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TH

Torrid Holdings Inc. (CURV)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY26 (quarter ended August 2, 2025): Net sales $262.8M and Adjusted EBITDA $21.5M were in line; comps -6.9% and gross margin fell 310 bps YoY to 35.6% amid softer peaks and higher promotions . Revenue slightly beat consensus while EPS was a hair below: $262.8M vs $259.4M* and $0.02 vs $0.022*, respectively [GetEstimates].
  • Guidance cut: FY25 net sales lowered to $1.015–$1.030B (from $1.030–$1.055B) and Adjusted EBITDA to $80–$90M (from $95–$105M), on tariff headwinds and +$5M incremental marketing investment; Q3 guide set to $235–$245M sales and $16–$21M EBITDA .
  • Strategic execution continues: sub-brands performing and targeted to be 25–30% of assortment in 2026; digital demand approaching 70%; store optimization on track with 59 YTD closures (target ~180 for FY25) and retention tracking ~60%+ .
  • Capital allocation: ~$20M used to repurchase ~6M shares at $3.50 in Q2; ABL extended to 2030; liquidity $111.7M at quarter-end .

What Went Well and What Went Wrong

What Went Well

  • Sub-brands gaining traction with higher margin profile; company plans for 25–30% assortment mix in 2026, supporting 150–250 bps EBITDA margin expansion next year. Quote: “Our five new sub-brands are resonating… will represent 25% to 30% of our assortment next year… deliver approximately 150 to 250 basis points of adjusted EBITDA margin expansion.” .
  • SG&A discipline and store optimization drove expense leverage (SG&A $70.5M vs $76.8M LY, 20 bps leverage); retention from closures performing at targets; digital approaching 70% of demand .
  • Capital actions: repurchased ~6M shares ($20M) alongside a secondary; extended ABL to 2030; liquidity $111.7M at Q2-end .

What Went Wrong

  • Gross margin compression to 35.6% (vs 38.7% LY) from softer holiday peaks (Memorial Day/July 4th), increased promotions, and category mix (tops softness) .
  • Comps -6.9%; tops pressured by graphics and crop tops; management expects graphics to underperform through year-end with improvement late Q4 into 2026 .
  • Guide cut on tariffs (+ incremental marketing): FY25 net sales and EBITDA lowered; tariff headwinds up to $10M incremental vs prior update, with cumulative headwind embedded; marketing ramped ~$5M in H2 to support brand and sub-brand awareness .

Financial Results

Period definitions: Q2 FY25 (ended Aug 3, 2024), Q1 FY26 (ended May 3, 2025), Q2 FY26 (ended Aug 2, 2025).

MetricQ2 FY25Q1 FY26Q2 FY26
Net Sales ($M)$284.6 $266.0 $262.8
Comparable Sales %(1)% (3.5)% (6.9)%
Gross Profit Margin %38.7% 38.1% 35.6%
Income from Operations ($M)$20.4 $16.0 $10.2
Net Income ($M)$8.3 $5.9 $1.6
Diluted EPS ($)$0.08 $0.06 $0.02
Adjusted EBITDA ($M)$34.6 $27.1 $21.5
Adjusted EBITDA Margin %12.2% 10.2% 8.2%
Cash & Equivalents ($M)$53.9 $23.7 $21.5
Inventory ($M)$128.4 $149.6 $130.2

Actual vs S&P Global consensus (Q2 FY26):

MetricActualConsensus# of Est.
Revenue ($M)$262.8 $259.4*5*
EPS ($)$0.02 $0.022*5*

Values with asterisks retrieved from S&P Global.

KPIs and operating items:

KPIQ2 FY25Q1 FY26Q2 FY26
Number of Stores (end of period)657 632 575
Liquidity ($M)—$141.0 $111.7
Share Repurchase ($M)——~$20.0 (approx. 6M shares at $3.50)

