Torrid (CURV)

Women’s plus-size apparel retailer Torrid Holdings (NYSE:CURV) beat Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 7.7% year on year to $262.8 million. On the other hand, next quarter’s revenue guidance of $240 million was less impressive, coming in 7.2% below analysts’ estimates. Its GAAP profit of $0.02 per share was in line with 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).

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years.

With $1.07 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 sales grew at a sluggish 1.3% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) as it didn’t open many new stores.

This quarter, Torrid’s revenue fell by 7.7% year on year to $262.8 million but beat Wall Street’s estimates by 0.9%. Company management is currently guiding for a 9% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to decline by 5% over the next 12 months, a deceleration versus the last six years. This projection doesn't excite us and implies its products will see some demand headwinds.

Number of Stores

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

Torrid listed 575 locations in the latest quarter and has kept its store count flat over the last two years while other consumer retail businesses have opted for growth.

When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.

Same-Store Sales

The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. 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 5.6% annual declines. This performance isn’t ideal, and we’d be concerned if Torrid starts opening new stores to artificially boost revenue growth.

In the latest quarter, Torrid’s same-store sales fell by 6.9% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.

Torrid’s unit economics are higher than the typical retailer, giving it the flexibility to invest in areas such as marketing and talent to reach more consumers. As you can see below, it averaged a decent 36.4% gross margin over the last two years. Said differently, Torrid paid its suppliers $63.61 for every $100 in revenue.

This quarter, Torrid’s gross profit margin was 35.6%, down 3.2 percentage points year on year and missing analysts’ estimates by 3.5%. Torrid’s full-year margin has also been trending down over the past 12 months, decreasing by 1.1 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 an important measure of profitability for retailers as it accounts for all expenses necessary to run a store, including wages, inventory, rent, advertising, and other administrative costs.

Torrid was profitable over the last two years but held back by its large cost base. Its average operating margin of 4.3% was weak for a consumer retail business.

Looking at the trend in its profitability, Torrid’s operating margin decreased by 1.6 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. 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.

In Q2, Torrid generated an operating margin profit margin of 3.9%, down 3.3 percentage points year on year. Since Torrid’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, and administrative overhead increased.

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 35.7% annually over the last six years while its revenue grew by 1.3%. This tells us the company became less profitable on a per-share basis as it expanded.

In Q2, Torrid reported EPS of $0.02, down from $0.08 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Torrid’s full-year EPS of $0.04 to grow 300%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Torrid has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 2.3% over the last two years, slightly better than the broader consumer retail sector.

Taking a step back, we can see that Torrid’s margin dropped by 4.8 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’s free cash flow clocked in at $14.62 million in Q2, equivalent to a 5.6% margin. The company’s cash profitability regressed as it was 7.7 percentage points lower than in the same quarter last year, but it’s still above its two-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, causing short-term swings. Long-term trends carry greater meaning.

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 2.3%, lower than the typical cost of capital (how much it costs to raise money) for consumer retail companies.

Torrid reported $21.54 million of cash and $435.6 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $84.95 million of EBITDA over the last 12 months, we view Torrid’s 4.9× net-debt-to-EBITDA ratio as safe. We also see its $24.55 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Torrid narrowly top analysts’ revenue expectations this quarter. On the other hand, its full-year EBITDA guidance missed and its revenue guidance for next quarter fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 11.7% to $2.11 immediately after reporting.

Updated: November 8, 2025 at 9:34 PM EST

Before making an investment decision, investors should account for Torrid’s business fundamentals and valuation in addition to what happened in the latest quarter.

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 growth was uninspiring over the last six years, and analysts expect its demand to deteriorate over the next 12 months. And 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 relatively low ROIC suggests management has struggled to find compelling investment opportunities.

Torrid’s P/E ratio based on the next 12 months is 18.9x. This multiple tells us a lot of good news is priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $2.72 on the company (compared to the current share price of $1.20).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.