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What changed in Torrid Holdings Inc.'s 10-K — 2025 vs 2026

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Paragraph-level year-over-year comparison of Torrid Holdings Inc.'s 2025 and 2026 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2026 report.

+299 added−335 removedSource: 10-K (2025-04-01) vs 10-K (2024-04-02)

Top changes in Torrid Holdings Inc.'s 2026 10-K

299 paragraphs added · 335 removed · 252 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn turn, our loyal customers provide us with a rich set of data that allows us to improve our product and experience, thus creating a virtuous cycle that reinforces our leading position in plus-size apparel and intimates. • We provide a fit she knew she wanted but never had access to; • We accomplish this by fitting every single article of clothing we produce on a real woman, tailoring for her special needs, not simply "grading up" non-plus-size apparel; • We utilize a proprietary sizing process that is constantly updated through data and our continuous customer feedback loop, until we fit to perfection; and • We deliver unparalleled technical fit combined with unapologetic attitude and style.
Biggest changeOur diverse assortment caters to the curvy woman's unique needs, offering: • A tailored fit she rarely has access to that meets all of her individual style aspirations; • A rigorous design process where every single article of clothing is fitted on a real woman, and not simply "grading up" non-plus-size apparel; • A proprietary sizing process constantly updated through continuous customer feedback and data, until we fit to perfection; and • An expanded brand that provides a fusion of trendy and on-point style with exceptional tailoring that satisfies the unique needs of the curvy woman.
The charters for committees of our Board of Directors (Audit, Compensation and Nominating and Corporate Governance Committees), our Corporate Governance Guidelines and our Code of Business Conduct are also available on our website under "Investors, Governance Documents." Investors and others should note that we may announce material information to our investors using our investor relations website (https://investors.torrid.com), SEC filings, press releases, public conference calls and webcasts.
The charters for committees of our Board of Directors (Audit, Compensation and Nominating and Corporate Governance Committees), our Corporate Governance Guidelines and our Code of Business Conduct are also available on our website under "Investors, Governance Documents." 7 Investors and others should note that we may announce material information to our investors using our investor relations website (https://investors.torrid.com), SEC filings, press releases, public conference calls and webcasts.
Our e-Commerce and store channels complement and drive traffic to one another, creating more loyal omni-channel customers. 2 e-Commerce Our e-Commerce channel is central to our unified commerce platform. Our online platform provides customers with a highly engaging shopping experience featuring access to our full product assortment, an aesthetically rich and easily navigable website and seamless ordering and fulfillment.
Our e-Commerce and store channels complement and drive traffic to one another, creating more loyal omni-channel customers. e-Commerce Our e-Commerce channel is central to our unified commerce platform. Our online platform provides customers with a highly engaging shopping experience featuring access to our full product assortment, an aesthetically rich and easily navigable website, and seamless ordering and fulfillment.
Torrid Rewards and our Torrid Credit Card program provide us with a strong ability to attribute sales and behavioral data to individual customers, which informs our decision-making process. Unified Commerce Platform Through our unified commerce platform, which includes our e-Commerce and retail stores, we deliver a seamless brand experience to our customers wherever and whenever she chooses to shop.
Torrid Rewards and our Torrid Credit Card program provide us with a strong ability to attribute sales and behavioral data to individual customers, which informs our decision-making process. 2 Unified Commerce Platform Through our unified commerce platform, which includes our e-Commerce and retail stores, we deliver a seamless brand experience to our customers wherever and whenever she chooses to shop.
We further differentiate ourselves based on the strength of our brand, industry-leading unified commerce business model and e-Commerce penetration, strong data capabilities, loyal customer base, customer-focused product assortment and highly experienced leadership team. • Plus-Size Focused Direct to Consumer Brands. We compete with other plus-size focused direct to consumer brands.
We further differentiate ourselves based on the strength of our brand, industry-leading unified commerce business model and e-Commerce penetration, strong data capabilities, loyal customer base, customer-focused product assortment and highly experienced leadership team. • Plus- and Mid-Size Focused Direct to Consumer Brands. We compete with other plus- and mid-size focused direct to consumer brands.
We coordinate the introduction of our collections across our e-Commerce platform and stores, allowing a customer to experience a consistent brand message wherever and whenever she chooses to shop. We have a large and growing following on our social media channels, including Facebook, Instagram, Pinterest, Twitter, YouTube and TikTok.
We coordinate the introduction of our collections across our e-Commerce platform and stores, allowing a customer to experience a consistent brand message wherever and whenever she chooses to shop. We have a large and growing following on 4 our social media channels, including Facebook, Instagram, Pinterest, Twitter, YouTube and TikTok.
Further, we may face new competitors and increased competition from existing competitors as we expand into new markets and increase our presence in existing markets. 5 Our competition in the women’s plus-size apparel industry includes: • Plus-Size Focused Specialty Retailers. We compete with other specialty retailers that, like Torrid, focus on plus-size customers.
