Torrid Holdings Q1 2025: Unpacking Key Contradictions in Store Closures, Promotions, and Customer Behavior

Store Closures and Impact on Revenue, Promotional Strategy and Impact on Demand, Inventory Management and Store Optimization, Customer Behavior and Sub-brand Acquisition Strategy, Store Fleet Optimization Strategy are the key contradictions discussed in Torrid Holdings' latest 2025Q1 earnings call.



Strategic Business Initiatives and Product Expansion:
- Torrid Holdings reported sub-brands like Festi, Belle Isle, Nightfall, and Retro Chic exceeding expectations, achieving 2x to 6x original forecasts.
- The growth in sub-brands was driven by their targeted marketing towards distinct lifestyles and broader plus-size consumer segments.

Channel Optimization and Online Demand Growth:
- Online sales demand approached 70% of total sales and is expected to reach low-to-mid 70% penetration in 2026.
- This shift is attributed to customer preference for an online experience and the company's focus on aligning demand channels to support its internal marketplace strategy.

Store Optimization and Closures:
- The company is accelerating store closures, planning for approximately 180 closures in 2025, with minimal impact on net sales due to high customer retention rates post-closure.
- Store closures are part of a strategic shift to align distribution with customer demand and improve profitability, given that 60% of closed stores' customers transfer to other stores or online.

Tariff Mitigation and Sourcing Strategy:
- Torrid Holdings reduced its exposure to China-sourced goods to low-single digits, down from mid-teens, by diversifying sourcing to other countries.
- The strategy includes cost savings, fabric adjustments, and selective pricing adjustments to offset the impact of tariffs, projected at approximately $20 million for the rest of the year.

Marketing and Customer Engagement:
- Marketing investments increased to $15.4 million from $12.8 million, with a focus on customer acquisition and brand building.
- The strategic shift in marketing contributed to positive results in customer acquisition and reactivation momentum on the web, reflecting a customer-centric approach to engage and retain customers.