Torrid Holdings Inc.

Previous wording

We have 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. We closed 59 stores through the end of the second quarter of fiscal year 2025 and intend to accelerate our store closures throughout the remainder of fiscal year 2025 to target as many as 120 additional store closures. A majority of our store leases are up for renewal in fiscal year 2025.

Current wording

We have 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. We closed 74 stores through the end of the third quarter of fiscal year 2025 and intend to accelerate our store closures throughout the remainder of fiscal year 2025 to target approximately 100 additional store closures. A majority of our store leases are up for renewal in fiscal year 2025.

Previous wording

(A)Comparable sales for the three- and six-month periods ended August 3, 2024 compare sales for the 13- and 26-week periods ended August 3, 2024, respectively, with sales for the 13- and 26-week periods ended August 5, 2023.

Current wording

(A)Comparable sales for the three- and nine-month periods ended November 2, 2024 compare sales for the 13- and 39-week periods ended November 2, 2024, respectively, with sales for the 13- and 39-week periods ended November 4, 2023.

Previous wording

(B)Refer to “Results of Operations” for a reconciliation of net income to Adjusted EBITDA.

Current wording

(B)Refer to “Results of Operations” for a reconciliation of net (loss) income to Adjusted EBITDA.

Previous wording

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. Comparable sales for the three- and six-month periods ended August 3, 2024 compare sales for the 13- and 26-week periods ended August 3, 2024, respectively, with sales for the 13- and 26-week periods ended August 5, 2023. 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.

Current wording

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. Comparable sales for the three- and nine-month periods ended November 2, 2024 compare sales for the 13- and 39-week periods ended November 2, 2024, respectively, with sales for the 13- and 39-week periods ended November 4, 2023. 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.

Previous wording

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 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.

Current wording

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.

Previous wording

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.

Current wording

Provision for (Benefit from) Income Taxes. Our provision for (benefit from) 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.

Previous wording

The following table provides a reconciliation of net income to Adjusted EBITDA for the periods presented (in thousands):

Current wording

The following table provides a reconciliation of net loss to Adjusted EBITDA for the periods presented (in thousands):

Previous wording

(B)Share-based compensation for awards that will be settled in cash was not material during the three months ended August 2, 2025 and $1.1 million during the three months ended August 3, 2024. These awards are accounted for similar to awards settled in shares in accordance with ASC 718, Compensation—Stock Compensation.

Current wording

(B)During the three months ended November 1, 2025 and November 2, 2024, share-based compensation includes benefits of $0.1 million and $0.3 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.

Previous wording

(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.

Current wording

(D)Other expenses include severance costs for certain key management positions, certain transaction and litigation fees (including certain settlement costs), 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.

Previous wording

Net sales decreased $21.8 million, or 7.7%, to $262.8 million for the three months ended August 2, 2025, from $284.6 million for the three months ended August 3, 2024. This decrease was primarily driven by a decrease in sales transaction values. The total number of stores we operate decreased by 82 stores, or 12.5%, to 575 stores as of August 2, 2025, from 657 stores as of August 3, 2024.

Current wording

Net sales decreased $28.6 million, or 10.8%, to $235.2 million for the three months ended November 1, 2025, from $263.8 million for the three months ended November 2, 2024. This decrease was primarily driven by a decrease in sales transactions. The total number of stores we operate decreased by 95 stores, or 14.5%, to 560 stores as of November 1, 2025, from 655 stores as of November 2, 2024.

Previous wording

Gross profit for the six months ended August 2, 2025 decreased $30.8 million, or 13.6%, to $194.9 million, from $225.7 million for the six months ended August 3, 2024. Gross profit as a percentage of net sales decreased 3.1% to 36.9% for the six months ended August 2, 2025 from 40.0% for the six months ended August 3, 2024. The decrease in gross profit was primarily driven by a decrease in net sales. The decrease in gross profit as a percentage of net sales was primarily driven by a decrease in net sales, increased merchandising payroll costs and store depreciation, and the deleverage of store occupancy costs as a result of lower net sales.

Current wording

Gross profit for the three months ended November 1, 2025 decreased $13.0 million, or 13.6%, to $82.2 million, from $95.2 million for the three months ended November 2, 2024. Gross profit as a percentage of net sales decreased 1.2% to 34.9% for the three months ended November 1, 2025 from 36.1% for the three months ended November 2, 2024. The decrease in gross profit was primarily driven by a decrease in net sales partially offset by a decrease in store occupancy costs. The decrease in gross profit as a percentage of net sales was primarily driven by a decrease in net sales, increased merchandising payroll costs, and the deleverage of store depreciation expense and store occupancy costs as a result of lower net sales.

