Torrid’s Store Closures Continue Amid Shift to Online Sales
Things are looking pretty intense for Torrid, a well-known fashion retailer based in Southern California.
The company, founded in Orange County, has closed a total of 177 stores since last year, reflecting its ongoing shift to focus on digital sales, according to reports.
Torrid has previously indicated plans to close around 180 stores overall.
“Digital continues to be our customers’ preferred channel, now approaching 70% of total demand,” said Torrid’s CEO Lisa Harper during a recent earnings call. “We’re accelerating our transformation to a more digitally-led business, which includes optimizing our retail footprint.”
Harper mentioned that these closures would help the company cut fixed costs and reinvest in aspects that promote long-term growth.
As of this month, Torrid now operates 457 locations across the U.S., Puerto Rico, and Canada. Harper reassured stakeholders that this reduction is acceptable.
“Customer retention through this transition has remained strong, with our marketing efforts successfully redirecting traffic both online and to nearby stores,” Harper noted in the company’s latest earnings report.
Founded in 2001, Torrid launched its first store in Brea Mall, offering apparel and accessories for women sizes 10 to 30. However, the company’s net sales have dropped by 11.8%, totaling $231.7 million compared to $262.8 million during the same quarter last year. Comparable sales also decreased by 6.3% in the second quarter.
Interestingly, while the store closures may seem drastic, some experts believe they could ultimately benefit the business. Dominick Miserandino, CEO of RTM Nexus, pointed out to TheStreet that “Torrid shedding a huge chunk of its stores is a brutal, necessary acknowledgment that physical stores were becoming a drag on their bottom line.” With over 70% of sales happening online, retaining so many low-productivity mall leases just doesn’t make sense financially.
This move appears to align with Torrid’s customers’ clear preference for shopping online, he added.
Torrid’s gross profit margin did see an improvement, rising to 38.7% from 35.6% in the same quarter last year. The company’s net income also increased to $5.2 million, a notable rise compared to $1.2 million in the second quarter of the prior year.
In short, while the shift might be tough in the moment, it seems like Torrid is making adjustments aimed at a more sustainable future.
