Torrid Holdings (CURV) Stock Forecast & Price Target

Torrid Holdings Inc. is enhancing its marketing strategy by increasing annual spending to approximately 6% of revenue, demonstrating a commitment to boosting brand awareness and customer engagement, particularly following planned store closures. The company reported a 20.4% year-over-year increase in marketing expenditures, correlating with a rise in customer retention and frequency, which is essential for long-term growth. Additionally, strong performance from sub-brands, expected to comprise 25%-30% of the assortment by FY26, is projected to drive margins higher due to their limited promotions and greater full-price sell-throughs, ultimately leading to an adjusted EBITDA margin of 7.7%, reflecting a year-over-year improvement.

Torrid Holdings Inc. has experienced a decline in revenue, reporting a 7.7% year-over-year decrease to $262.8 million for the quarter, despite slightly exceeding consensus expectations. The company's operating margin contracted significantly by 260 basis points year-over-year to only 0.1%, falling well below previous estimates and consensus projections due to greater-than-anticipated gross margin compression and operational deleverage. Furthermore, the outlook for future performance has been dampened by higher tariff rates, increased marketing expenses, and continued macroeconomic uncertainty, leading to downward revisions in the company's guidance.