Torrid Holdings Inc.
06/11/2026 | Press release | Distributed by Public on 06/11/2026 14:06
Quarterly Report for Quarter Ending May 2, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Form 10-Q. This discussion contains forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those described below and in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Form 10-K and in our other filings with the SEC and public communications.
Overview
We are a direct-to-consumer brand in North America dedicated to offering a diverse assortment of stylish apparel, intimates, and accessories skillfully designed for the curvy woman. Specializing in sizes 10 to 30, our primary focus is on providing fashionable, comfortable, and affordable options that meet the unique needs of our customers. Our extensive collection features high quality merchandise, including tops, bottoms, denim, dresses, intimates, activewear, footwear, and accessories. Our products are exclusive to us and each product is meticulously crafted to cater to the needs of the curvy woman, empowering her to love the way she looks and feels. Our collections are artfully curated to suit all aspects of our customers' lives, including casual weekends, work, dressy and special occasions. Understanding the importance of affordability, we aim to keep our prices reasonable without compromising on quality. This allows us to build a meaningful connection with our customers, distinguishing us from other brands that often overlook plus- and mid-size consumers. Our brand experience and product offerings establish us as a differentiated and reliable choice for plus- and mid-size customers, which we believe sets us apart in the market. We strive to be everything our customer needs in her closet, consistently delivering products that make her feel confident and stylish.
In fiscal year 2025, we implemented a retail store optimization strategy to better align our distribution with the demands of our customers who have increasingly demonstrated a preference for our online experience. We believe this strategy will enhance our customer experience, significantly reduce our cost structure, and improve working capital and cash flow generation, allowing us to reinvest more aggressively in customer reactivation and acquisition initiatives to support long-term revenue growth. In connection with this strategy, we closed 151 stores in fiscal year 2025 and 20 stores in the first quarter of fiscal year 2026, and intend to close up to 10 additional stores in the second quarter of fiscal year 2026.
Key Financial and Operating Metrics
We use the following metrics to assess the progress of our business, inform how we allocate our time and capital, and assess the near-term and longer-term performance of our business.
| Three Months Ended | |||||||||||
| May 2, 2026 | May 3, 2025 | ||||||||||
| Number of stores (as of end of period) | 463 | 632 | |||||||||
| Comparable sales | (1.7) | % | (3.5) | % | |||||||
|
Net income (in thousands)
|
$ | 414 | $ | 5,940 | |||||||
|
Adjusted EBITDA(A) (in thousands)
|
$ | 17,639 | $ | 27,128 | |||||||
(A)Refer to "Results of Operations" for a reconciliation of net income to Adjusted EBITDA.
Comparable Sales. We define comparable sales for any given period as the sales of our e-Commerce operations and stores that we have included in our comparable sales base during that period. We include a new store in our comparable sales base after it has been open for 15 full fiscal months. If a store is closed during a fiscal year, it is only included in the computation of comparable sales for the full fiscal months in which it was open. We also determine when certain store remodels and relocations are reintegrated into our comparable sales base. Partial fiscal months are excluded from the computation of comparable sales. We apply current year foreign currency exchange rates to both current year and prior year comparable sales to remove the impact of foreign currency fluctuation and achieve a consistent basis for comparison. Comparable sales allow us to evaluate how our unified commerce business is performing exclusive of the effects of non-comparable sales and new store openings.
Torrid Holdings Inc. | Q1 2026 Form 10-Q |
Number of Stores. Store count reflects all stores open at the end of a reporting period.
Adjusted EBITDA. Adjusted EBITDA is a supplemental measure of our operating performance that is neither required by, nor presented in accordance with GAAP and our calculation thereof may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA represents GAAP net income (loss) plus interest expense less interest income, net of other (income) expense, plus provision for/less (benefit from) income taxes, depreciation and amortization ("EBITDA"), and share-based compensation, noncash deductions and charges and other expenses. We believe Adjusted EBITDA facilitates operating performance comparisons from period to period by isolating the effects of certain items that vary from period to period without any correlation to ongoing operating performance. We also use Adjusted EBITDA as one of the primary methods for planning and forecasting the overall expected performance of our business and for evaluating on a quarterly and annual basis actual results against such expectations. Further, we recognize Adjusted EBITDA as a commonly used measure in determining business value and, as such, use it internally to report and analyze our results and as a benchmark to determine certain non-equity incentive payments made to executives.