Segment breakdown: Not provided in the company’s Q2 materials (Torrid reports consolidated results only) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY25$1.030B–$1.055B $1.015B–$1.030B Lowered
Adjusted EBITDAFY25$95M–$105M $80M–$90M Lowered
Net SalesQ3 FY25—$235M–$245M Introduced
Adjusted EBITDAQ3 FY25—$16M–$21M Introduced
CapexFY25$10M–$15M $10M–$15M Maintained
Store ClosuresFY25Up to 180 Up to 180 (59 closed YTD) Maintained (execution update)
Tariffs (net headwind)FY25Net $20M, to be offset Up to $50M gross, ~$40M mitigated; up to $10M exposure from July tariffs; incremental headwind to margins Increased/clarified
Marketing SpendFY25~5% of sales (implied) ~6% of sales in FY25; +$5M in H2 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY24, Q1 FY25)Current Period (Q2 FY26)Trend
Sub-brands strategyEarly launches (Festy, Nightfall, Retro Chic) exceeding plans; plan to scale; aim 10% of business in 2025 Penetration to more than double in Q3; plan 25–30% of assortment in 2026; higher margins Accelerating scale, positive margin mix
Digital mix & store optimizationDigital approaching ~70%; plan significant closures; retention ~60% Digital approaching 70%; 59 closures YTD; target ~180 in FY25; retention at/above targets; reallocation of savings to marketing Executing; retention robust
Tariffs & sourcingTariff mitigation via sourcing, cost sharing; pause footwear category (neutral EBITDA; -$40–$45M revenue) July tariff increases drive up to $10M additional exposure; gross up to $50M with ~$40M mitigated; total headwind embedded; selective price actions Headwind increased; mitigation ongoing
Marketing & model searchShift marketing spend earlier; influencer programs; model search planned Incremental $5M H2; “A Torrid Summer” influencer activation; digital model search 9/9 kickoff Higher top-of-funnel investment
Category performanceDresses, denim, non-denim bottoms strength; clearance drag moderating Strength in bottoms/dresses/swim; tops (graphics/crop tops) soft; promotions to drive conversion Mixed; tops underperform
Capital allocationLiquidity strong; debt reduction ~$20M repurchase; ABL extended to 2030; plan to use 2026 FCF for buybacks/deleveraging Active buybacks; improved flexibility

Management Commentary

  • “Our five new sub-brands are resonating with the customers and will represent 25% to 30% of our assortment next year… deliver approximately 150 to 250 basis points of adjusted EBITDA margin expansion.” — Lisa Harper, CEO .
  • “Final tariff announcements in July are expected to result in up to $10 million of additional expense exposure… In total, this represents an estimated $15 million headwind to Adjusted EBITDA.” — Lisa Harper, CEO .
  • “We repurchased approximately 6 million shares of our common stock at $3.50 per share, utilizing $20 million of the company’s cash… extended our ABL… to 2030.” — Paula Dempsey, CFO .
  • “We now expect full-year net sales in the range of $1.015 billion to $1.030 billion… adjusted EBITDA in the range of $80 to $90 million… investing an incremental $5 million in marketing in the second half.” — Paula Dempsey, CFO .

Q&A Highlights

  • Sub-brand scaling and mix: Management reconfirmed 25–30% of assortment in 2026 with hundreds of bps higher product margins; potential tests for pop-ups/standalone formats; broaden younger demographic reach .
  • Promotions and conversion: Customer value orientation required more promotions than planned to drive conversion; softness during holiday peaks (Memorial Day/July 4th), but strong semi-annual sale in June .
  • Tariffs and pricing: July tariff changes added incremental headwind; majority mitigated through sourcing, vendor negotiations, and selective pricing; opening price point assortment to be ~25% of apparel in 2026 to improve value offering .
  • Store closures and retention: Retention from closures at/above ~60%; greater migration to online; majority of remaining ~120 closures back-half weighted to align with lease expirations, limiting exit costs .
  • Capital priorities: Maintain flexibility; 2026 free cash to fund repurchases and deleveraging under $100M authorization (~$45M remaining) .

Estimates Context

  • Q2 FY26 results vs consensus (S&P Global): Revenue $262.8M vs $259.4M*, EPS $0.02 vs $0.022*; 5 estimates for each metric* [GetEstimates].
  • Implication: Modest top-line beat offset by mixed margin dynamics and EPS in line-to-slightly below; FY guide reduction likely to drive estimate resets lower on both revenue and EBITDA.

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • In-line quarter operationally with a slight revenue beat*, but pressure in gross margin and tops category resulted in EPS landing just below consensus* and a cut to FY net sales and EBITDA guidance [GetEstimates].
  • 2025 now framed as a transition year: tariff headwinds and higher H2 marketing spending to seed 2026 sub-brand scale and channel realignment benefits; expect EBITDA margin expansion of 150–250 bps beginning in 2026 if execution holds .
  • Watch execution on closures (pace to ~180) and retention (~60%+), as well as digital mix (~70%)—key to preserving revenue while structurally reducing fixed costs .
  • Near-term catalysts: digital model search activation (Sept 9), sub-brand delivery frequency increasing in H2, potential stabilization in tops mix; risks include promotional intensity, continued tariff uncertainty, and macro-sensitive peaks .
  • Balance sheet/liquidity remain adequate ($111.7M), with proactive ABL extension; opportunistic repurchases (~$20M in Q2) underline management’s confidence but constrain near-term cash flexibility .
  • Estimate trajectory: Expect Street to take FY25 EBITDA lower post-guide; 2026 set-up improves if sub-brands reach 25–30% mix and store optimization savings flow through as planned .

Citations: 8-K Q2 FY26 press release and financials ; Q2 FY26 press release ; Q2 FY26 call ; Q1 FY26 materials ; Q4 FY24 materials ; S&P Global Estimates (values marked with asterisks).