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Torrid Holdings Inc. (CURV - Free Report) has captured the market’s attention with an impressive 19.1% gain over the past month. This rally, driven by optimism surrounding the company’s strategic focus and operational strengths, has left investors contemplating their next move. Should you ride the wave, hold steady, or capitalize on the surge by cashing out? Let’s analyze what’s driving Torrid’s momentum and what lies ahead.
The stock has comfortably outpaced the industry’s modest rise of 5.2%. Torrid’s unmatched scale and operational capabilities have also helped it outperform the Retail-Wholesale sector and the S&P 500 index, which posted respective gains of 3.8% and 2.5%.
Torrid Stock Past One-Month Performance
Image Source: Zacks Investment Research
As the leader in plus-size fashion, Torrid has demonstrated resilience and adaptability in a challenging retail environment. The company’s focus on product evolution and digital capabilities positions it to capitalize on emerging opportunities. By targeting broader demographic segments, Torrid is strategically expanding its market presence, setting itself up for long-term growth.
Torrid stock closed at $4.16 during yesterday’s trading session, sitting 54.5% below its 52-week high of $9.14, reached on July 17, 2024. Torrid recently overtook the 20-day moving average, suggesting a bullish trend. With that in mind, let’s dive into Torrid’s prospects and determine the best course of action for your portfolio.
CURV Trading Above 20-Day Moving Average
Image Source: Zacks Investment Research
Torrid Leading the Way in Plus-Size Fashion
Torrid’s success stems from its dominance in the plus-size fashion market, a vastly underserved segment. The company has consistently demonstrated an ability to align its brand with the needs of its target customers, offering not just fashionable options but also products designed for comfort and fit. This customer-centric approach has allowed Torrid to cultivate deep brand loyalty and compete with players such as Abercrombie & Fitch (ANF - Free Report) , Stitch Fix (SFIX - Free Report) and Tapestry (TPR - Free Report) .
By refreshing its product offerings, including expanding beyond core categories like denim and intimates, Torrid continues to capture the interest of a broader audience. Its commitment to innovation ensures that it stays relevant and appealing to younger demographics while retaining its established customer base. This forward-thinking strategy positions the brand to meet shifting preferences in the dynamic retail landscape. Torrid's brand awareness has risen from the low 40% range last year to 52%.
Torrid’s omnichannel strategy is another critical element of its success, seamlessly integrating its e-commerce and physical store presence. By offering flexible fulfillment options, such as in-store pickups and direct-to-consumer shipping, the company enhances customer convenience. This approach not only improves the shopping experience but also strengthens customer relationships, as shoppers increasingly value the flexibility and immediacy offered by such solutions. The company's direct business accounts for 60% of total demand. With 93% of customers engaged in Torrid's loyalty program, the company has built a dynamic marketing framework that drives customer acquisition, retention, and reactivation.
Torrid is transitioning into the second phase of its business transformation strategy. The first phase focused on operational excellence, including realigning product sourcing, optimizing inventory, and improving supply chain capabilities. The second phase is centered on scaling the business by expanding product offerings, increasing wallet share and growing the active customer base. These initiatives are aimed at top and bottom-line growth.
The company’s disciplined inventory and product cost management have driven gross margin expansion. Torrid registered a 323-basis point increase in gross margin in the second quarter of fiscal 2024. The company also improved its product costs by refining sourcing strategies and reducing reliance on China, with plans to decrease China’s share of production to the mid-teens by the end of 2024.
Torrid's Strategic Shifts: Growth Plans & Outlook
Torrid's proactive steps to rebalance store footprint and streamline operations should help drive growth. About 65% of Torrid’s locations are situated within enclosed malls, with the remainder in outdoor centers. However, the company has identified a clear preference among its customers for outdoor shopping centers, which have demonstrated higher conversion rates. Recognizing this trend, Torris aims to achieve a more balanced mix of stores, with an equal distribution between indoor malls and outdoor centers in the coming years.