Previous wording

Selling, general and administrative expenses for the three months ended August 2, 2025 decreased $6.3 million, or 8.2%, to $70.5 million, from $76.8 million for the three months ended August 3, 2024. The decrease was primarily due to a $2.4 million decrease in store and e-Commerce payroll costs, a $2.2 million decrease in other store operating costs, a $0.8 million decrease in headquarters general and administrative expenses, and a $0.8 million decrease in share-based compensation. Selling, general and administrative expenses as a percentage of net sales decreased 0.2% to 26.8% for the three months ended August 2, 2025 from 27.0% for the three months ended August 3, 2024. The decrease was primarily driven by decreased other store operating costs and share-based compensation, partially offset by the deleverage of headquarters general and administrative expenses as a result of lower net sales.

Current wording

Selling, general and administrative expenses for the three months ended November 1, 2025 decreased $8.6 million, or 11.5%, to $66.3 million, from $74.9 million for the three months ended November 2, 2024. The decrease was primarily due to a $4.5 million decrease in store and e-Commerce payroll costs, a $2.6 million decrease in performance bonuses, and a $1.5 million decrease in headquarters general and administrative expenses. Selling, general and administrative expenses as a percentage of net sales decreased 0.3% to 28.2% for the three months ended November 1, 2025 from 28.5% for the three months ended November 2, 2024. The decrease was primarily driven by decreased performance bonuses and store and e-Commerce payroll costs, partially offset by the deleverage of headquarters general and administrative expenses and other store operating costs as a result of lower net sales.

Previous wording

Marketing expenses for the three months ended August 2, 2025 decreased $0.2 million, or 1.5%, to $12.8 million, from $13.0 million for the three months ended August 3, 2024. Marketing expenses as a percentage of net sales increased 0.3% to 4.9% during the three months ended August 2, 2025 from 4.6% during the three months ended August 3, 2024. The decrease in marketing expenses was primarily driven by decreased spend on our model search campaign and SMS/affiliate marketing, partially offset by increased social media spend, retargeting, and photographic production. The increase in marketing expenses as a percentage of net sales was due to lower net sales.

Current wording

Marketing expenses for the three months ended November 1, 2025 increased $2.7 million, or 20.4%, to $15.7 million, from $13.1 million for the three months ended November 2, 2024. Marketing expenses as a percentage of net sales increased 1.8% to 6.7% during the three months ended November 1, 2025 from 4.9% during the three months ended November 2, 2024. The increase in both marketing expenses and marketing expenses as a percentage of net sales was primarily driven by increased spend on our model search campaign, social media, retargeting, and photographic production.

Previous wording

Interest expense was $8.1 million for the three months ended August 2, 2025, compared to $9.1 million for the three months ended August 3, 2024. The decrease was primarily due to a lower balance on the Amended Term Loan Credit Agreement resulting from principal payments.

Current wording

Interest expense was $7.9 million for the three months ended November 1, 2025, compared to $8.8 million for the three months ended November 2, 2024. The decrease was primarily due to a lower balance on the Amended Term Loan Credit Agreement resulting from principal payments.

Previous wording

The provision for income taxes was $0.5 million and $3.1 million for the three months ended August 2, 2025 and August 3, 2024, respectively. Our effective tax rate was 23.7% for the three months ended August 2, 2025 and 26.9% for the three months ended August 3, 2024. The decrease in the effective tax rate for the three months ended August 2, 2025 as compared to the three months ended August 3, 2024 was primarily due to a decrease in the amount of non-deductible compensation for covered employees for the three months ended August 2, 2025.

Current wording

The benefit from income taxes was $1.5 million for the three months ended November 1, 2025 and it was not material for the three months ended November 2, 2024. Our effective tax rate was 19.3% for the three months ended November 1, 2025 and 2.1% for the three months ended November 2, 2024. The increase in the effective tax rate for the three months ended November 1, 2025 as compared to the three months ended November 2, 2024 was primarily due to an increase in the amount of non-deductible compensation for covered employees and an increase in loss before income taxes for the three months ended November 1, 2025.

Previous wording

(B)During the six months ended August 2, 2025 and August 3, 2024, share-based compensation includes $0.2 million and $1.4 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.

Current wording

(B)During the nine months ended November 1, 2025 and November 2, 2024, share-based compensation includes $0.1 million and $1.2 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.

Previous wording

(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.

Current wording

(D)Other expenses include severance costs for certain key management positions, certain transaction and litigation fees (including certain settlement costs), 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.

Previous wording

Net sales decreased $35.6 million, or 6.3%, to $528.8 million for the six months ended August 2, 2025, from $564.4 million for the six months ended August 3, 2024. This decrease was primarily driven by a decrease in sales transaction values. The total number of stores we operate decreased by 82 stores, or 12.5%, to 575 stores as of August 2, 2025, from 657 stores as of August 3, 2024.