Adjusted EBITDA has limitations as an analytical tool. This measure is not a measurement of our financial performance under GAAP and should not be considered in isolation or as an alternative to or substitute for net income, income from operations or any other performance measures determined in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Among other limitations, Adjusted EBITDA does not reflect:
•interest expense;
•interest income, net of other (income) expense;
•provision for (benefit from) income taxes;
•depreciation and amortization;
•share-based compensation;
•noncash deductions and charges; and
•other expenses.
Factors Affecting Our Performance
We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and elsewhere in this Form 10-Q and in the section titled "Risk Factors" in our 2025 Form 10-K.
Customer Acquisition and Retention. Our success is impacted not only by efficient and profitable customer acquisition, but also by our ability to retain customers and encourage repeat purchases. It is important to maintain reasonable costs for these marketing efforts relative to the net sales and profit we expect to derive from customers. Failure to effectively attract customers on a cost-efficient basis would adversely impact our profitability and operating results. Requirements for consumer disclosures regarding privacy practices and application tracking transparency framework that requires opt-in consent for certain types of tracking has increased the difficulty and cost of acquiring and retaining customers. These changes may adversely affect our results of operations.
Customer Migration from Single to Omni-channel. We have a history of converting customers from single-channel customers to omni-channel customers, defined as active customers who shopped both online and in-store within the last 12 months. Customers that shop across multiple channels purchase from us more frequently and spend approximately 3.5 times more per year than our single-channel customer.
Torrid Holdings Inc. | Q1 2026 Form 10-Q |
Overall Economic Trends. Our results of operations during any given period are often impacted by the overall economic conditions in the markets in which we operate. Consumer purchases of clothing generally remain constant or may increase during stable economic periods and decline during recessionary periods, inflationary periods and other periods when disposable income is adversely affected. Recent historic high rates of inflation have led to a softening of consumer demand. We have encountered inflation on our wages, transportation and product costs, and a material increase in these costs without any meaningful offsetting price increases may reduce our future profits. Government actions in various countries relating to tariffs, particularly countries in the East and Southeast Asia region, have introduced significant uncertainty to the current U.S. trade environment resulting in increased cost of goods sold and impacted gross margins. Beginning in early 2025, the U.S. government announced a series of broad import tariff increases, including new and expanded duties on goods imported from major sourcing countries that collectively supply a significant portion of our imports. The tariff environment has remained highly fluid, with executive orders, temporary pauses, partial reversals, and ongoing negotiations between the U.S. and its trading partners creating continuing uncertainty. In early 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA") and other laws to collect certain tariffs. Following that ruling, the U.S. Customs and Border Protection was directed to process refunds of the IEEPA tariffs which remain subject to ongoing litigation. On April 20, 2026, we submitted a refund application seeking the first phase of reimbursement of certain previously paid IEEPA tariff amounts totaling approximately $11.4 million. The degree of our exposure is dependent on (among other things) the countries in which the merchandise is manufactured, rates imposed, timing of the tariffs and potential refunds of such tariffs. Higher tariffs may adversely impact our results.
Demographic Changes. The growth of our business is impacted, in part, by the size of the plus- and mid-size population. Slower or negative growth in this demographic, specific to certain geographic markets, income levels, the increasing use of GLP-1 medications or overall, could adversely affect our results of operations.
Growth in Brand Awareness. We intend to continue investing in our brand, with a specific focus on growing brand awareness, customer engagement, and conversion through targeted investments in performance and brand marketing. We have made significant historical investments to strengthen the Torrid brand through our marketing efforts, brand partnerships, events and expansion of our social media presence. If we fail to cost-effectively promote our brand or convert impressions into new customers, our net sales growth and profitability may be adversely affected.