Further, we may face new competitors and increased competition from existing competitors as we expand into new markets and increase our presence in existing markets. 5 Our competition in the women’s plus- and mid-size apparel industry includes: • Plus- and Mid-Size Focused Specialty Retailers. We compete with other specialty retailers that, like Torrid, focus on plus- and mid-size customers.
We use these channels to 4 communicate with our customers, disseminate our outbound marketing messages and collect feedback about their lifestyles and product preferences. Sourcing and Production We outsource the manufacturing of our products, which eliminates the need to own or operate manufacturing facilities.
We use these channels to communicate with our customers, disseminate our outbound marketing messages and collect feedback about their lifestyles and product preferences. Sourcing and Production We outsource the manufacturing of our products, which eliminates the need to own or operate manufacturing facilities.
The 7 information contained on such websites and social media posts is not incorporated by reference into this filing. Further, our references to website URLs in this filing are intended to be inactive textual references only. 8
The information contained on such websites and social media posts is not incorporated by reference into this filing. Further, our references to website URLs in this filing are intended to be inactive textual references only. 8
We believe our brand messaging built around our fit resonates with the attitudes of younger generations who are frustrated with being ignored by other brands. Our marketing collateral intentionally represents the diversity of our customer base, including women of all sizes from 10 to 30, and communicates the confidence and sexiness our product is intended to deliver.
We believe our brand messaging built around fashion and fit resonates with the attitudes of younger generations who are frustrated with being ignored by other brands. Our marketing collateral intentionally represents the diversity of our customer base, including curvy women of all sizes from 10 to 30, and communicates the confidence and sexiness our product is intended to deliver.
Our core competency is our differentiated, market-leading fit that we achieve through the following strategies: • Maniacal focus on fit across our entire organization; 1 • Differentiated technical fit created through building and continuously refining a database of fit specifications derived from testing, measuring and cataloging garments on our fit models; • Proprietary fabrics specifically engineered to enhance the fit; • Fit all of our products on fit models and our staff, not mannequins; and • We often test new fabrics, new silhouettes and new product lines on our staff and community of loyal customers before launch.
Our core competency is our differentiated, market-leading fit that we achieve through the following strategies: • Laser focus on fit across our entire organization; • Differentiated technical fit created through building and continuously refining a database of fit specifications derived from testing, measuring and cataloging garments on our fit models; • Proprietary fabrics specifically engineered to enhance the fit; • Fit all of our products on fit models and our staff, not mannequins; and • We often test new fabrics, new silhouettes and new product lines on our staff and community of loyal customers before launch.
Customers Our typical customer is an employed, youthful woman between the ages of approximately 27 and 42 years old with above-average annual household income, and wears sizes 10 to 30 (average of size 18). Approximately half of our customers are under 40 years old and the ethnic composition of our customer base largely parallels that of the U.S. population.
Customers Our typical customer is an employed, youthful woman between the ages of approximately 30 and 44 years old with above-average annual household income, and wears sizes 10 to 30 (average of size 18). Approximately half of our customers are under 40 years old and the ethnic composition of our customer base largely parallels that of the U.S. population.
Further, we have patents issued, as well as applications pending for our innovative technology featured in our most popular line of bras, the 360° Back Smoothing Bra, as well as the Wire-free Push-Up Brassiere with Hinge for Improved Support and Flexibility, and for our Power Mesh Panels for Tummy-Flattening Pants and Tummy-Covering Garments.
Further, we have patents issued, as well as applications pending for our innovative technology featured in our most popular line of bras, the Reduced-Coverage Back Smoothing Brassiere, as well as the Wire-free Push-Up Brassiere with Hinge for Improved Support and Flexibility, and for our Power Mesh Panels for Tummy-Flattening Pants and Tummy-Covering Garments.
We believe we have established effective two-way lines of communication throughout our organization, including using technologies to communicate with stores in real time and routinely synthesize store insights and customer feedback from the field to influence decision making. As of February 3, 2024, we employed approximately 1,820 full-time and 5,800 part-time employees.
We believe we have established effective two-way lines of communication throughout our organization, including using technologies to communicate with stores in real time and routinely synthesize store insights and customer feedback from the field to influence decision making. 3 As of February 1, 2025, we employed approximately 1,810 full-time and 5,780 part-time employees.
We offer a fit-first focus and a broad and stylish product assortment that is differentiated by our vertical sourcing capabilities. We target a younger, more stylish consumer with a wide assortment that has broad appeal.
We offer a fashion-first focus rooted in a great fit and a broad and stylish product assortment that is differentiated by our vertical sourcing capabilities. We target a younger, more fashion-minded consumer with a wide assortment that has broad appeal.
