Torrid Holdings(CURV 0.21%) reported second quarter 2025 results on Aug. 4, 2025, with net sales of $262.8 million and adjusted EBITDA of $21.5 million, in line with internal expectations but reflecting a 6.9% year-over-year comparable sales decline. Management highlighted a strategic pivot toward digital-led growth, accelerated store closures, increased marketing investment, and rapid expansion of higher-margin sub-brands, while navigating tariff headwinds and maintaining liquidity for capital returns. The following insights detail the most significant strategic and financial developments from the call.
Store closures accelerate Torrid Holdings’ digital transition
During the second quarter, the company closed 57 underperforming stores and remains on track to close approximately 180 locations in fiscal 2025, with digital sales now nearing 70% of total demand. This store rationalization is designed to concentrate resources on more profitable digital and omni-channel operations, while a revamped retention strategy aims to preserve customer relationships as the physical footprint shrinks.
“With digital sales approaching 70% of total demand, we are executing a comprehensive realignment that capitalizes on this fundamental shift while strengthening customer relationships across all touch points. To that end, we have been closely tracking customer retention throughout the course of our store closures, and the results remain in line with our objectives. Our target is to retain at least 60% of customers, consistent with historical performance following closures. Encouragingly, retention trends from the 2025 closures are outperforming fiscal 2024 with a greater share of customers migrating to our online platform.”
— Lisa Harper, Chief Executive Officer
This digital migration, coupled with stable customer retention, demonstrates the company’s ability to adapt its business model and maintain engagement despite a shrinking store base.
Sub-brands drive margin expansion and growth for Torrid Holdings
Sub-brand penetration is expected to double in the third quarter and reach 25%-30% of the assortment in fiscal 2026, already delivering “hundreds of basis points” higher product margins than legacy categories. Large-scale refixturing—135 stores year to date—has enabled expanded in-store sub-brand presence, and launches have shown positive halo effects on core denim and intimates.
“we’re still very happy with the margin profile that we’re seeing in sub-brands. And it’s delivering hundreds of basis points higher in product margins than the bulk of the business. And we’re seeing that consistently perform as we roll out more and more deliveries of these. I think there are a few ways that we contemplate expansion past 2026 in this business, whether there are — and we’ll test some of these ideas next year, whether there are stores that we convert to more of a focus on sub-brands.”
— Lisa Harper, Chief Executive Officer
The incremental margin from sub-brands enables reinvestment in scale initiatives and supports the company’s goal of 150-250 basis points of adjusted EBITDA margin expansion in fiscal 2026, even as marketing spend rises.
Capital allocation shifts prioritize shareholder returns and debt reduction
The company repurchased approximately 6 million shares at $3.50 per share using $20 million in cash as part of its $100 million buyback authorization, reducing the remaining authorization to approximately $45 million. Total liquidity, including available borrowing, stood at $111.7 million, and the company proactively extended its asset-based loan (ABL) maturity to 2030.
“We currently have an active $100 million authorization for share repurchase, of which we have approximately $45 million remaining. We also intend to deploy free cash flow to further reduce our debt, fortifying our balance sheet for long-term financial flexibility. At the same time, we remain committed to investing selectively in initiatives that drive profitable growth and improve customer retention, ensuring that our capital decisions not only provide immediate returns, but also strengthen the foundation for future growth.”
— Lisa Harper, Chief Executive Officer
Simultaneous share buybacks and debt reduction, even during a period of EBITDA and net income compression, signal management’s confidence in future cash generation and intrinsic equity value.
Looking Ahead
Management revised fiscal 2025 guidance to net sales of $1.015 billion to $1.030 billion and adjusted EBITDA of $80 million to $90 million, reflecting increased tariffs and a $5 million boost in digital marketing spend, now forecast at 6% of sales. The company is targeting 150-250 basis points of adjusted EBITDA margin expansion and substantial free cash flow uplift in fiscal 2026, driven primarily by store closures and sub-brand growth. Capital allocation priorities for 2026 are focused on further share repurchases and debt reduction, supported by ongoing inventory discipline, with year-end comparable inventories expected to decline by mid-to-high single digits year-over-year.
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