thi-20231028

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 28, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from to

Commission File Number 001-40571

TORRID HOLDINGS INC.

(Exact name of registrant as specified in its charter)


Delaware						84-3517567
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)
18501 East San Jose Avenue City of Industry, California (Address of principal executive offices)						91748 (Zip Code)

(626) 667-1002

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, par value $0.01 per share

CURV

New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of December 1, 2023, there were approximately 104,102,736 shares of the registrant's common stock outstanding.

Table of Contents


		PAGE
	Part I - Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of October 28, 2023 and January 28, 2023	5
	Condensed Consolidated Statements of Operations and Comprehensive (L oss) Income for the three and nine months ended October 28, 2023 and October 29, 2022	6
	Condensed Consolidated Statements of Stockholders' Deficit for the nine months ended October 28, 2023 and October 29, 2022	7
	Condensed Consolidated Statements of Cash Flows for the nine months ended October 28, 2023 and October 29, 2022	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
	Part II - Other Information
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signatures		37

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are subject to the “safe harbor” of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this Quarterly Report on Form 10-Q are forward-looking statements. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "will," "should," "can have," "likely" and other words and terms of similar meaning (including their negative counterparts or other various or comparable terminology). For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth or initiatives, strategies or the expected outcome or impact of pending or threatened litigation are forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside our control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements, including:

•changes in consumer spending and general economic conditions;

•the negative impact on interest expense as a result of rising interest rates;

•inflationary pressures with respect to labor and raw materials and global supply chain constraints that could increase our expenses;

•our ability to identify and respond to new and changing product trends, customer preferences and other related factors;

•our dependence on a strong brand image;

•increased competition from other brands and retailers;

•our reliance on third parties to drive traffic to our website;

•the success of the shopping centers in which our stores are located;

•our ability to adapt to consumer shopping preferences and develop and maintain a relevant and reliable omni-channel experience for our customers;

•our dependence upon independent third parties for the manufacture of all of our merchandise;

•availability constraints and price volatility in the raw materials used to manufacture our products;

•interruptions of the flow of our merchandise from international manufacturers causing disruptions in our supply chain;

•our sourcing a significant amount of our products from China;

•shortages of inventory, delayed shipments to our e-Commerce customers and harm to our reputation due to difficulties or shut-down of our distribution facility (including as a result of COVID-19);

•our reliance upon independent third-party transportation providers for substantially all of our product shipments;

•our growth strategy;

•our failure to attract and retain employees that reflect our brand image, embody our culture and possess the appropriate skill set;

•damage to our reputation arising from our use of social media, email and text messages;

•our reliance on third-parties for the provision of certain services, including real estate management;

•our dependence upon key members of our executive management team;

•our reliance on information systems;

•system security risk issues that could disrupt our internal operations or information technology services;

•unauthorized disclosure of sensitive or confidential information, whether through a breach of our computer system or otherwise;

•our failure to comply with federal and state laws and regulations and industry standards relating to privacy, data protection, advertising and consumer protection;

•payment-related risks that could increase our operating costs or subject us to potential liability;

•claims made against us resulting in litigation;

•changes in laws and regulations applicable to our business;

•regulatory actions or recalls arising from issues with product safety;

•our inability to protect our trademarks or other intellectual property rights;

•our substantial indebtedness and lease obligations;

•restrictions imposed by our indebtedness on our current and future operations;

•changes in tax laws or regulations or in our operations that may impact our effective tax rate;

•the possibility that we may recognize impairments of long-lived assets;

•our failure to maintain adequate internal control over financial reporting; and

•the threat of war, terrorism or other catastrophes that could negatively impact our business.

The outcome of the events described in any of our forward-looking statements are also subject to risks, uncertainties and other factors described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 28, 2023 and in our other filings with the SEC and public communications. You should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q in the context of these risks and uncertainties.

We caution you that the important factors referenced above may not include all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the outcomes or affect us or our operations in the way we expect. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise except to the extent required by law. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

Investors and others should note that we may announce material information to our investors using our investor relations website (https://investors.torrid.com), SEC filings, press releases, public conference calls and webcasts. We use these channels, as well as social media, to communicate with our investors and the public about our company, our business and other issues. It is possible that the information that we post on social media could be deemed to be material information. We therefore encourage investors to visit these websites from time to time. The information contained on such websites and social media posts is not incorporated by reference into this filing. Further, our references to website URLs in this filing are intended to be inactive textual references only.