Inventory Management. Our strategy is built around a base of core products that provide our customer with year-round style. At the same time, we introduce new lines of merchandise approximately 16 times per year, thus providing a consistent flow of fresh merchandise to keep our customer engaged, encourage repeat business and attract new customers. We employ a data-driven approach to design and product development, proactively and quickly incorporating sales and operational performance information alongside customer feedback from thousands of product reviews. We engage in ongoing dialogue with customers through social media and customer surveys. Although we intend to continue to tightly manage our inventory levels, shifts in these levels may result in fluctuations in the amount of regular price sales, markdowns, and merchandise mix, as well as gross margin.
Investments. We have invested significantly to strengthen our business, including augmenting leadership across our organization and enhancing our infrastructure and technology in order to realize growth. We anticipate that a significant portion of our operating expenses will be attributable to our spending on advertising and marketing and hiring additional personnel primarily in marketing, product design and development, merchandising, technology, operations, customer service and general and administrative functions. We are strategically working to rebalance our store footprint, aiming for an optimal split among malls, outdoor centers and online. We will also continue to make investments to improve the customer experience both in-store and online. We believe that such investments will increase the number and loyalty of our customers and, as a result, yield positive financial performance in the long term.
Seasonality. While seasonality frequently impacts businesses in the retail sector, our business is generally not seasonal. Accordingly, our net sales do not fluctuate as significantly as those of other brands and retailers from quarter to quarter and any modest seasonal effect does not significantly change the underlying trends in our business. Additionally, we do not generate an outsized share of our net sales or Adjusted EBITDA during the holiday season. Typically, our Adjusted EBITDA generation is strongest in the first half of the year as we benefit from more favorable product margins, lower advertising and lower shipping expenses relative to the second half of the year. The lack of net sales seasonality provides structural cost advantages relative to peers, including reduced staffing cyclicality and seasonal distribution capacity needs.
Torrid Holdings Inc. | Q1 2026 Form 10-Q |
Impact of Infectious Disease Outbreaks. Infectious disease outbreaks may cause general business disruption worldwide which could directly or indirectly impact our business, results of operations, cash flows, and financial condition. This could have a negative impact on our business including, but not limited to, closure requirements with respect to some or all of our physical locations, changes in consumer behavior, difficulties attracting and retaining employees and supply chain disruptions.
Components of Our Results of Operations
Net Sales. Net sales reflects our revenues from the sale of our merchandise, shipping and handling revenue received from e-Commerce sales, royalties, profit-sharing and marketing and promotional funds from the use of private label credit cards ("PLCC Funds"), and gift card breakage income, less returns, discounts and loyalty points/awards. Revenue from our stores is recognized at the time of sale and revenue from our e-Commerce channel is recognized upon shipment of the merchandise to the customer; except in cases where the merchandise is shipped to a store and revenue is recognized when the customer retrieves the merchandise from the store. Net sales are impacted by the size of our active customer base, product assortment and availability, marketing and promotional activities and the spending habits of our customers. Net sales are also impacted by the migration of single-channel customers (i.e., customers shopping only in-store or online) to omni-channel customers (i.e., customers shopping both in-store and online), who on average spend significantly more than single-channel customers in a given year.
Gross Profit. Gross profit is equal to our net sales less cost of goods sold. Our cost of goods sold includes merchandise costs, freight, inventory shrinkage, payroll expenses associated with the merchandising department, distribution center expenses and store occupancy expenses, including rent, common area maintenance charges, real estate taxes and depreciation. Merchandising payroll costs and store occupancy costs included within cost of goods sold are largely fixed and do not necessarily increase as volume increases. We review our inventory levels on an ongoing basis in order to identify slow-moving merchandise and generally use markdowns to clear that merchandise. The timing and level of markdowns are driven primarily by customer acceptance of our merchandise. The primary drivers of our merchandise costs include the raw materials, labor in the countries where we source our merchandise, customs duties, and logistics costs.