As part of this effort, Torrid intends to close 10 to 15 stores this calendar year, with an additional 20 to 25 closures expected by the end of fiscal 2024. The company forecasts that the closures will contribute 80-110 basis points to adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) margin expansion for fiscal 2025.
Torrid is focused on driving positive comparable sales and expanding gross margins. With continued improvements in product costs and reduced inventory levels, the company expects these efforts to result in healthy adjusted EBITDA in the latter half of the year. Net sales for fiscal 2024 are expected to range between $1.135 billion and $1.145 billion, while adjusted EBITDA is guided in the range of $110-$116 million.
How Do Estimates Measure Up for CURV?
Reflecting the positive sentiment around Torrid, the Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 30 days, the consensus estimate for the current fiscal has increased by a penny to 20 cents, while for the next fiscal it has risen by two cents to 31 cents, indicating indicate expected year-over-year growth rates of 81.8% and 55%, respectively.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Image Source: Zacks Investment Research
Does Torrid Still Offer an Attractive Valuation?
Torrid is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 14.45X, which positions it at a discount compared to the industry and the S&P 500’s average of 16.92X and 22.38X. The stock is also trading below its median P/E level of 25.93, observed over the past year. This suggests that CURV stock is priced attractively relative to its peers and historical levels, positioning it as a potential bargain.
CURV Looks Attractive From a Valuation Standpoint
Image Source: Zacks Investment Research
Should You Buy, Hold, or Sell Torrid Stock?
Torrid’s emphasis on product innovation, digital capabilities and expansion of its customer base has positioned it for sustained growth in the direct-to-consumer apparel, intimates, and accessories segments. Its successful omnichannel strategy and operational improvements, including cost management and gross margin expansion, further strengthen its outlook. Despite the recent stock rally, Torrid remains attractively priced compared to its peers, offering the potential for continued upside. While current stakeholders may choose to maintain or increase their holdings, the stock's valuation presents an attractive entry point for potential investors. CURV currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Torrid Stock Up 19% in a Month: Is it Time to Buy, Hold or Cash Out?
Key Takeaways
Torrid Holdings Inc. (CURV - Free Report) has captured the market’s attention with an impressive 19.1% gain over the past month. This rally, driven by optimism surrounding the company’s strategic focus and operational strengths, has left investors contemplating their next move. Should you ride the wave, hold steady, or capitalize on the surge by cashing out? Let’s analyze what’s driving Torrid’s momentum and what lies ahead.
The stock has comfortably outpaced the industry’s modest rise of 5.2%. Torrid’s unmatched scale and operational capabilities have also helped it outperform the Retail-Wholesale sector and the S&P 500 index, which posted respective gains of 3.8% and 2.5%.
Torrid Stock Past One-Month Performance
Image Source: Zacks Investment Research
As the leader in plus-size fashion, Torrid has demonstrated resilience and adaptability in a challenging retail environment. The company’s focus on product evolution and digital capabilities positions it to capitalize on emerging opportunities. By targeting broader demographic segments, Torrid is strategically expanding its market presence, setting itself up for long-term growth.
Torrid stock closed at $4.16 during yesterday’s trading session, sitting 54.5% below its 52-week high of $9.14, reached on July 17, 2024. Torrid recently overtook the 20-day moving average, suggesting a bullish trend. With that in mind, let’s dive into Torrid’s prospects and determine the best course of action for your portfolio.
CURV Trading Above 20-Day Moving Average
Image Source: Zacks Investment Research
Torrid Leading the Way in Plus-Size Fashion
Torrid’s success stems from its dominance in the plus-size fashion market, a vastly underserved segment. The company has consistently demonstrated an ability to align its brand with the needs of its target customers, offering not just fashionable options but also products designed for comfort and fit. This customer-centric approach has allowed Torrid to cultivate deep brand loyalty and compete with players such as Abercrombie & Fitch (ANF - Free Report) , Stitch Fix (SFIX - Free Report) and Tapestry (TPR - Free Report) .
