Torrid Holdings Inc.

Greetings. Welcome to the Torrid third quarter fiscal 2021 earnings call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Jessica Schmidt. You may begin.

Good afternoon, everyone. Thank you for joining Torrid's call to discuss its third quarter results which we released this afternoon and can be found on our website at investors.torrid.com. With me on the call is Liz Munoz, Chief Executive Officer of Torrid, and George Wailiff, Chief Financial Officer. Before we begin, I would like to remind you of the company's safe harbor language, which I'm sure you're all familiar with. Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to the business, see our filings with the SEC. This call will contain non-GAAP financial measures such as adjusted EBITDA and adjusted EBITDA margins. Reconciliations of these non-GAAP measures to the most comparable GAAP measure are included in the earnings release furnished with the SEC and available on our website. Now I would like to turn the call over to Liz Nunez.

Good afternoon, everyone. Thank you for joining us for a discussion of our third quarter performance. Before I begin, I would like to take a moment to address Georgia's retirement, which I am sure you saw in today's press release. George has been a tremendous partner over the last decade, during which time we have built an incredible relationship. He was an integral part of our success, particularly as we transitioned to a public company, and I want to thank him for his valuable contributions to Torrid, as well as congratulate him on his pending and well-deserved retirement. George will remain in his role through the end of the first quarter of 2022, at which point he will transition to serve in an advisory role. I know George will always be available to us, and we look forward to a seamless transition over the next several months. We are in the process of launching a comprehensive search of both internal and external candidates, and we will update you on the progress we make as appropriate. I also want to thank our employees and customers whose passion and loyalty contributed to our strong performance. We are especially grateful for our employees' efforts as they navigate this difficult operating environment. On today's call, I will discuss our strong third quarter performance and detail our growth strategies. I will then turn the call over to George to discuss our financial performance in more detail and provide an update on our outlook. We are excited to be reporting another quarter of strong performance. We delivered double-digit top-line and EBITDA growth while navigating the global supply challenges, further demonstrating the strength of our business model and the progress we are making against our long-term strategies. Our mission at Torrid is to help curvy women everywhere know the confidence and excitement that comes from getting dressed every day in apparel and intimates that make them love the way they look and feel. We continue to deliver on our mission again this quarter, providing her with an unparalleled fit and experience that we consistently refine and enhance. Briefly highlighting our third quarter results, net sales grew 13% compared to the third quarter of last year and 19% compared to 2019. Our sales growth was driven by a comparable sales increase of 14%, which includes e-commerce and stores, marking our 37th positive comp in the last 39 quarters. Our adjusted EBITDA, a $55 million increase from last year's 31, and our adjusted EBITDA margin expanded nearly 700 basis points to 18%. Our results reflect continued execution against our key strategic initiatives, and we are energized by the long runway that's still in front of us. At Torrid, we have a powerful and nimble operating model, and we remain committed to continuously building on our successes to evolve the business and keep our customers highly engaged with our brand. With a constant flow of valuable feedback, we continuously test and innovate across all aspects of the organization. We use our learning to evolve our offering and experience, enabling us to deliver on our commitment to this underserved community. Turning to each of our growth strategies, which include expanding Curve, deepening our customer relationships, increasing our brand awareness, and attracting new customers, as well as leveraging our infrastructure. First, growing our Curve business. Curve is an important initiative for us and our customers as we are solving her fit challenges and intimates, providing our customer with something she never thought was possible, a bra that is both sexy and comfortable. During the quarter, we further supported Curve with additional marketing campaigns that effectively targeted specific customer segments to encourage first Curve purchases. We tested product-specific rewards to activate bras, which is part of our strategy to usher customers into specific categories that drive longer-term loyalty. These marketing campaigns successfully drove sales in the bra category, contributing to both revenue growth and higher margin in the quarter. In Q3, we ran a test in select stores where we doubled the size of our Curve assortment, and we were pleased with the results. Our Curve offerings drove incremental revenue, basket size, and conversion in these stores. We also see evidence that Curve is attracting new customers with bras remaining the number two entry item for new Torrid customers. Looking ahead, we will expand the reach of our Torrid Curve Intimates business, building on the traction we've gained in attracting new customers, increasing loyalty, and driving higher overall basket size. In the fourth quarter, we will launch in-store bra fitting events to further engage our customers, and we will build on our targeted marketing campaigns to drive curve purchases. We remain on track to launch a dedicated curve experience on our website next year and plan to expand the combined curve and torrid assortment to over 25% of our stores by the end of 2022. We could not be more excited about the significant opportunity ahead for CURS. Turning to our second growth strategy, deepening our relationships with existing customers, our flow of new product creates excitement and engagement with our customers. During the quarter, we saw strength in our casual offerings, including denim, active lounge, and sleep. Trends in dressier and where-to-work items were compelling as our customer continues to return to a more normal behavior across social activities and work. We also launched our third lovesick collection, which was met with a favorable response. Performance in our licensed product offering was also strong, with sales growing almost twice as fast as the overall brand. In licensing, we used learnings from past successes and leveraged our customers' affinity for holiday celebrations. For example, we launched a limited Halloween collection where we saw exceptional response from our existing customers and drew new customers to Torrid. As we go forward, we will continue to create excitement through product innovation. We are expanding our unparalleled fit capabilities to categories that address additional needs our customer is asking of Torrid, including footwear, sleep, brand collaborations, and special occasions. For example, we enhance the fit of our wide-calf boots, which are available in multiple shaft sizes, by continuing to leverage our extensive fit capabilities. The customer response has been strong, and we will continue to build on this success to serve our customer in additional ways that meet her needs. We also continue to make enhancements to our e-commerce platform to create excitement and deepen our engagement with our customers. During the third quarter, we added a daily drop navigation option to highlight our most recent fresh arrivals, which has quickly become one of the highest generators of unique visits on our