Selling, General and Administrative Expenses. Selling, general and administrative expenses include all operating costs not included in cost of goods sold or marketing expenses.
Marketing Expenses. We continue to make investments in marketing in an effort to grow and retain our active customer base and increase our brand awareness. Marketing expenses consist primarily of (i) targeted online performance marketing costs, such as retargeting, paid search/product listing advertising, and social media advertisements, (ii) store and brand marketing, public relations and photographic production designed to acquire, retain and remain connected to customers and (iii) payroll and benefits expenses associated with our marketing team.
Interest Expense. Interest expense consists primarily of interest expense and other fees associated with our ABL Facility (as defined below) and Amended Term Loan Credit Agreement (as defined below).
Provision for Income Taxes. Our provision for income taxes consists of an estimate of federal and state income taxes based on enacted federal and state tax rates, as adjusted for allowable credits, deductions and uncertain tax positions.
Torrid Holdings Inc. | Q1 2026 Form 10-Q |
Results of Operations
Our fiscal year ends on the Saturday nearest to January 31 and each fiscal year is generally comprised of four 13-week quarters (although in years with 53 weeks, the fourth quarter is comprised of 14 weeks). Fiscal years 2026 and 2025 are 52-week years. Fiscal years are identified according to the calendar year in which they begin. For example, references to "fiscal year 2026" or similar references refer to the fiscal year ending January 30, 2027. References to the first quarter of fiscal years 2026 and 2025 and to the three-month periods ended May 2, 2026 and May 3, 2025, respectively, refer to the 13-week periods then ended.
Three Months Ended May 2, 2026 Compared to Three Months Ended May 3, 2025
The following table summarizes our consolidated results of operations for the periods indicated (dollars in thousands):
| Three Months Ended | |||||||||||||||||||||||
| May 2, 2026 |
% of Net Sales |
May 3, 2025 |
% of Net Sales |
||||||||||||||||||||
|
Net sales
|
$ | 245,800 | 100.0 | % | $ | 265,965 | 100.0 | % | |||||||||||||||
| Cost of goods sold | 158,982 | 64.7 | 164,563 | 61.9 | |||||||||||||||||||
| Gross profit | 86,818 | 35.3 | 101,402 | 38.1 | |||||||||||||||||||
| Selling, general and administrative expenses | 63,713 | 25.9 | 70,016 | 26.3 | |||||||||||||||||||
| Marketing expenses | 14,542 | 5.9 | 15,359 | 5.8 | |||||||||||||||||||
| Income from operations | 8,563 | 3.5 | 16,027 | 6.0 | |||||||||||||||||||
| Interest expense | 7,719 | 3.1 | 8,161 | 3.1 | |||||||||||||||||||
| Interest income, net of other (income) expense | (27) | 0.0 | (706) | (0.3) | |||||||||||||||||||
| Income before income taxes | 871 | 0.4 | 8,572 | 3.2 | |||||||||||||||||||
| Provision for income taxes | 457 | 0.2 | 2,632 | 1.0 | |||||||||||||||||||
| Net income | $ | 414 | 0.2 | % | $ | 5,940 | 2.2 | % | |||||||||||||||
The following table provides a reconciliation of net income to Adjusted EBITDA for the periods presented (in thousands):
| Three Months Ended | |||||||||||
| May 2, 2026 | May 3, 2025 | ||||||||||
| Net income | $ | 414 | $ | 5,940 | |||||||
| Interest expense | 7,719 | 8,161 | |||||||||
| Interest income, net of other (income) expense | (27) | (706) | |||||||||
| Provision for income taxes | 457 | 2,632 | |||||||||
|
Depreciation and amortization(A)
|
6,343 | 9,394 | |||||||||
|
Share-based compensation(B)
|
2,019 | 1,469 | |||||||||
|
Noncash deductions and charges(C)
|
44 | 52 | |||||||||
|
Other expenses(D)
|
670 | 186 | |||||||||
| Adjusted EBITDA | $ | 17,639 | $ | 27,128 | |||||||
(A)Depreciation and amortization excludes amortization of debt issuance costs and original issue discount that are reflected in interest expense.