No single supplier accounted for more than 13% of merchandise purchased in fiscal year 2023. Approximately 98% of our product receipts in fiscal year 2023 were sourced internationally, primarily from Asia. We plan to continue diversifying our vendor bases by both vendor and geography. We continue to reduce our exposure to factories located within China.
No single supplier accounted for more than 9% of merchandise purchased in fiscal year 2024. Substantially all of our product receipts in fiscal year 2024 were sourced internationally, primarily from Asia. We plan to continue diversifying our vendor bases by both vendor and geography. We continue to reduce our exposure to factories located within China.
Our extensive database contains valuable customer information that helps us better market to our customers. We have significant visibility into our customers' transaction behavior, including purchases made across our channels. We use our customer database to acquire, develop and retain customers. We can identify customers who purchase products regardless of whether they shop on our e-Commerce platform or in-store.
We have significant visibility into our customers' transaction behavior, including purchases made across our channels. We use our customer database to acquire, develop and retain customers. We can identify customers who purchase products regardless of whether they shop on our e-Commerce platform or in-store.
We also provide our in-store brand ambassadors with sales and key performance data that help them optimize their store's performance and foster a culture of accountability. Communications with our store associates is a critical channel for valuable product and customer feedback.
We provide thorough product- and fit-oriented training that aims to strengthen our brand experience in the store. We also provide our in-store brand ambassadors with sales and key performance data that help them optimize their store's performance and foster a culture of accountability. Communications with our store associates is a critical channel for valuable product and customer feedback.
We use our customer database to strategically optimize the value of our marketing investments across our customer base and channels. This enables us to efficiently acquire new customers, effectively market to repeat customers and reactivate lapsed customers. Our investments in digital and physical marketing drive customer acquisition and engagement across all of our channels.
This enables us to efficiently acquire new customers, effectively market to repeat customers and reactivate lapsed customers. Our investments in digital and physical marketing drive customer acquisition and engagement across all of our channels.
The mission of the Torrid Foundation is to support various nonprofit organizations dedicated to helping women and changing lives for our customers and their diverse communities. The funds utilized in these efforts are raised from customer donations, including whole-dollar sale round-ups, and a portion of proceeds from certain product collaborations like our Breast Cancer Awareness Collection.
The mission of the Torrid Foundation is to support various nonprofit organizations dedicated to helping women and changing lives for our customers and their communities. The funds utilized in these efforts are raised from customer donations, including whole-dollar sale round-ups and proceeds from a portion of total sales during specific campaign periods.
Our work environment is open and collaborative with a flat organizational structure that facilitates efficient decision making. Approximately 94% of our employees identify as female, and many are also customers who believe in our mission to empower curvy women to love the way they look and feel.
Our work environment is open and collaborative with an organizational structure that facilitates efficient decision making. Many of our employees are also customers who believe in our mission to empower curvy women to love the way they look and feel. We strive to promote a welcoming and inclusive culture throughout our Company.
Of these employees, approximately 530 are assigned to our headquarters in City of Industry, California and approximately 7,090 are employed in our stores and distribution center. Our number of employees, particularly part-time employees, fluctuates depending upon seasonal needs.
Of these employees, approximately 490 are assigned to our headquarters in City of Industry, California and approximately 7,100 are employed in our stores and distribution center. Our number of employees, particularly part-time employees, fluctuates depending upon seasonal needs. Our employees are not represented by a labor union and are not party to a collective bargaining agreement.
Competition We face competition across a variety of players within the broader apparel industry. Our competitors range from smaller, growing e-Commerce brands to considerably larger players with substantially greater financial, marketing and other resources.
We believe our reduced seasonality is also attributable to the behavior of our customer, who is generally purchasing products for herself, not as gifts. Competition We face competition across a variety of players within the broader apparel industry. Our competitors range from smaller, growing e-Commerce brands to considerably larger players with substantially greater financial, marketing and other resources.
We believe in rewarding high performance and seek to design plans and programs to support this culture. To further support the advancement of our employees, we invest in a wide range of training and development opportunities at all levels across the organization, including through both online and instructor-led internal programs, as well as third-party programs.
To further support the advancement of our employees, we invest in a wide range of training and development opportunities at all levels across the organization, including through both online and instructor-led internal programs, as well as third-party programs. We regularly collect feedback from our employees to better understand and improve our learning and development offerings to meet their needs.
Item 1. Business Overview Torrid Holdings Inc. ("Torrid," "we," "us," "our," the "Company") is a direct-to-consumer brand of apparel, intimates and accessories in North America aimed at fashionable women who are curvy and wear sizes 10 to 30.
Item 1. Business Overview Torrid Holdings Inc. ("Torrid," "we," "us," "our," the "Company") is a direct-to-consumer brand in North America dedicated to offering a diverse assortment of stylish apparel, intimates, and accessories skillfully designed for curvy women.