Current wording

Net sales decreased $64.3 million, or 7.8%, to $763.9 million for the nine months ended November 1, 2025, from $828.2 million for the nine months ended November 2, 2024. This decrease was primarily driven by a decrease in sales transactions and sales transaction values. The total number of stores we operate decreased by 95 stores, or 14.5%, to 560 stores as of November 1, 2025, from 655 stores as of November 2, 2024.

Previous wording

Gross profit for the three months ended August 2, 2025 decreased $16.8 million, or 15.2%, to $93.5 million, from $110.3 million for the three months ended August 3, 2024. Gross profit as a percentage of net sales decreased 3.1% to 35.6% for the three months ended August 2, 2025 from 38.7% for the three months ended August 3, 2024. The decrease in gross profit was primarily driven by a decrease in net sales. The decrease in gross profit as a percentage of net sales was primarily driven by a decrease in net sales, increased store depreciation and merchandising payroll costs, and the deleverage of store occupancy costs as a result of lower net sales.

Current wording

Gross profit for the nine months ended November 1, 2025 decreased $43.8 million, or 13.6%, to $277.1 million, from $320.8 million for the nine months ended November 2, 2024. Gross profit as a percentage of net sales decreased 2.4% to 36.3% for the nine months ended November 1, 2025 from 38.7% for the nine months ended November 2, 2024. The decrease in gross profit was primarily driven by a decrease in net sales. The decrease in gross profit as a percentage of net sales was primarily driven by a decrease in net sales, increased merchandising payroll costs and store depreciation, and the deleverage of store occupancy costs as a result of lower net sales.

Previous wording

Selling, general and administrative expenses for the six months ended August 2, 2025 decreased $12.8 million, or 8.3%, to $140.5 million, from $153.3 million for the six months ended August 3, 2024. The decrease was primarily due to a $4.9 million decrease in store and e-Commerce payroll costs, a $3.3 million decrease in other store operating costs, a $2.2 million decrease in headquarters general and administrative expenses, a $1.0 million decrease in share-based compensation and a $0.8 million decrease in performance bonuses. Selling, general and administrative expenses as a percentage of net sales decreased 0.6% to 26.6% for the six months ended August 2, 2025 from 27.2% for the six months ended August 3, 2024. The decrease was primarily driven by decreased store and e-Commerce payroll costs, other store operating costs and share-based compensation, partially offset by the deleverage of headquarters general and administrative expenses as a result of lower net sales.

Current wording

Selling, general and administrative expenses for the nine months ended November 1, 2025 decreased $21.4 million, or 9.4%, to $206.8 million, from $228.2 million for the nine months ended November 2, 2024. The decrease was primarily due to a $9.4 million decrease in store and e-Commerce payroll costs, a $4.1 million decrease in other store operating costs, a $3.7 million decrease in headquarters general and administrative expenses and a $3.4 million decrease in performance bonuses. Selling, general and administrative expenses as a percentage of net sales decreased 0.4% to 27.1% for the nine months ended November 1, 2025 from 27.5% for the nine months ended November 2, 2024. The decrease was primarily driven by decreased store and e-Commerce payroll costs, other store operating costs and performance bonuses, partially offset by the deleverage of headquarters general and administrative expenses as a result of lower net sales.

Previous wording

Marketing expenses for the six months ended August 2, 2025 increased $2.4 million, or 9.1%, to $28.2 million, from $25.8 million for the six months ended August 3, 2024. Marketing expenses as a percentage of net sales increased 0.7% to 5.3% during the six months ended August 2, 2025 from 4.6% during the six months ended August 3, 2024. The increase in both marketing expenses and marketing expenses as a percentage of net sales was due to increased social media spend, retargeting, photographic production, and payroll expenses associated with our marketing team, partially offset by decreased spend in our model search campaign.

Current wording

Marketing expenses for the nine months ended November 1, 2025 increased $5.0 million, or 12.9%, to $43.9 million, from $38.9 million for the nine months ended November 2, 2024. Marketing expenses as a percentage of net sales increased 1.0% to 5.7% during the nine months ended November 1, 2025 from 4.7% during the nine months ended November 2, 2024. The increase in both marketing expenses and marketing expenses as a percentage of net sales was due to increased social media spend, retargeting, photographic production, and payroll expenses associated with our marketing team, partially offset by decreased spend in our model search campaign.

Previous wording

Interest expense was $16.3 million for the six months ended August 2, 2025, compared to $18.5 million for the three months ended August 3, 2024. The decrease was primarily due to a lower balance on the Amended Term Loan Credit Agreement resulting from principal payments.

Current wording

Interest expense was $24.2 million for the nine months ended November 1, 2025, compared to $27.3 million for the three months ended November 2, 2024. The decrease was primarily due to a lower balance on the Amended Term Loan Credit Agreement resulting from principal payments.

