Torrid Holdings Inc.

Previous wording

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.

Current wording

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 8 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.

Previous 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.

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 our store optimization program, we closed 151 stores in fiscal year 2025, 20 stores in the first quarter of fiscal year 2026 and completed this program with the closure of an additional six stores in the second quarter of fiscal year 2026. As part of our normal operating cadence, we will continue to carefully evaluate store performance against minimum profitability thresholds, which may result in store closures in the future.

Previous wording

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

Current wording

(A)Refer to “Results of Operations” for a reconciliation of net income to Adjusted EBITDA. As discussed further below, net income and Adjusted EBITDA were benefited in each of the three and six months ended August 1, 2026 by $11.1 million from IEEPA tariff refunds.

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, 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.

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 that certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized. 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 $11.3 million. During the three-month period ended August 1, 2026, we received refunds of a portion of these previously paid IEEPA tariffs totaling approximately $11.1 million and associated interest totaling approximately $0.3 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

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.

Current wording

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 second quarter of fiscal years 2026 and 2025 and to the three- and six-month periods ended August 1, 2026 and August 2, 2025, respectively, refer to the 13- and 26-week periods then ended.

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 $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.

Current wording

Net sales decreased $31.1 million, or 11.8%, to $231.7 million for the three months ended August 1, 2026, from $262.8 million for the three months ended August 2, 2025. This decrease was primarily driven by a decrease in sales transaction values. The total number of stores we operate decreased by 118 stores, or 20.5%, to 457 storesas of August 1, 2026, from 575 stores as of August 2, 2025, primarily due to the implementation of our retail store optimization strategy.

Previous 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.

Current wording

Gross profit for the three months ended August 1, 2026 decreased $3.7 million, or 4.0%, to $89.7 million, from $93.5 million for the three months ended August 2, 2025. Gross profit as a percentage of net sales increased 3.1% to 38.7% for the three months ended August 1, 2026 from 35.6% for the three months ended August 2, 2025. The decrease in gross profit was primarily driven by a decrease in net sales and increased promotional activity, partially offset by refunds of previously paid IEEPA tariffs of approximately $11.1 million and decreased store occupancy costs, store depreciation expense and distribution center expenses. The increase in gross profit as a percentage of net sales was primarily driven by refunds of previously paid IEEPA tariffs and decreased store occupancy costs, store depreciation expense and distribution center expenses, partially offset by increased promotional activity.

Previous 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.

Current wording

Interest expense was $7.8 million for the three months ended August 1, 2026, compared to $8.1 million for the three months ended August 2, 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 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.

Current wording

The provision for income taxes was $1.4 million for the three months ended August 1, 2026 and $0.5 million for the three months ended August 2, 2025. Our effective tax rate was 21.0% for the three months ended August 1, 2026 and 23.7% for the three months ended August 2, 2025. The decrease in the effective tax rate for the three months ended August 1, 2026 as compared to the three months ended August 2, 2025 was primarily due to the discrete recognition of refunds of previously paid IEEPA tariffs, partially offset by a decrease in the amount of non-deductible compensation for covered employees relative to income before income taxes for the three months ended August 1, 2026.

Previous 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.

Current wording

(B)During the six months ended August 1, 2026 and August 2, 2025, share-based compensation includes $2.0 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

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.

Current wording

Selling, general and administrative expenses for the six months ended August 1, 2026 decreased $14.9 million, or 10.6%, to $125.6 million, from $140.5 million for the six months ended August 2, 2025. The decrease was primarily due to a $11.6 million decrease in store and e-Commerce payroll costs primarily due to the implementation of our retail store optimization strategy, a $2.5 million decrease in performance bonuses and a $2.1 million decrease in headquarters general and administrative expenses, partially offset by a $1.5 million increase in share-based compensation. Selling, general and administrative expenses as a percentage of net sales decreased 0.3% to 26.3% for the six months ended August 1, 2026 from 26.6% for the six months ended August 2, 2025. The decrease was primarily driven by decreased store and e-Commerce payroll costs primarily due to the implementation of our retail store optimization strategy, and a decrease in performance bonuses, 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

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.

Current wording

Marketing expenses for the six months ended August 1, 2026 decreased $0.3 million, or 1.1%, to $27.9 million, from $28.2 million for the six months ended August 2, 2025. Marketing expenses as a percentage of net sales increased 0.5% to 5.8% during the six months ended August 1, 2026 from 5.3% during the six months ended August 2, 2025. The decrease in marketing expenses was primarily driven by decreased spend on social media and retargeting, partially offset by increases in online marketing, models/model search, direct mail, photography and payroll and benefits expenses associated with our marketing team. 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.

Previous 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.

Current wording

As of August 1, 2026, we had $22.0 million in cash and cash equivalents and $304.0 million of outstanding indebtedness, net of unamortized original issue discount and financing costs, of which $39.7 million consists of borrowings on our ABL Facility, which is accruing interest at an underlying variable rate of 7%, and $264.3 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 August 1, 2026, we had access to $52.4 million in additional liquidity from our ABL Facility, net of outstanding letters of credit.

Previous wording

A summary of operating, investing and financing activities are shown in the following table (in thousands):

Current wording

A summary of operating, investing and financing activities is shown in the following table (in thousands):

Previous 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.

Current wording

Net cash provided by operating activities during the six months ended August 1, 2026 was $10.1 million compared to net cash used of $2.3 million during the six months ended August 2, 2025. Theincrease in net cash provided by operating activities during thesix months ended August 1, 2026 was primarily as a result of an increase in accounts payable compared to a decrease in accounts payable in the six months ended August 2, 2025, partially offset by a lower decrease in inventory.

Previous 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.

Current wording

Net cash used in investing activities during the six months ended August 1, 2026 was $7.4 million compared to $3.7 million during the six months ended August 2, 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, and an increase in capital expenditures in our West Jefferson, Ohio distribution center during the six months ended August 1, 2026, compared to the six months ended August 2, 2025.

Previous 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.

Current wording

Net cash used in financing activities during the six months ended August 1, 2026 was $0.4 million compared to $21.5 million during the six months ended August 2, 2025. The decrease in net cash used in financing activities is primarily due to the absence of a repurchase of our common stock during the six months ended August 1, 2026.