(B)During the three months ended May 2, 2026 and May 3, 2025, share-based compensation includes $0.8 million and $0.2 million, respectively, for awards that will be settled in cash as they are accounted for similar to awards settled in shares in accordance with ASC 718, Compensation-Stock Compensation.
(C)Noncash deductions and charges includes noncash losses on property and equipment disposals and the net impact of noncash rent expense.
(D)Other expenses include severance costs for certain key management positions, certain transaction and litigation fees, and the reimbursement of certain management expenses, primarily for travel, incurred by Sycamore on our behalf, which are not considered to be part of our core business.
Torrid Holdings Inc. | Q1 2026 Form 10-Q |
Net Sales
Net sales decreased $20.2 million, or 7.6%, to $245.8 million for the three months ended May 2, 2026, from $266.0 million for the three months ended May 3, 2025. This decrease was primarily driven by decreases in sales transactions and sales transaction values primarily due to the implementation of our retail store optimization strategy. The total number of stores we operate decreased by 169 stores, or 26.7%, to 463 stores as of May 2, 2026, from 632 stores as of May 3, 2025, primarily due to the implementation of our retail store optimization strategy.
Gross Profit
Gross profit for the three months ended May 2, 2026 decreased $14.6 million, or 14.4%, to $86.8 million, from $101.4 million for the three months ended May 3, 2025. Gross profit as a percentage of net sales decreased 2.8% to 35.3% for the three months ended May 2, 2026 from 38.1% for the three months ended May 3, 2025. The decrease in gross profit was primarily driven by a decrease in net sales and increased promotional activity, partially offset by decreased store occupancy costs, store depreciation expense and distribution center expenses. The decrease in gross profit as a percentage of net sales was primarily driven by higher costs from tariffs imposed under IEEPA and increased promotional activity, partially offset by decreased store occupancy costs, store depreciation expense and distribution center expenses.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended May 2, 2026 decreased $6.3 million, or 9.0%, to $63.7 million, from $70.0 million for the three months ended May 3, 2025. The decrease was primarily due to a $5.4 million decrease in store and e-Commerce payroll costs, a $1.0 million decrease in headquarters general and administrative expenses, and a $0.4 million decrease in performance bonuses, partially offset by a $0.6 million increase in share-based compensation. Selling, general and administrative expenses as a percentage of net sales decreased 0.4% to 25.9% for the three months ended May 2, 2026 from 26.3% for the three months ended May 3, 2025. The decrease was primarily driven by decreased store and e-Commerce payroll costs, partially offset by increased share-based compensation and the deleverage of headquarters general and administrative expenses and other store operating costs as a result of lower net sales.
Marketing Expenses
Marketing expenses for the three months ended May 2, 2026 decreased $0.8 million, or 5.3%, to $14.5 million, from $15.4 million for the three months ended May 3, 2025. Marketing expenses as a percentage of net sales increased 0.1% to 5.9% for the three months ended May 2, 2026 from 5.8% for the three months ended May 3, 2025. The decrease in marketing expenses was primarily driven by decreases in social media and retargeting, partially offset by increased spend on photographic production, direct mail and models. The increase in marketing expenses as a percentage of net sales was driven by the deleverage of marketing expenses as a result of lower net sales.
Interest Expense
Interest expense was $7.7 million for the three months ended May 2, 2026, compared to $8.2 million for the three months ended May 3, 2025. The decrease was primarily due to a decrease in the variable interest rate and a lower balance on the Amended Term Loan Credit Agreement resulting from principal payments, partially offset by an increase resulting from increased borrowing under the ABL Facility.
