CURV Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

Net Sales: $246 million, slightly above guidance but down from $260 million year-over-year.
Adjusted EBITDA: $17.6 million (7.2% margin), at the high end of guidance, compared to $27.1 million (10.2% margin) in the prior year.
Comparable Sales: Declined 1.7% overall; however, excluding footwear, comparable sales increased by 1.2%.
Gross Profit: $86.8 million, down from $101 million last year; Gross Margin at 35.3%, down from 38.1%.
SG&A Expenses: Decreased to $63.7 million from $70 million, reflecting benefits from store optimization.
Net Income: $414,000 or $0.00 per share, down from $5.9 million or $0.06 per share last year.
Inventory: $143 million, a 4.6% decrease year-over-year.

2. Strategic Updates and Business Highlights

Leadership Changes: Ashlee Wheeler appointed as Chief Commercial Officer, focusing on unifying marketing, e-commerce, pricing, and analytics.
Store Optimization: Completed 20 store closures in Q1, totaling 171 closures since the program's inception, with plans for 7-8 more in Q2.
Sub Brand Growth: Achieved 75% growth in sub brands in Q1, with expectations to reach $110 million in sales for the year, up from $70 million in 2025.
Opening Price Points (OPP): Represented 30% of apparel sales, contributing positively to performance in dresses, knit tops, and non-denim bottoms.
Marketing Initiatives: Focus on customer acquisition, retention, and reactivation, including a revamped CRM strategy and the return of the "Casting Call" campaign.

3. Forward Guidance and Outlook

Fiscal 2026 Guidance: Expected net sales of $940 million to $960 million and adjusted EBITDA of $65 million to $75 million.
Q2 Guidance: Anticipated sales of $232 million to $240 million and adjusted EBITDA of $12 million to $16 million.
Expense Savings: Targeting approximately $40 million in savings from store optimization, with $11 million realized in Q1.
Tariff Refunds: Initial recovery of $9 to $11 million expected, with additional phases anticipated.

4. Bad News, Challenges, or Points of Concern

Comparable Sales Decline: Overall comparable sales down 1.7%, indicating potential challenges in customer demand.
Gross Margin Pressure: Decline attributed to tariffs and planned promotions, with gross margin down significantly from the previous year.
Footwear Business: Restructuring has created a headwind in the first half; expected to turn positive in the second half but remains a concern.
Market Environment: Ongoing uncertainties in the macroeconomic environment affecting consumer spending behavior.

5. Notable Q&A Insights

Promotional Activity: Management indicated that promotional levels were in line with expectations and not excessive, with OPP reducing reliance on promotions.
Customer Behavior: Positive conversion metrics were reported, with double-digit growth in conversion rates and low single-digit growth in units per transaction.
Freight Pressure: Currently manageable, with 70% of goods sourced on a Delivered Duty Paid (DDP) basis, protecting against freight variability.
Confidence in Back Half: Management expressed confidence in achieving positive comparable sales in the second half, driven by the recovery of the footwear business and enhanced marketing efforts.

Overall, while Torrid Holdings Inc. faced challenges in Q1 2026, including declining comparable sales and margin pressures, strategic initiatives in marketing and store optimization, along with a focus on customer engagement, provide a foundation for potential growth moving forward.

CURV — Torrid Holdings Inc.