Previous wording

The provision for income taxes was $3.1 million and $7.6 million for the six months ended August 2, 2025 and August 3, 2024, respectively. Our effective tax rate was 29.4% for the six months ended August 2, 2025 and 26.9% for the six months ended August 3, 2024. The increase in the effective tax rate for the six months ended August 2, 2025 as compared to the six months ended August 3, 2024 was primarily due to an increase in the amount of non-deductible compensation for covered employees and a decrease in income before provision for income taxes for the six months ended August 2, 2025.

Current wording

The provision for income taxes was $1.6 million and $7.5 million for the nine months ended November 1, 2025 and November 2, 2024, respectively. Our effective tax rate was 59.5% for the nine months ended November 1, 2025 and 28.0% for the nine months ended November 2, 2024. The increase in the effective tax rate for the nine months ended November 1, 2025 as compared to the nine months ended November 2, 2024 was primarily due to an increase in the amount of non-deductible compensation for covered employees and a decrease in income before income taxes for the nine months ended November 1, 2025.

Previous wording

As of August 2, 2025, we had $21.5 million in cash and cash equivalents and $288.4 million of outstanding indebtedness, net of unamortized original issue discount and financing costs, of which $7.9 million consists of borrowings on our ABL Facility, which is accruing interest at an underlying variable rate of 8%, and $280.5 million consists of term loans under the Amended Term Loan Credit Agreement, which is accruing interest at an underlying variable rate of 10%. As of August 2, 2025, we had access to $90.2 million in additional liquidity from our ABL Facility, net of outstanding letters of credit.

Current wording

As of November 1, 2025, we had $17.2 million in cash and cash equivalents and $291.3 million of outstanding indebtedness, net of unamortized original issue discount and financing costs, of which $14.9 million consists of borrowings on our ABL Facility, which is accruing interest at an underlying variable rate of 7%, and $276.4 million consists of term loans under the Amended Term Loan Credit Agreement, which is accruing interest at an underlying variable rate of 10%. As of November 1, 2025, we had access to $86.2 million in additional liquidity from our ABL Facility, net of outstanding letters of credit.

Previous wording

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 if we fail to maintain certain specified availability (as defined by the ABL Facility). 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.

Current wording

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 if we fail to maintain certain specified availability (as defined by the ABL Facility). 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.

Previous wording

Net cash used in operating activities during the six months ended August 2, 2025 was $2.3 million compared to net cash provided by operating activities of $68.4 million during the six months ended August 3, 2024. The decrease in net cash provided by operating activities during the six months ended August 2, 2025 was primarily as a result of decreases in accounts payable and accrued expenses and other current liabilities. The decreases in accounts payable and accrued expenses and other current liabilities were primarily driven by a decrease in inventory purchases before the current period end compared to the prior period end.

Current wording

Net cash used in operating activities during the nine months ended November 1, 2025 was $7.1 million compared to net cash provided by operating activities of $65.4 million during the nine months ended November 2, 2024. The decrease in net cash provided by operating activities during the nine months ended November 1, 2025 was primarilyas a result of decreases in accounts payable and accrued expenses and other current liabilities. The decreases in accounts payable and accrued expenses and other current liabilities were primarily driven by a decrease in inventory purchases before the current period end compared to the prior period end and a decrease in accrued payroll and related expenses.

Previous wording

Net cash used in investing activities during the six months ended August 2, 2025 was $3.7 million, compared to $10.2 million during the six months ended August 3, 2024. The decrease in net cash used in investing activities was primarily a result of a decrease in capital expenditures due to fewer new store openings and remodels during the six months ended August 2, 2025, compared to the six months ended August 3, 2024.

Current wording

Net cash used in investing activities during the nine months ended November 1, 2025 was $5.4 million, compared to $12.6 million during the nine months ended November 2, 2024. The decrease in net cash used in investing activities was primarily a result of a decrease in capital expenditures due to fewer new store openings and remodels, partially offset by an increased investment in store fixtures and equipment during the nine months ended November 1, 2025, compared to the nine months ended November 2, 2024.

Previous wording

Net cash used in financing activities during the six months ended August 2, 2025 was $21.5 million compared to $16.0 million during the six months ended August 3, 2024. The increase in net cash used in financing activities is primarily due to the repurchase of our common stock, partially offset by an increase in net borrowings related to the ABL Facility.

Current wording

Net cash used in financing activities during the nine months ended November 1, 2025 was $19.0 million compared to $20.4 million during the nine months ended November 2, 2024. The decrease in net cash used in financing activities is primarily due to an increase in net borrowings related to the ABL Facility, partially offset by the repurchase of our common stock.