Provision for Income Taxes
The provision for income taxes was $0.5 million for the three months ended May 2, 2026 and $2.6 million for the three months ended May 3, 2025. Our effective tax rate was 52.5% for the three months ended May 2, 2026 and 30.7% for the three months ended May 3, 2025. The increase in the effective tax rate for the three months ended May 2, 2026 as compared to the three months ended May 3, 2025 was primarily due to a decrease in the amount of non-deductible compensation for covered employees relative to income before income taxes for the three months ended May 2, 2026.
Torrid Holdings Inc. | Q1 2026 Form 10-Q |
Liquidity and Capital Resources
Cash Sources
Our business relies on cash flows from operations as our primary source of liquidity. We do, however, have access to additional liquidity, if needed, through borrowings under our ABL Facility.
As of May 2, 2026, we had $22.8 million in cash and cash equivalents and $301.2 million of outstanding indebtedness, net of unamortized original issue discount and financing costs, of which $32.8 million consists of borrowings on our ABL Facility, which is accruing interest at an underlying variable rate of 7%, and $268.4 million consists of term loans under the Amended Term Loan Credit Agreement, which is accruing interest at an underlying variable rate of 9%. As of May 2, 2026, we had access to $77.2 million in additional liquidity from our ABL Facility, net of outstanding letters of credit.
ABL Facility
In May 2015, we entered into a credit agreement for a senior secured asset-based revolving credit facility (as amended and restated in October 2017 and as amended in June 2019, September 2019, June 2021, April 2023, and August 2025) with Bank of America, N.A., as agent, and the lenders party thereto (the "ABL Facility"). Under the ABL Facility, the aggregate commitments available are $150.0 million (subject to a borrowing base) and we have the right to request additional commitments up to $50.0 million plus the aggregate principal amount of any permanent principal reductions we may take (subject to customary conditions precedent). In August 2025, the maturity date of the principal amount of the outstanding loans was extended from June 14, 2026 to the earlier of (i) August 1, 2030 and (ii) the date that is 91 days prior to the maturity of any material indebtedness (as defined in the ABL Facility). The ABL Facility currently would mature 91 days prior to June 14, 2028, the maturity date of the Amended Term Loan Credit Agreement.
The ABL Facility requires us to maintain a fixed charge coverage ratio (as defined by the ABL Facility) of at least 1.00 to 1.00 when a covenant compliance event occurs. A covenant compliance event occurs if we fail to maintain certain specified availability (as defined by the ABL Facility) of at least the greater of 10% of the loan cap, as defined by the ABL Facility, and $7.0 million. If we fail to maintain the fixed charge coverage ratio defined by the ABL Facility, the lenders may declare the unpaid principal amount of all outstanding loans and all interest accrued and unpaid thereon to be immediately due and payable, among other remedies available to the lenders. The ABL Facility contains a number of other covenants that, among other things and subject to certain exceptions, will restrict our ability and the ability of our subsidiaries to: incur additional indebtedness; pay dividends on our capital stock or redeem, repurchase or retire our capital stock or our other indebtedness; make investments, loans and acquisitions; engage in transactions with our affiliates; sell assets, including capital stock of our subsidiaries; alter the business we conduct; consolidate or merge; and incur liens.
As of May 2, 2026, we did not trigger a covenant compliance event and were compliant with our covenants under the ABL Facility.
Amended Term Loan Credit Agreement
In June 2021, we entered into a term loan credit agreement (as amended in May 2023) with Bank of America, N.A., as agent, and the lenders party thereto (the "Amended Term Loan Credit Agreement"). The Amended Term Loan Credit Agreement provides for term loans in an initial aggregate amount of $350.0 million and has a maturity date of June 14, 2028. The Amended Term Loan Credit Agreement is subject to fixed mandatory quarterly principal amortization payments until the maturity date of approximately $4.4 million.
The Amended Term Loan Credit Agreement also contains a number of covenants that, among other things and subject to certain exceptions, will restrict our ability and the ability of our subsidiaries to: create, incur or assume liens on our assets or property; incur additional indebtedness; issue preferred or disqualified stock; consolidate or merge; sell assets; pay dividends or make distributions, make investments, or engage in transactions with our affiliates.
