Torrid's Bold Pivot: Closing Stores to Fuel Digital Dominance—Is This Retail's Next Big Bet?

Let me tell ya, retail's a brutal business these days. But Torrid (CURV) isn't playing by the old rules. The plus-size fashion giant is making a gutsy move: closing 180 stores this year while doubling down on its digital sales, which now account for a staggering 70% of revenue. Is this a risky gamble or a masterstroke? Let's dig into the details—because the future of retail could hinge on this pivot.

First, the store closures: Torrid isn't just downsizing. It's systematically axing underperforming locations—those averaging just $350K in annual sales, way below the company's average. By mid-2025, 60 stores will be gone, with another 120 by year-end. The goal? To slash costs and redirect resources to where the customers are: online.

But here's the kicker: Torrid claims it'll retain 60% of customers from shuttered stores, thanks to its 95% loyalty program enrollment. Those customers are being funneled to nearby stores or the app, which just hit a revenue high. The plan? Turn physical stores into community hubs and service centers—think outfit consultations, return kiosks, and events that reinforce the Torrid brand.

Now, let's talk digital dominance. With 70% of sales online and climbing, Torrid's app is the real star. It's not just selling clothes—it's offering personalized styling, exclusive sub-brands (like Festi and Belle Isle), and a level of sizing expertise that's hard to beat. The company aims for 75% digital sales by 2026, and with its loyalty program and sub-brand launches, I'm buying that.

The sub-brands are a hidden gem. Brands like Lovesick (launching in August) and StudioLuxe (September) are targeting younger, cost-conscious shoppers while boosting margins. These lines are already reactivating lapsed customers and driving new traffic. By 2026, sub-brands could make up 30% of sales, up from 10% today. That's a recipe for growth—and a moat against rivals.

But here's the math that matters: Torrid's Q1 earnings show EBITDA guidance of $95–$105 million for 2025, with margins set to jump 150–250 basis points in 2026 as closures kick in. Even with $40M in lost revenue from store closings, the company's slashing costs (SG&A dropped to 26.3% of sales) and investing in tech to keep inventory flowing.

Now, the risks: Tariffs are a thorn, costing $20M this year. But Torrid's fighting back with price hikes and vendor deals. And while gross margins dipped due to promotions, the sub-brands' higher prices and digital focus should stabilize that.

Here's my call: Torrid's bet is worth taking. This isn't just a pivot—it's a full-on strategy to own the digital-first, community-driven retail model. If they can keep customers loyal online while pruning underperformers offline, this stock could be a long-term winner.

Investment Takeaway: Torrid's shares are volatile, but the underlying story is solid. With a target price of $25–$30 (up from $18 as I write), this is a name to watch for growth investors. Just keep an eye on execution—those store closures and sub-brand launches need to hit their marks.

Bottom line? In a world where physical stores are dying, Torrid's reinvention might just be the blueprint for survival. Let's see if they can turn this gamble into gold.