Our supply chain team including the distribution center, transportation, customs compliance and vendor compliance functions manage the transportation, receipt, quality assurance, storage, sorting, packing and distribution of merchandise for our e-Commerce platform and store channels. Stores are replenished at least once per week from this facility by third-party delivery services.
Our supply chain team including the distribution center, transportation, customs compliance and vendor compliance functions manage the inbound transportation, receipt, quality assurance, storage, sorting, picking, packing and distribution of merchandise for our e-Commerce platform and store channels.
In fiscal year 2023, no single quarter contributed more than 26% of Torrid net sales. We believe this is partly attributable to our broad merchandise offering that encourages purchasing across seasons. We believe our reduced seasonality is also attributable to the behavior of our customer, who is generally purchasing products for herself, not as gifts.
Seasonality While the apparel industry is generally seasonal in nature, we have not historically experienced significant seasonal fluctuations in our sales. In fiscal year 2024, no single quarter contributed more than 26% of Torrid net sales. We believe this is partly attributable to our broad merchandise offering that encourages purchasing across seasons.
Through third parties, we periodically monitor our factories and suppliers to ensure compliance with these guidelines. Distribution and Fulfillment Our unified commerce business model is serviced by our distribution facility located in West Jefferson, Ohio. We leased the operations of the fully functional, state-of-the-art distribution center in West Jefferson, Ohio in 2018.
Through third parties, we periodically monitor our factories and suppliers to ensure compliance with these guidelines. Distribution and Fulfillment Our unified commerce business model is serviced by our distribution facility located in West Jefferson, Ohio. This 750,000 square foot facility is highly automated and capable of handling our existing and future needs.
Over the course of approximately two decades, Torrid has developed the requisite design and engineering expertise for the highly technical bra category through a rigorous in-house research and development process.
Over the course of approximately two decades, Torrid has developed the requisite design and engineering expertise for the highly technical bra category through a rigorous in-house research and development process. 1 Product Design and Development We are dedicated to creating youthful, sexy and commercially relevant products that cater specifically to the woman in our size range.
We believe that our in-store brand ambassadors are critical to our success and often represent the face of our organization to our customers. We empower our managers and in-store brand ambassadors to deliver a superior shopping experience. We provide thorough product- and fit-oriented training that aims to strengthen our brand experience in the store.
We believe that diverse perspectives and experiences are important to help inform management of risks, business strategies and opportunities. We believe that our in-store brand ambassadors are critical to our success and often represent the face of our organization to our customers. We empower our managers and in-store brand ambassadors to deliver a superior shopping experience.
We regularly collect feedback from our employees to better understand and improve our learning and development offerings to meet their needs. To ensure we provide a rich and rewarding experience for our employees, we monitor culture and engagement to build on the competencies that are important for our future success.
To ensure we provide a rich and rewarding experience for our employees, we monitor culture and engagement to build on the competencies that are important for our future success. We routinely hold employee engagement events and virtual and on-demand learning sessions for our associates' development. Employee safety remains a priority.
Product Product Offering We offer a full product assortment that addresses our customers' entire closet, including tops, bottoms, denim, dresses, intimates, activewear, footwear and accessories. We believe our products not only provide an unparalleled technical fit, but also have the style and attitude that enable our customers to dress like her non-plus-size friends.
Product Product Offering We offer a comprehensive product line that inspires our customers with new and exciting options for her entire closet. Our assortment spans tops, bottoms, denim, dresses, intimates, activewear, footwear and accessories that we believe embody the attitude and style that enable our customers to comfortably and confidently dress like their non-plus-size friends.
We compete indirectly with department stores, specialty apparel players and mass merchandise retailers who also carry products in our size range and offer similar categories of merchandise to our customer segment. By maintaining a maniacal focus on fit, our proprietary product offering delivers a superior fit for the curvy woman that makes her love the way she looks and feels.
We compete indirectly with department stores, specialty apparel players and mass merchandise retailers who also carry products in our size range and offer similar categories of merchandise to our customer segment.
This 750,000 square foot facility is highly automated and is capable of handling our existing and future needs. The West Jefferson facility is equipped with omni-channel capabilities that enable both direct-to-customer eCommerce and retail store order fulfillment including buy-online-pickup-in-store ("BOPIS") and ship-to-store.
The West Jefferson facility is equipped with omni-channel capabilities that enable global direct-to-customer e-Commerce, U.S. and Canada retail store order fulfillment, including buy-online-pickup-in-store ("BOPIS") and ship-to-store fulfillment. Our Store omni-channel offerings also include ship-from-store, ship-to-store and BOPIS in the U.S. and Canada.
Trademarks that are important in identifying and distinguishing our products and services include, but are not limited to, Torrid®, Torrid Curve®, CURV® and Lovesick®. Our rights to some of these trademarks may be limited to select markets. We also own domain names, including our website, www.torrid.com.