Part I - Financial Information

Item 1. Financial Statements (Unaudited)

TORRID HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except share and per share data)


	October 28, 2023		January 28, 2023
Assets
Current assets:
Cash and cash equivalents	$	15,596	$	13,569
Restricted cash	366		366
Inventory	171,034		180,055
Prepaid expenses and other current assets	24,628		20,050
Prepaid income taxes	4,645		2,081
Total current assets	216,269		216,121
Property and equipment, net	100,746		113,613
Operating lease right-of-use assets	165,789		177,179
Deposits and other noncurrent assets	14,950		8,650
Deferred tax assets	3,301		3,301
Intangible asset	8,400		8,400
Total assets	$	509,455	$	527,264
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	79,031	$	76,207
Accrued and other current liabilities	102,411		108,847
Operating lease liabilities	42,954		45,008
Borrowings under credit facility	5,100		8,380
Current portion of term loan	16,144		16,144
Due to related parties	6,766		12,741

Total current liabilities	252,406		267,327
Noncurrent operating lease liabilities	160,580		172,103
Term loan	292,589		304,697
Deferred compensation	4,753		4,246
Other noncurrent liabilities	8,363		9,115
Total liabilities	718,691		757,488
Commitments and contingencies (Note 15)
Stockholders' deficit
Common shares: $0.01 par value; 1,000,000,000 shares authorized; 104,102,356 shares issued and outstanding at October 28, 2023; 103,774,813 shares issued and outstanding at January 28, 2023	1,042		1,038
Additional paid-in capital	133,714		128,205
Accumulated deficit	(343,517)		(359,206)
Accumulated other comprehensive loss	(475)		(261)
Total stockholders' deficit	(209,236)		(230,224)
Total liabilities and stockholders' deficit	$	509,455	$	527,264

The accompanying notes are an integral part of these condensed consolidated financial statements.

TORRID HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE (LOSS) INCOME

(UNAUDITED)

(In thousands, except per share data)


	Three Months Ended				Nine Months Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Net sales	$	275,408	$	300,201	$	858,406	$	986,916
Cost of goods sold	183,906		198,263		553,585		623,556
Gross profit	91,502		101,938		304,821		363,360
Selling, general and administrative expenses	71,881		69,347		212,700		220,136
Marketing expenses	12,739		12,638		38,988		44,114
Income from operations	6,882		19,953		53,133		99,110
Interest expense	9,757		8,390		28,831		21,351
Interest income, net of other expense	267		147		238		223
(Loss) income before (benefit from) provision for income taxes	(3,142)		11,416		24,064		77,536
(Benefit from) provision for income taxes	(394)		4,139		8,375		23,483
Net (loss) income	$	(2,748)	$	7,277	$	15,689	$	54,053
Net (loss) earnings per share:
Basic	$	(0.03)	$	0.07	$	0.15	$	0.52
Diluted	$	(0.03)	$	0.07	$	0.15	$	0.52
Weighted average number of shares:
Basic	104,081		103,623		103,937		104,560
Diluted	104,081		103,805		104,170		104,695
Comprehensive (loss) income:
Net (loss) income	$	(2,748)	$	7,277	$	15,689	$	54,053
Other comprehensive loss:
Foreign currency translation adjustment	(271)		(465)		(214)		(480)
Total other comprehensive loss	(271)		(465)		(214)		(480)
Comprehensive (loss) income	$	(3,019)	$	6,812	$	15,475	$	53,573

The accompanying notes are an integral part of these condensed consolidated financial statements.

