Torrid Holdings Shrinks Retail Presence with Closure of 57 Stores in Q2

Summary:

1. Torrid Holdings reported Q2 2025 results with net sales of $262.8 million and a 6.9% decline in comparable sales.
2. The company is focusing on digital growth, store closures, sub-brands for margin expansion, and capital allocation for shareholder returns.
3. Management revised guidance for fiscal 2025 and emphasized future strategies for growth and debt reduction.

   Article:
   Torrid Holdings recently released its second-quarter 2025 financial results, showcasing net sales of $262.8 million but also noting a 6.9% decrease in comparable sales compared to the previous year. Despite this decline, the company is strategically pivoting towards digital-led growth, accelerated store closures, increased marketing investments, and the rapid expansion of higher-margin sub-brands. These efforts are aimed at navigating challenges such as tariff headwinds while maintaining liquidity for capital returns.

   One significant aspect of Torrid Holdings’ strategy is the acceleration of store closures to facilitate its digital transition. The company closed 57 underperforming stores during the quarter and plans to shutter approximately 180 locations in fiscal 2025. With digital sales approaching 70% of total demand, Torrid is focusing on more profitable digital and omni-channel operations while ensuring customer retention remains strong despite the reduction in physical stores.

   Moreover, the company’s emphasis on sub-brands has been driving margin expansion and growth. Sub-brand penetration is expected to double in the third quarter, reaching 25%-30% of the assortment by fiscal 2026. These sub-brands are delivering higher product margins than legacy categories, enabling Torrid Holdings to reinvest in scale initiatives and target a 150-250 basis points of adjusted EBITDA margin expansion in fiscal 2026.

   Capital allocation has also been a key focus for Torrid Holdings, with a shift towards prioritizing shareholder returns and debt reduction. The company repurchased approximately 6 million shares, reducing the remaining buyback authorization to around $45 million. Simultaneously, Torrid is actively reducing debt while maintaining liquidity and extending its asset-based loan maturity to 2030, signaling confidence in future cash generation and equity value.

   Looking ahead, management has revised fiscal 2025 guidance, anticipating net sales of $1.015 billion to $1.030 billion and adjusted EBITDA of $80 million to $90 million. The company aims to achieve adjusted EBITDA margin expansion and substantial free cash flow uplift in fiscal 2026 through store closures and sub-brand growth. Capital allocation priorities for 2026 will continue to focus on shareholder returns and debt reduction, supported by inventory discipline.

   In conclusion, Torrid Holdings’ strategic initiatives and financial performance reflect a commitment to adapting to market changes, driving growth through digital channels and sub-brands, and prioritizing shareholder value through capital allocation strategies.