Patent and Trademark Office or other foreign trademark registration offices or exist under common law in the United States and other jurisdictions. Trademarks that are important in identifying and distinguishing our products and services include, but are not limited to, Torrid®, Torrid Curve®, CURV® and Lovesick®. Our rights to some of these trademarks may be limited to select markets.
For example, we have the ability to track page views, search history, clicks, linger time and purchase route for visitors to our e-Commerce platform. We use our data to drive decision making across the organization. This customer data is largely based on information provided by customers who have opted-in to be part of our loyalty program.
We use our data to drive decision making across the organization. This customer data is largely based on information provided by customers who have opted-in to be part of our loyalty program. Our extensive database contains valuable customer information that helps us better market to our customers.
Our sole focus on designing for our specific customer needs differentiate her experience when she shops with us. Our distinct combination of first at fit design, service, product quality and value allows us to compete effectively within the women’s plus-size apparel market. Intellectual Property Our trademarks are important to our marketing efforts.
Our distinct combination of first at fashion and fit design, service, product quality and value allows us to compete effectively within the women’s plus- and mid-size apparel market. Intellectual Property Our trademarks are important to our marketing efforts. We own or have the rights to use certain trademarks, service marks and trade names that are registered with the U.S.
As we managed through these challenges, we prioritized the health, safety and overall well-being of our teams and customers. An important part of our culture is our focus on giving back to the community, which we do primarily through our Torrid Foundation that we established in 2017.
We develop and administer company-wide policies to ensure the safety of each team member and compliance with Occupational Safety and Health Administration standards and local requirements. An important part of our culture is our focus on giving back to the community, which we do primarily through our Torrid Foundation that we established in 2017.
Our employees are not represented by a labor union and are not party to a collective bargaining agreement. 3 Our talent strategy is to attract, engage and retain the best and most qualified talent to create a diverse and inclusive workforce. We offer competitive compensation packages that are based on market-specific data for comparable roles and geographic locations.
Our talent strategy is to attract, engage and retain the best and most qualified talent. We offer competitive compensation packages that are based on market-specific data for comparable roles and geographic locations. We believe in rewarding high performance and seek to design plans and programs to support this culture.
This frequency provides our stores with a steady flow of new inventory that helps maintain product freshness and in-stock availability. Information Systems We utilize a full range of third-party management information systems to support our store, e-Commerce, merchandising, customer data, financial and real estate business teams.
Information Systems We utilize a full range of third-party management information systems to support our store, e-Commerce, merchandising, customer data, financial and real estate business teams. We utilize these systems to provide us with various functions, including customer relationship management, point-of-sales, inventory management, merchandising support systems, financial reporting, e-Commerce solutions and other systems.
In fiscal year 2023, the Torrid Foundation raised over $2.2 million in support of partner organizations dedicated to educating and empowering women. Data Analytics We have a significant volume of customer and transaction data, collected from a variety of sources, including e-Commerce and in-store interactions, our loyalty program, social media and customer surveys.
Data Analytics We have a significant volume of customer and transaction data, collected from a variety of sources, including e-Commerce and in-store interactions, our loyalty program, social media and customer surveys. For example, we have the ability to track page views, search history, clicks, linger time and purchase route for visitors to our e-Commerce platform.
Our offering is built on the foundation of basic merchandise that represents year-round styles and colors that are constantly replenished ("Basics"). Our core offering includes products that are on-trend interpretations of our Basics merchandise that we update with new fabrics, prints, embellishments or features ("Core").
Our core offerings include products that are on-trend interpretations of our Basics merchandise ("Core") that we update with new fabrics, prints, embellishments or features. For example, the Harper Blouse represents a Basics item with Core iterations that feature different lengths and sleeve designs.
As of February 3, 2024, we operated 655 stores in the U.S., Puerto Rico and Canada. Our stores are located primarily in premium malls, shopping plazas, lifestyle centers and outlet locations, and the quality of our real estate locations is high as substantially all of our stores are located in A and B malls or off-mall locations.
As of February 1, 2025, we operated 634 stores in the U.S., Puerto Rico and Canada. Our stores are located primarily in premium malls, shopping plazas, lifestyle centers and outlet locations. Our stores are designed to deliver an immersive fit discovery experience and serve as desirable customer destinations.
We believe we are a destination for our customers to shop for every occasion, from casual to dressy, and everything in between. While we aim to bring her the latest in fashion trends, we do not rely on being a fashion leader.
Combined with an unparalleled fit, we believe our products make us a destination for our customers to shop for every occasion, from casual to dressy, and everything in between. While we aim to bring her current styles and trends, we also bring her offerings built on a foundation of timeless year-round styles and colors ("Basics") that are constantly replenished.
Our products are exclusive to us, with few exceptions, and provide a consistent quality and fit that we believe she cannot find elsewhere. Our product development is led by a team of highly skilled designers, artists and product engineers.
Our product development is led by a team of highly skilled designers, artists and product engineers.