By refreshing its product offerings, including expanding beyond core categories like denim and intimates, Torrid continues to capture the interest of a broader audience. Its commitment to innovation ensures that it stays relevant and appealing to younger demographics while retaining its established customer base. This forward-thinking strategy positions the brand to meet shifting preferences in the dynamic retail landscape. Torrid's brand awareness has risen from the low 40% range last year to 52%.
Torrid’s omnichannel strategy is another critical element of its success, seamlessly integrating its e-commerce and physical store presence. By offering flexible fulfillment options, such as in-store pickups and direct-to-consumer shipping, the company enhances customer convenience. This approach not only improves the shopping experience but also strengthens customer relationships, as shoppers increasingly value the flexibility and immediacy offered by such solutions. The company's direct business accounts for 60% of total demand. With 93% of customers engaged in Torrid's loyalty program, the company has built a dynamic marketing framework that drives customer acquisition, retention, and reactivation.
Torrid is transitioning into the second phase of its business transformation strategy. The first phase focused on operational excellence, including realigning product sourcing, optimizing inventory, and improving supply chain capabilities. The second phase is centered on scaling the business by expanding product offerings, increasing wallet share and growing the active customer base. These initiatives are aimed at top and bottom-line growth.
The company’s disciplined inventory and product cost management have driven gross margin expansion. Torrid registered a 323-basis point increase in gross margin in the second quarter of fiscal 2024. The company also improved its product costs by refining sourcing strategies and reducing reliance on China, with plans to decrease China’s share of production to the mid-teens by the end of 2024.
Torrid's Strategic Shifts: Growth Plans & Outlook
Torrid's proactive steps to rebalance store footprint and streamline operations should help drive growth. About 65% of Torrid’s locations are situated within enclosed malls, with the remainder in outdoor centers. However, the company has identified a clear preference among its customers for outdoor shopping centers, which have demonstrated higher conversion rates. Recognizing this trend, Torris aims to achieve a more balanced mix of stores, with an equal distribution between indoor malls and outdoor centers in the coming years.
As part of this effort, Torrid intends to close 10 to 15 stores this calendar year, with an additional 20 to 25 closures expected by the end of fiscal 2024. The company forecasts that the closures will contribute 80-110 basis points to adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) margin expansion for fiscal 2025.
Torrid is focused on driving positive comparable sales and expanding gross margins. With continued improvements in product costs and reduced inventory levels, the company expects these efforts to result in healthy adjusted EBITDA in the latter half of the year. Net sales for fiscal 2024 are expected to range between $1.135 billion and $1.145 billion, while adjusted EBITDA is guided in the range of $110-$116 million.
How Do Estimates Measure Up for CURV?
Reflecting the positive sentiment around Torrid, the Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 30 days, the consensus estimate for the current fiscal has increased by a penny to 20 cents, while for the next fiscal it has risen by two cents to 31 cents, indicating indicate expected year-over-year growth rates of 81.8% and 55%, respectively.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Image Source: Zacks Investment Research
Does Torrid Still Offer an Attractive Valuation?
Torrid is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 14.45X, which positions it at a discount compared to the industry and the S&P 500’s average of 16.92X and 22.38X. The stock is also trading below its median P/E level of 25.93, observed over the past year. This suggests that CURV stock is priced attractively relative to its peers and historical levels, positioning it as a potential bargain.
CURV Looks Attractive From a Valuation Standpoint
Image Source: Zacks Investment Research
Should You Buy, Hold, or Sell Torrid Stock?
Torrid’s emphasis on product innovation, digital capabilities and expansion of its customer base has positioned it for sustained growth in the direct-to-consumer apparel, intimates, and accessories segments. Its successful omnichannel strategy and operational improvements, including cost management and gross margin expansion, further strengthen its outlook. Despite the recent stock rally, Torrid remains attractively priced compared to its peers, offering the potential for continued upside. While current stakeholders may choose to maintain or increase their holdings, the stock's valuation presents an attractive entry point for potential investors. CURV currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.