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 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.

Current wording

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.

Previous wording

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

Current wording

(A)Refer to “Results of Operations” for a reconciliation of net 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 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.

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. 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

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, affect the cost of our merchandise. The degree of our exposure is dependent on (among other things) the countries in which the merchandise is manufactured, rates imposed, and timing of the tariffs. Higher tariffs may adversely impact our results.

Current wording

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.

Previous wording

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 or overall, could adversely affect our results of operations.

Current wording

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.

Previous wording

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 our operating expenses will grow as we continue to increase our spending on advertising and marketing and hire 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.

Current wording

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.

Previous 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.

Current 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.

Previous 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.

Current wording

(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.

Previous 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.

Current 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.

Previous 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.

Current wording

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 storesas of May 2, 2026, from 632 stores as of May 3, 2025, primarily due to the implementation of our retail store optimization strategy.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous wording

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).

Current wording

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.

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). 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.

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 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.

Previous wording

As of November 1, 2025, we were compliant with our covenants under the ABL Facility.

Current wording

As of May 2, 2026, we did not trigger a covenant compliance event and were compliant with our covenants under the ABL Facility.

Previous wording

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 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.

Current wording

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.

Previous wording

Outside of any routine transactions made in the ordinary course of business or otherwise described in this Form 10-Q, there have been no significant changes to our material cash requirements as disclosed in our 2024 Form 10-K.

Current wording

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.

Previous 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.

Current wording

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. Theincrease in net cash provided by operating activities during thethree 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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.