IPO News: Torrid Holdings is set to go public next week, here’s what to know

The retail industry undergoes various shifts from time to time as the needs and preferences of customers keep on changing. In today’s world, where concepts like female empowerment and body positivity are gaining huge prominence, there is a growing market for retailers who serve plus-sized customers, a segment that has traditionally been underserved. Torrid Holdings is a leading player in this market.

Intro

Torrid Holdings is a leader in the $85 billion women’s plus-size apparel and intimates market in the US. The plus-size market caters to individuals who require sizes 10 and above, and this segment currently serves 90 million women in the US. In terms of net sales, Torrid is the largest direct-to-consumer brand of women’s plus-size apparel and intimates in North America.

The California-based company was founded in 2001 and has 7,308 employees. It sells its products to customers through its ecommerce platform as well as through its store fleet. As of May 1, 2021, Torrid had 608 stores. The company served 3.2 million active customers in 2020.

IPO details

Torrid is set to go public on July 1, 2021. The company will begin trading on the New York Stock Exchange under the ticker symbol CURV. Torrid plans to offer 8 million shares for a price of $18-$21 per share to raise $156 million. The team of underwriters managing the IPO will be led by Morgan Stanley and BofA Securities.

Financials

Torrid grew its net sales at a compound annual growth rate of 8% between 2017 and 2020. In 2020, the company’s sales were impacted by the onset of the COVID-19 pandemic which forced the temporary closures of most of its stores. During this time, Torrid upped its investment in its ecommerce channel which received a good boost amid the pandemic.

Torrid’s net sales grew 14% year-over-year from $909 million in 2018 to $1.03 billion in 2019. In 2020, net sales amounted to $974 million, reflecting a 6% YoY drop due to pandemic-related store closures. Despite this, the company was able to gain market share in women’s plus-size apparel and intimates in 2020. Net income totaled $25 million in 2020.

Total active customers amounted to 3.4 million in 2019, up 11% compared to 2018. In 2020, this number declined by 5% to 3.2 million as many customers chose to postpone their purchases during the year.

Ecommerce sales grew 28% in both 2018 and 2019 and represented 42% and 48% of net sales in 2018 and 2019 respectively. In 2020, ecommerce sales made up 70% of net sales.

Market opportunity

The plus-size apparel market for women is large, growing and underserved across both online and offline channels. There are studies that state that 78% of plus-size women would opt to spend more on clothing if they had more options available in their size. Torrid believes it is less than 4% penetrated among US plus-size women and has a huge opportunity to grow market share in this segment.

The company is also expected to benefit from the growth in ecommerce. Based on data from eMarketer, US online apparel sales were $125 billion in 2019 and are expected to reach $270 billion in 2024, growing at a CAGR of 17%.

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