As of May 2, 2026, we were compliant with our covenants under the Amended Term Loan Credit Agreement.
Torrid Holdings Inc. | Q1 2026 Form 10-Q |
Cash Uses
Our primary cash needs are for merchandise inventories, payroll, rent for our stores, headquarters and distribution center, capital expenditures associated with opening new stores and updating existing stores, logistics and information technology. We also need cash to fund our interest and principal payments on the Amended Term Loan Credit Agreement and ABL Facility and make discretionary repurchases of our common stock. The most significant components of our working capital are cash and cash equivalents, merchandise inventories, prepaid expenses and other current assets, accounts payable, accrued and other current liabilities and operating lease liabilities. We believe that cash generated from operations and the availability of borrowings under our ABL Facility or other financing arrangements will be sufficient to meet working capital requirements and anticipated capital expenditures for at least the next 12 months. There can be no assurance, however, that our business will generate sufficient cash flows from operations or that future borrowings will be available under our ABL Facility or otherwise to enable us to service our indebtedness, or to make capital expenditures in the future. Our future operating performance and our ability to service or extend our indebtedness will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.
Outside of any routine transactions made in the ordinary course of business, there have been no significant changes to our material cash requirements as disclosed in our 2025 Form 10-K.
Cash Flow Analysis
A summary of operating, investing and financing activities are shown in the following table (in thousands):
| Three Months Ended | |||||||||||
| May 2, 2026 | May 3, 2025 | ||||||||||
| Net cash provided by (used in) operating activities | $ | 11,179 | $ | (18,015) | |||||||
| Net cash used in investing activities | $ | (5,484) | $ | (2,547) | |||||||
| Net cash used in financing activities | $ | (2,899) | $ | (4,674) | |||||||
Net Cash Provided By/Used In Operating Activities
Operating activities consist primarily of net income adjusted for noncash items, including depreciation and amortization and share-based compensation, the effect of working capital changes and taxes paid.
Net cash provided by operating activities during the three months ended May 2, 2026 was $11.2 million compared to net cash used of $18.0 million during the three months ended May 3, 2025. The increase in net cash provided by operating activities during the three months ended May 2, 2026 was primarily as a result of an increase in accounts payable and a lower decrease in accrued expenses and other current liabilities, partially offset by an increase in inventory and a decrease in net income.
Net Cash Used In Investing Activities
Typical investing activities consist primarily of capital expenditures for growth (new store openings, relocations and major remodels), store maintenance (minor store remodels and investments in store fixtures), and infrastructure to support the business related primarily to information technology, our headquarters facility and our West Jefferson, Ohio distribution center.
Net cash used in investing activities during the three months ended May 2, 2026 was $5.5 million compared to $2.5 million during the three months ended May 3, 2025. The increase in net cash used in investing activities was primarily a result of an increase in capital expenditures due to an increased investment in store fixtures and equipment during the three months ended May 2, 2026, compared to the three months ended May 3, 2025.
Net Cash Used In Financing Activities
Financing activities consist primarily of (i) borrowings and repayments related to our ABL Facility, (ii) borrowings and repayments related to the Amended Term Loan Credit Agreement and (iii) repurchases and retirement of our common stock.
Net cash used in financing activities during the three months ended May 2, 2026 was $2.9 million compared to $4.7 million during the three months ended May 3, 2025. The decrease in net cash used in financing activities is primarily due to an increase in net borrowings related to the ABL Facility.
Torrid Holdings Inc. | Q1 2026 Form 10-Q |
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates as discussed in our 2025 Form 10-K.
Recently Issued Accounting Pronouncements
Refer to "Note 2-Accounting Standards" in our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for information regarding recently issued accounting pronouncements.
Torrid Holdings Inc. published this content on June 11, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on June 11, 2026 at 20:06 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]