Torrid Holdings Inc. (CURV) had the kind of quarter retailers dread, posting results Wednesday that missed expectations and prompted the company's CEO to essentially admit they fumbled the ball.
The California-based plus-size fashion retailer reported a net loss of $6.4 million, or 6 cents per share, for the quarter ended November 1. That's a notable deterioration from the year-ago period, when Torrid posted a loss of just $1.2 million, or 1 cent per share. Net sales fell 10.8% to $235.2 million from $263.8 million, while comparable sales declined 8.3%.
In a statement, CEO Lisa Harper didn't sugarcoat the situation: "Our third-quarter results fell short of our expectations due to execution missteps that were largely within our control."
When a CEO says problems were "within our control," that's typically management-speak for "we messed up things we should have gotten right." Investors weren't thrilled with that admission. Torrid shares dropped 12.8% on Thursday to trade at $1.14.
For the full fiscal year, the company expects net sales between $995 million and $1.002 billion, with adjusted EBITDA projected at $59 million to $62 million.
Wall Street analysts wasted no time recalibrating their expectations. Following the earnings announcement, two analysts made significant adjustments to their price targets:
- Telsey Advisory Group analyst Dana Telsey maintained a Market Perform rating but slashed the price target from $3 to $2.
- B of A Securities analyst Lorraine Hutchinson kept a Buy rating but cut the price target from $6 to $2—a 67% reduction that suggests even the bulls are tempering their enthusiasm.
The dual downgrades underscore the challenge facing Torrid as it works to reverse its sales decline and restore investor confidence in a competitive retail environment.