TORRID HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(UNAUDITED)

(In thousands)


	Nine Months Ended October 28, 2023
	Common Shares			Additional Paid-In Capital			Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Deficit
	Shares	Amount
Balance at January 28, 2023	103,775	$	1,038	$	128,205		$	(359,206)	$	(261)	$	(230,224)
Net income	—	—		—			11,808		—		11,808
Issuance of common shares and withholding tax payments related to vesting of restricted stock awards and restricted stock units	53	1		(124)			—		—		(123)
Share-based compensation	—	—		2,377		0	—		—		2,377
Other comprehensive loss	—	—		—			—		(170)		(170)
Balance at April 29, 2023	103,828	1,039		130,458			(347,398)		(431)		(216,332)
Net income	—	—		—			6,629		—		6,629
Issuance of common shares and withholding tax payments related to vesting of restricted stock awards and restricted stock units	121	1		(64)			—		—		(63)
Issuance of common shares related to employee stock purchase plan	95	1		219			—		—		220
Share-based compensation	—	—		1,662			—		—		1,662
Other comprehensive income	—	—		—			—		227		227
Balance at July 29, 2023	104,044	1,041		132,275			(340,769)		(204)		(207,657)
Net loss	—	—		—			(2,748)		—		(2,748)
Issuance of common shares and withholding tax payments related to vesting of restricted stock awards and restricted stock units	58	1		(64)			—		—		(63)
Share-based compensation	—	—		1,503			—		—		1,503
Other comprehensive loss	—	—		—			—		(271)		(271)
Balance at October 28, 2023	104,102	$	1,042	$	133,714		$	(343,517)	$	(475)	$	(209,236)

The accompanying notes are an integral part of these condensed consolidated financial statements.

TORRID HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(UNAUDITED)

(In thousands)


	Nine Months Ended October 29, 2022
	Common Shares			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Deficit
	Shares	Amount
Balance at January 29, 2022	107,858	$	1,078	$	118,286	$	(377,759)	$	76	$	(258,319)
Net income	—	—		—		24,066		—		24,066
Issuance of common shares and withholding tax payments related to vesting of restricted stock awards and restricted stock units	39	—		(178)		—		—		(178)
Share-based compensation	—	—		2,480		—		—		2,480
Repurchase and retirement of common stock	(2,919)	(29)		—		(22,836)		—		(22,865)
Other comprehensive loss	—	—		—		—		(40)		(40)
Balance at April 30, 2022	104,978	1,049		120,588		(376,529)		36		(254,856)
Net income	—	—		—		22,710		—		22,710
Issuance of common shares and withholding tax payments related to vesting of restricted stock awards and restricted stock units	74	1		(227)		—		—		(226)
Issuance of common shares related to employee stock purchase plan	95	1		350		—		—		351
Share-based compensation	—	—		2,175		—		—		2,175
Repurchase and retirement of common stock	(1,546)	(15)		—		(8,820)		—		(8,835)
Other comprehensive income	—	—		—		—		25		25
Balance at July 30, 2022	103,601	1,036		122,886		(362,639)		61		(238,656)
Net income	—	—		—		7,277		—		7,277
Issuance of common shares and withholding tax payments related to vesting of restricted stock awards and restricted stock units	40	—		(153)		—		—		(153)
Share-based compensation	—	—		2,913		—		—		2,913
Other comprehensive loss	—	—		—		—		(465)		(465)
Balance at October 29, 2022	103,641	$	1,036	$	125,646	$	(355,362)	$	(404)	$	(229,084)

The accompanying notes are an integral part of these condensed consolidated financial statements.

TORRID HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)


	Nine Months Ended October 28, 2023		Nine Months Ended October 29, 2022
OPERATING ACTIVITIES
Net income	$	15,689	$	54,053
Adjustments to reconcile net income to net cash provided by operating activities:
Write down of inventory	3,767		1,750
Operating right-of-use assets amortization	30,494		31,209
Depreciation and other amortization	28,242		28,120
Share-based compensation	5,981		7,568
Other	(1,351)		(603)
Changes in operating assets and liabilities:
Inventory	4,969		(31,341)
Prepaid expenses and other current assets	(4,578)		(8,778)
Prepaid income taxes	(2,564)		5,192
Deposits and other noncurrent assets	(6,433)		(3,255)
Accounts payable	2,969		31,447
Accrued and other current liabilities	(5,954)		(35,824)
Operating lease liabilities	(31,565)		(31,230)
Other noncurrent liabilities	(468)		4,345
Deferred compensation	507		(2,701)
Due to related parties	(5,975)		864
Income taxes payable	—		3,093
Net cash provided by operating activities	33,730		53,909
INVESTING ACTIVITIES
Purchases of property and equipment	(15,228)		(17,087)

SEC Form 10-Q filed by Torrid Holdings Inc.