss of $0.08 per share was 36% above analysts’ consensus estimates.

Company Overview

Promoting a message of body positivity and inclusiveness, Torrid Holdings (NYSE:CURV) is a plus-size women’s apparel and accessories retailer.

Apparel sales are not driven so much by personal needs but by seasons, trends, and innovation, and over the last few decades, the category has shifted meaningfully online. Retailers that once only had brick-and-mortar stores are responding with omnichannel presences. The online shopping experience continues to improve and retail foot traffic in places like shopping malls continues to stall, so the evolution of clothing sellers marches on.

Retail competitors offering some selection of plus-size women’s apparel and accessories include department stores such as Macy’s (NYSE:M) and Kohl’s (NYSE:KSS) as well as off-price concepts such as TJX (NYSE:TJX) and Ross Stores (NASDAQ:ROST).

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $1 billion in revenue over the past 12 months, Torrid is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.

As you can see below, Torrid’s revenue declined by 8.1% per year over the last three years as it closed stores and observed lower sales at existing, established locations.

This quarter, Torrid’s revenue fell by 14.3% year on year to $236.2 million but beat Wall Street’s estimates by 2.2%. Company management is currently guiding for a 9.8% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to decline by 5.6% over the next 12 months. it’s tough to feel optimistic about a company facing demand difficulties.

Number of Stores

The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.

Torrid operated 483 locations in the latest quarter. Over the last two years, the company has generally closed its stores, averaging 6.3% annual declines.

When a retailer shutters stores, it usually means that brick-and-mortar demand is less than supply, and it is responding by closing underperforming locations to improve profitability.

Same-Store Sales

A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).

Torrid’s demand has been shrinking over the last two years as its same-store sales have averaged 5.7% annual declines. This performance isn’t ideal, and Torrid is attempting to boost same-store sales by closing stores (fewer locations sometimes lead to higher same-store sales).

In the latest quarter, Torrid’s same-store sales fell by 10% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.

Gross profit margins are an important measure of a retailer’s pricing power, product differentiation, and negotiating leverage.

Torrid has bad unit economics for a retailer, giving it less room to reinvest and grow its presence. As you can see below, it averaged a 36.2% gross margin over the last two years. That means Torrid paid its suppliers a lot of money ($63.81 for every $100 in revenue) to run its business.

In Q4, Torrid produced a 30% gross profit margin , marking a 3.6 percentage point decrease from 33.6% in the same quarter last year. Torrid’s full-year margin has also been trending down over the past 12 months, decreasing by 2.7 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to discount products and higher input costs (such as labor and freight expenses to transport goods).

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Torrid was profitable over the last two years but held back by its large cost base. Its average operating margin of 3.7% was weak for a consumer retail business. This result isn’t too surprising given its low gross margin as a starting point.

Analyzing the trend in its profitability, Torrid’s operating margin decreased by 3 percentage points over the last year. Torrid’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Torrid generated an operating margin profit margin of negative 2.1%, down 3.4 percentage points year on year. Since Torrid’s gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, and administrative overhead expenses.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Torrid, its EPS declined by 29.1% annually over the last three years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

In Q4, Torrid reported EPS of negative $0.08, down from negative $0.03 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Torrid to improve its earnings losses. Analysts forecast its full-year EPS of negative $0.07 will advance to negative $0.04.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Torrid has shown mediocre cash profitability relative to peers over the last two years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 2%, below what we’d expect for a consumer retail business.

Taking a step back, we can see that Torrid’s margin dropped by 7.9 percentage points over the last year. This decrease warrants extra caution because Torrid failed to grow its same-store sales. Its cash profitability could decay further if it tries to reignite growth by opening new stores.

Torrid burned through $9.32 million of cash in Q4, equivalent to a negative 3.9% margin. The company’s cash flow turned negative after being positive in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Torrid historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 11.3%, somewhat low compared to the best consumer retail companies that consistently pump out 25%+.

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

Torrid burned through $21.87 million of cash over the last year, and its $436.5 million of debt exceeds the $20.44 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.

Unless the Torrid’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.

We remain cautious of Torrid until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

It was good to see Torrid beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its gross margin missed and its EBITDA guidance for next quarter fell short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock traded up 23.2% to $1.55 immediately after reporting.

Updated: March 19, 2026 at 4:16 PM EDT

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Torrid, you should also grasp the company’s longer-term business quality and valuation.

We cheer for all companies serving everyday consumers, but in the case of Torrid, we’ll be cheering from the sidelines. First off, its revenue has declined over the last three years. While its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its declining EPS over the last three years makes it a less attractive asset to the public markets. On top of that, its declining physical locations suggests its demand is falling.

Torrid’s EV-to-EBITDA ratio based on the next 12 months is 7.6x. This multiple tells us a lot of good news is priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $1.48 on the company (compared to the current share price of $1.55), implying they don’t see much short-term potential in Torrid.