Our stores are designed to deliver an immersive fit discovery experience and serve as desirable customer destinations. As a result, they are less dependent on broader traffic trends and perform consistently across all formats. Our average store size is approximately 3,100 square feet. People and Culture We have created a company culture focused on attracting, training and developing talent.
As a result, they exhibit resilience to trends in traffic volatility and perform consistently across all formats. Our average store size is approximately 3,100 square feet. People and Culture Our management is committed to attracting, developing and retaining talent, and supporting a company culture of belonging where our associates and customers feel valued.
We cannot yet determine the full impact these laws, or other such future laws, regulations and standards, may have on our current or future business. We may publish privacy policies, marketing materials, and other statements, such as compliance with certain certifications or self-regulatory principles, regarding data privacy and security.
Additionally, the FTC and many state attorneys general are interpreting existing federal and state consumer protection laws to impose expanded standards for the online collection, use, dissemination and security of data. We may publish privacy policies, marketing materials, and other statements, such as compliance with certain certifications or self-regulatory principles, regarding data privacy and security.
The facility also handles customer and store returns to drive efficient online returns processing, allowing us to execute on our unified commerce strategy. During 2020 we also accelerated our omni-channel offerings such as ship from store and curbside pickup, which when combined with BOPIS continues to drive customer acquisition and retention.
During 2024 we enabled ship-to-store and ship-from-store for our Canadian retail stores to accelerate the growth and retention of our Canadian market through more delivery options for our customers. The facility also handles customer and store returns to drive efficient online returns processing, allowing us to seamlessly execute our unified commerce strategy.
In 2020, we established our Diversity, Equity, & Inclusion Committee, which seeks to create a more equitable and inclusive workplace through open dialogue, training, recruiting, and retaining diverse talent. The goal of creating a welcoming and supportive environment spans our full organization from our headquarters and distribution center to our stores.
The goal of creating a welcoming and supportive environment spans our full organization from our headquarters and distribution center to our stores. We remain committed to a work environment rooted in mutual respect and inclusion and will continue to encourage different ideas and points of view.
For example, California enacted the California Consumer Privacy Act of 2018 (the "CCPA") which came into effect on January 1, 2020 and limits how we may collect and use personal information.
For example, on January 1, 2023, the California Privacy Rights Act (the “CPRA”) amendments to the California Consumer Privacy Act of 2018 (the “CCPA”) came into force.
Torrid is focused on fit and offers high quality products across a broad assortment that includes tops, bottoms, denim, dresses, intimates, activewear, footwear and accessories. Our proprietary product offering delivers a superior fit for the curvy woman that makes her love the way she looks and feels.
By maintaining a maniacal focus on fashion and fit, our proprietary product offering delivers a superior fit for the curvy woman that makes her love the way she looks and feels. Our sole focus on designing for our specific customer needs differentiate her experience when she shops with us.
For example, the Harper Blouse represents a Basics item with Core iterations that feature different lengths and sleeve designs. Our trend driven items incorporate the latest fashions available in the broader market to excite and engage our customer but are bought narrowly and reordered as demand dictates to minimize inventory risk.
Our trend-driven items incorporate fresh styles available in the broader market to excite and engage our customer but are bought narrowly and reordered as demand dictates to minimize inventory risk. Our focus on bottoms and intimates, both attractive growth categories where technical expertise is critical, drives customer loyalty and serves as an entry point to the Torrid brand.
Further, we collaborate with other leading brands, including Betsey Johnson, Disney, and Warner Brothers to create capsule collections to reach new customers and increase our brand awareness. We strengthen the connection with our most engaged customers through special events featuring plus-size models, celebrities, bloggers and other influencers.
We strengthen the connection with our most engaged customers through special events, like Casting Call, which feature plus- and mid-size models, celebrities, bloggers and other influencers. We use our customer database to strategically optimize the value of our marketing investments across our customer base and channels.
We strive to be market leaders in bottoms and intimates, both attractive growth categories where fit is critical. These categories serve as entry points to the Torrid brand and drive customer loyalty. We believe the design of our intimates line inspires confidence and allows our customer to move in effortless comfort throughout her day while feeling confident and sexy.
Our intimates line is designed to inspire confidence and allows our customer to move in effortless comfort throughout her day while feeling confident and sexy. We offer a full range of bra frames, sizes and solutions, continually testing new innovations.
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Our style is unapologetically youthful and sexy and we are maniacally focused on fit. We believe our customer values the appeal and versatility of our curated product assortment that helps her look her best for any occasion, including weekend, casual, work and dressy, all at accessible price points.
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Specializing in sizes 10 to 30, our primary focus is on providing fashionable , comfortable, and affordable options that meet the unique needs of our customers. Our extensive collection features high quality merchandise, including tops, bottoms, denim, dresses, intimates, activewear, footwear, and accessories.
