Torrid Holdings Inc.

Greetings and welcome to the Toward Holdings, Inc. First Quarter Fiscal 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chinwe Abalu, Chief Accounting Officer. Thank you. You may begin.

Good afternoon, everyone, and thank you for joining Torrid's call today to discuss our financial results for the first quarter of fiscal 2024, which we released this afternoon and can be found on our website at investors.torrid.com. With me today on the call are Lisa Harper, Torrid's Chief Executive Officer, Ashley Wheeler, Torrid's new Chief Planning Officer, and Paula Dempsey, Torrid's Chief Financial Officer. Before we get started, I would like to remind you of the company's safe harbor language, which I'm sure you're familiar with. Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements may include, but are not limited to, statements containing the words expect, believe, plan, anticipate, will, may, should, estimate, and other words and terms of similar meaning. All forward-looking statements are based on current expectations and assumptions as of today, June 12, 2024. These statements are subject to risks and uncertainties that could cause actual results to differ materially. For further discussion of risks related to our business, see our filings with the SEC. This call will contain non-GAAP financial measures, such as adjusted EBITDA. Reconciliations to these non-GAAP measures to the most comparable gap measures are included in the earnings release furnished to the SEC and available on our website.

With that, I will turn the call over to Lisa. Thank you, Chin-Wei. Good afternoon, and thank you for joining us to discuss our first quarter results. Today, I'll start with some important announcements about our executive leadership team, followed by an overview of our first quarter performance and our strategies for 2024. I am thrilled to announce that Han Park has been promoted to Chief Operating Officer. Han joined Torrid in 2022 as the Chief Technology Officer. He has been instrumental in stabilizing our systems and executing an IT strategy that supports the growth of our business. We also announced that Ashley Wheeler has been promoted to Chief Planning Officer. Ashley has been with Torrid since 2011, serving in a number of merchandising and planning roles, most recently as Senior Vice President of Planning. She played a key role in driving improvements in our inventory management and optimizing our pricing strategy over the past year, and will now lead the entire planning and allocation group. And finally, we announced that Mark Mazzico, our Chief Commercial Officer, is retiring. Mark has a long history with Torrid, and I'm very grateful to him for coming out of retirement after working as a consultant to join us as a member of the Torrid leadership team. We appreciate all that Mark has done for Torrid and are grateful that he is staying on as a consultant and wish him the very best second retirement. Turning to our results, we are pleased with our start to fiscal 2024. In the first quarter, we delivered higher than expected adjusted EBITDA driven by strong gross margin expansion and disciplined expense management. For the quarter, we generated $280 million in sales and $38 million in adjusted EBITDA. We remained focused on tightly controlling our inventory and ended the quarter with healthy inventory levels, which were down 17% compared to a year ago. Our first quarter results reflect continued progress on our key initiatives. In stores, we saw traffic trends improve as we moved through the quarter, and we had a very successful toured cash event. Customers responded to our balanced merchandise assortment both in terms of breadth of styles as well as price points. During the quarter, we experienced strong regular price comp sales in knit tops, graphics, and denim. While overall comp declined for the quarter, it was primarily due to a decline in clearance sales relative to last year's strategic decision to significantly reduce inventory levels and promotions. We drove positive comp sales at regular price toward the end of the quarter and into the second quarter, demonstrating the strength of our new collection. We expect that clearance sales comps will be less of a drag on our top line as we move through the year. We remain focused on executing our strategic priorities, improving our merchandising assortment, strengthening our marketing message, and optimizing profitability and working capital through cost and inventory management. We were pleased with the response to our spring collection which reflect a better balance of casual and dressy styles. The reintroduction of our chalet fabrication was well received and supported a more casual look and feel to our stores. We saw a positive response to woven tops, dresses, and non-denim bottoms. In addition to balancing our assortments, we improved the pricing architecture of our collections. We offered more opening price points across categories. As part of our efforts to evolve and enhance our assortment, We recently visited our factories in Asia. We worked with our key factories to source new fabrications for Tor to position us to get back into the Chase and React model that we are known for. More to come on this in the future. Turning to marketing, our new digital platform is beginning to deliver results in the form of improved customer acquisition and engagement. During the quarter, we launched our casting call model search contest, and the response thus far has been incredible. Ashley will provide more details in a few minutes. Moving to working capital, we've successfully implemented a number of initiatives to reduce our inventory levels both in terms of cost and units. Our inventory was down 17% due to cost at the end of the quarter compared to a year ago, and we expect to end the year with inventory down double digits. This has led and will continue to lead to a significant improvement in our working capital efficiency as we move through the year. Another key strategic priority for us is to carefully evaluate our current store fleet. We are working on a comprehensive analysis of our store base to optimize our store footprint. We are reevaluating our stores based on center characteristics, market conditions, and profitability. While only a handful of stores perform below our standards, we are looking at all stores to make sure we are in the right location for our customers. We have found that stores and lifestyle centers perform better on average than our enclosed mall-based stores. We are in the early stages of this process and look forward to updating you on our findings later in the year. In closing, we've made tremendous progress over the past year, and we are beginning to realize the benefits of this work and our financial results. This marks another consecutive quarter of delivering on our expectations, and we believe that we are well positioned to continue to execute and deliver consistent growth and improve financial results for our shareholders. Before I turn the call over to Ashley, I would like to thank our amazing team of associates who are at the heart of everything we do. I will now welcome Ashley to the call, who will review our merchandising strategies and marketing plans. Paula will then review our financials and our outlook for fiscal 2024.