website, second only to the new arrivals option. We also began accepting applications for our Torrid credit card directly on our website, resulting in a significant increase in applications. We will continue to improve the features, functionality, and creativity of our website to expand our overall storytelling. We will build on these learnings and test new initiatives as we evolve our website to continue to enhance the online experience. We also leverage our loyalty program to deepen our relationships and expand our wallet share. During the quarter, we leveraged our loyalty program to create engagement on social media and strategically drive customer purchases to targeted categories. For example, we offered bonus points to loyalty customers who shared product reviews on social media platforms. resulting in a significant increase in our Facebook and Pinterest engagement. While this program engages our customer and generates content, it also provides us with valuable feedback that we can deploy to continually enhance our offering. We will accelerate this reward program, which was highly successful at incentivizing customer reviews during the quarter. taking a look at our third growth strategy building brand awareness and acquiring new customers we prioritize marketing investments and digital initiatives creative community events key collaborations and website enhancements during the quarter we also selectively opened new stores which serve as a low-cost source of new customer acquisition and an important competitive advantage as this customer more actively seeks in-person fitting interactions. In September, we also launched a marketing campaign with the tagline, Sexy Has No Size. This campaign highlighted our denim and bras and featured a diverse group of models of different sizes. As part of the campaign, we conducted paid partnerships with digital, female-focused publications, such as PopSugar and Refinery29 to launch integrated marketing support. We generated over 21 million impressions in Q3 through these partnerships, which we expect to drive increased awareness and subsequent new customer acquisition over time. We are in the early stages of building our influencer ambassador program to drive brand awareness authentically with people our customers can relate to. We are pleased with the results of our pilot as it demonstrated its ability to build brand awareness. The content generated during the quarter drove over 2 million impressions. We continue to evaluate and expand this program based on early reception and early learnings. Our digital marketing strategy is an important component of our overall marketing initiative, and we will continue to test new store traffic driving programs. On Instagram, we increased our video content reels and adjusted our messaging in response to changes on Instagram to drive engagement. We will continue to invest in both existing and emerging social media platforms. We are creating engaging social media videos that we will leverage across different platforms to drive increased brand awareness and followers. We also continue to leverage our community events to effectively activate customers and we will use them in new and creative ways. We plan to offer a VIP holiday event during the fourth quarter exclusively for our top loyalty members. Building off the success of our May 2021 model search called Team Torrid, we held a similar event for all of our employees in August. This model search generated inspiring stories and engaging content across our communities. The selected winners will be featured in our Spring 2022 marketing campaign. The winners from Team Torrid are on our website, and we are thrilled with the results, which demonstrate our commitment to inclusivity and diversity as we represent the real world. We are also proud to have held our eighth annual Breast Cancer Awareness Campaign, a cause important to us and to our community. This year, we collaborated with the National Breast Cancer Foundation and designed specific product to support this cause. The collaboration drew both excitement and engagement, and we successfully raised over $500,000. In addition to our digital marketing and brand awareness initiatives, our omnichannel strategy remains core to our customer acquisition and brand engagement. Even post-COVID, Stores continue to be the number one way in which a customer first discovers Torrid. During the third quarter, we opened 11 new stores, bringing our store base to 619 locations. As a reminder, over 90% of our store base is profitable. New store performance exceeded our expectations and generated over a third of sales from new customers ahead of pre-COVID levels. The majority of our openings were in outlet or off-mall locations, and we remain committed to engaging our customer where she wants to shop. Our stores offer an immersive fit experience and passionate associates designed to make her feel great. This experience is particularly important for a customer who has struggled with fit her entire life. making our store base a significant competitive advantage. Going forward, we are further leaning into the power of our store base with our localized marketing initiatives. And finally, our fourth growth strategy, enhancing our infrastructure. We continue to improve on our omni-channel capabilities, including the expansion of ship from store on additional products. We also saw continued growth in our buy online and pick up in-store capabilities. We love this feature as it encourages customers to shop additional products while in stores to pick up her online order. Our omnichannel capabilities enhance our direct-to-consumer unified commerce model, providing a seamless experience to our customers. As we head into the fourth quarter and fiscal 2022, we will continue to leverage our organization and infrastructure investments, as well as build upon our existing capabilities to drive profitable growth. We will expand and refine our omnichannel offering as we continue to adapt to the changing consumer environment, which we believe is an ongoing process. Over the next few months, we will launch our next generation Torrid app to enhance the experience and improve search functionality. Overall, we are pleased with our accomplishments this quarter and thus far for the year, particularly given the challenging operating environment. We, along with the rest of the industry, are facing global supply chain headwinds. We have strong long-term vendor relationships and a diversified manufacturing base, and we are working closely with our partners to mitigate the current challenges. Our priority is getting our products into the U.S. and specifically into our customers' hands, in addition to managing the costs associated with these deliveries. As always, we are focused on delivering for our customer and meeting her needs, despite the current operating environment. While we expect supply chain headwinds to continue at least into the first half of 2022, we are successfully navigating the current environment and our underlying operating model remains strong. In conclusion, we are proud of our third quarter performance, especially in light of the challenging environment. The results we have delivered so far in 2021 reflect our multi-level growth strategy and demonstrate the power of our brand. We have a significant opportunity ahead of us to expand brand awareness and accelerate customer acquisition within our large and underserved market. With just a small percentage of the $85 billion plus-size women's market, we remain in the early innings of our growth. We will continue to execute behind our proven growth strategies to deliver profitable growth and create long-term shareholder value. I will now turn the call over to George to discuss our third quarter financial performance in greater detail. He will also provide you with our financial outlook for the fourth quarter and the full year.