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Through our product and brand experience we connect with customers in a way that other brands, many of which treat plus-size customers as an after-thought, have not. The Torrid Approach We have created a proprietary fit that empowers our customers and drives loyalty.
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Our products are exclusive to us, and each product is meticulously crafted to cater to the needs of the curvy woman , empowering her to love the way she looks and feels. Our collections are artfully curated to suit all aspects of our customers’ lives, including casual weekends, work, dressy and special occasions.
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We have patent applications pending for our 360° Back Smoothing Bras as well as the Wire-free Push-Up Brassiere With Hinge For Improved Support And Flexibility, and our Power Mesh Panels for Tummy-Flattening Pants, both exclusive creations for the woman in our size range.
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Understanding the importance of affordability, we aim to keep our prices reasonable without compromising on quality. This allows us to build a meaningful connection with our customers, distinguishing us from other brands that often overlook plus- and mid-size consumers.
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Product Design and Development We are relentlessly focused on creating youthful, unapologetically sexy products specifically for the woman in our size range. We design, develop and merchandise almost all of our products in-house, under the Torrid®, Torrid Curve®, CURV® and Lovesick® brand names.
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Our brand experience and product offerings establish us as a differentiated and reliable choice for plus- and mid-size customers, which we believe sets us apart in the market. We strive to be everything our customer needs in her closet , consistently delivering products that make her feel confident and stylish.
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In December 2021, we went live with our new mobile app which incorporates a new design and new features such as advanced filter and search functionality, additional payment options and personalized notifications.
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The Torrid Approach We have developed a proprietary approach to designing stylish, commercially relevant apparel and intimates that resonates with a diverse range of customers and appeals broadly to their sense of style. Our loyal customer base provides us with valuable insights that enable us to refine our products and experience.
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Additionally, we embrace the diversity of our employees and believe that diverse and inclusive teams at all levels across the organization strengthen our ability to serve our customers. Nearly 50% of our employees identify as minorities.
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This creates a self-reinforcing cycle that solidifies our leadership in the plus- and mid-size apparel markets.
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We routinely engage independent third parties to conduct cultural training sessions and engagement events. These include diversity, equity and inclusion training sessions, fun employee engagement events, and virtual and on-demand learning sessions focused on emotional and social health. Employee safety remains a priority.
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Our in-house design, development and merchandising teams work tirelessly to bring our vision to life under our portfolio of brands, including Torrid®, Torrid Curve®, CURV®, and Lovesick®. Our products are exclusive to us and provide a consistent quality and fit that we believe she cannot find elsewhere.
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We develop and administer company-wide policies to ensure the safety of each team member and compliance with Occupational Safety and Health Administration standards and local requirements. In 2020, the COVID-19 pandemic brought unprecedented challenges to our business, our communities, and our teams.
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Further, we have introduced a multiple brand strategy, including niche concepts like Festi, Nightfall and Retro Chic with more coming in 2025. This will enable us to reach new customers and increase our brand awareness.
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We utilize these systems to provide us with various functions, including customer relationship management, point-of-sales, inventory management, merchandising support systems, financial reporting, e-Commerce solutions and other systems. Seasonality While the apparel industry is generally seasonal in nature, we have not historically experienced significant seasonal fluctuations in our sales.
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In late 2024 we outsourced our U.S. returns operations to a third-party returns specialist to improve costs and processing cycle times. International returns are processed at the West Jefferson facility.
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We own or have the rights to use certain trademarks, service marks and trade names that are registered with the U.S. Patent and Trademark Office or other foreign trademark registration offices or exist under common law in the United States and other jurisdictions.
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Stores are replenished at least once per week from this facility which provides our stores with a steady flow of both new inventory and basics replenishment that helps maintain product freshness and in-stock availability. Distribution for e-Commerce customers and retail stores are facilitated by third-party parcel delivery services that optimize cost and service.
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As a result, it is possible the GDPR may apply to us. The scope of our data privacy obligations worldwide continues to evolve as new, increasingly restrictive legislation and regulations are coming into force all around the world.
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We also own domain names, including our website, www.torrid.com.
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In addition, on November 3, 2020, California voters approved significant modifications of the CCPA, as the California Privacy Rights Act (the "CPRA"), which further expanded consumers' rights with respect to certain personal information sharing and created a new state agency to oversee implementation and enforcement efforts. Many of the CPRA's amendments became effective on January 1, 2023.
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As a result, it is possible the GDPR may apply to us. In addition, various federal and state legislative and regulatory bodies, or self-regulatory organizations, may expand current laws or regulations, enact new laws or regulations or issue revised rules or guidance regarding privacy, data protection, consumer protection, and advertising.
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Additionally, similar U.S. state comprehensive privacy laws have gone into effect in other U.S. states including Virginia, Colorado, Connecticut and Utah. Oregon, Texas, and Montana have enacted privacy laws that will go into effect in 2024.
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Among other operational requirements for covered companies, the CCPA mandates that covered companies provide new disclosures to California consumers and afford such consumers data privacy rights that include, among other things, the right to request a copy from a covered company of the personal information collected about them, the right to request correction or deletion of such personal information, and the right to request to opt-out of certain sales, or disclosures for the purposes of cross-context behavioral advertising, of such personal information.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeYou should read this summary together with the more detailed description of each risk factor contained below: • the adverse impact of rulemaking changes implemented by the Consumer Financial Protection Bureau on our income streams, profitability and results of operations; • the effect of changes in consumer spending and general macroeconomic conditions on our operations and financial performance; • our inability or failure to identify or respond to new trends; • our inability to maintain and enhance our brand and attract sufficient numbers of customers to our stores or sell sufficient quantities of our products; • increased competition from other brands or retailers and our ability to obtain favorable store locations; • our dependency or reliance on third parties for different services, such as customer driving, product sourcing, manufacturing and transportation; • our failure to successfully adapt to consumer shopping preferences and develop and maintain a relevant and reliable omni-channel experience for our customers; • our failure to find employees that reflect our brand image and embody our culture; • our failure to effectively utilize information systems and implement new technologies or misuse or unauthorized use of these systems and technologies; • price volatility and lack of availability of raw materials to manufacture our products and impact on transportation and labor costs; • our sourcing a significant amount of our products from China; • the interruption of the flow of merchandise from international manufacturers, including as a result of the imposition of additional duties, tariffs and other charges on imports and exports; • potential liability arising from payment-related risks, litigation or regulatory proceedings; • changes in laws and regulations, including, among others, privacy, data protection, advertising, consumer protection, environmental and tax regulations; • government or consumer concerns about product safety that could result in regulatory actions, recalls or changes to laws; • our inability to protect our trademarks or other intellectual property rights; • our substantial indebtedness and lease obligations; • our dependency on key members of our executive management team; and • war, terrorism and other catastrophes. 9 Risks Related to Our Business Our business is sensitive to consumer spending and general economic conditions, and an economic slowdown or inflationary pressures could adversely affect our financial performance.
Biggest changeYou should read this summary together with the more detailed description of each risk factor contained below: • the effect of changes in consumer spending and general macroeconomic conditions on our operations and financial performance; • the interruption of the flow of merchandise from international manufacturers, including as a result of the imposition of additional duties, tariffs and other charges on imports and exports; • the adverse impact of rulemaking changes implemented by the Consumer Financial Protection Bureau on our income streams, profitability and results of operations; • our inability or failure to identify or respond to new trends; • our inability to maintain and enhance our brand and attract sufficient numbers of customers to our stores or sell sufficient quantities of our products; • increased competition from other brands or retailers and our ability to obtain favorable store locations; • our dependency or reliance on third parties for different services, such as customer driving, product sourcing, manufacturing and transportation; • our failure to successfully adapt to consumer shopping preferences and develop and maintain a relevant and reliable omni-channel experience for our customers; • our failure to find employees that reflect our brand image and embody our culture; • our failure to effectively utilize information systems and implement new technologies or misuse or unauthorized use of these systems and technologies; • price volatility and lack of availability of raw materials to manufacture our products and impact on transportation and labor costs; • our sourcing a significant amount of our products from China; • potential liability arising from payment-related risks, litigation or regulatory proceedings; • changes in laws and regulations, including, among others, privacy, data protection, advertising, consumer protection, environmental and tax regulations; • government or consumer concerns about product safety that could result in regulatory actions, recalls or changes to laws; • our inability to protect our trademarks or other intellectual property rights; • our substantial indebtedness and lease obligations; • our dependency on key members of our executive management team; and • war, terrorism and other catastrophes. 9 Risks Related to Our Business Our business is sensitive to consumer spending and general economic conditions, and an economic slowdown or inflationary pressures could adversely affect our financial performance.
Any intellectual property litigation or claims against us could result in the loss or compromise of our intellectual property rights, could subject us to significant liabilities, require us to seek licenses on unfavorable terms, if available at all, prevent us from manufacturing or selling certain products, limit our ability to market or 22 sell to our customers using certain methods or technologies and/or require us to redesign or re-label our products or rename our brand, any of which could have a material adverse effect on our business, financial condition, results of operations or cash flows.
Any intellectual property litigation or claims against us could result in the loss or compromise of our intellectual property rights, could subject us to significant liabilities, require us to seek licenses on unfavorable terms, if available at all, prevent us from manufacturing or selling certain products, limit our ability to market or sell to our customers using certain methods or technologies and/or require us to redesign or re-label our products or rename our 22 brand, any of which could have a material adverse effect on our business, financial condition, results of operations or cash flows.
The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including: • quarterly variations in our operating results compared to market expectations; 24 • changes in preferences of our customers; • announcements of new products, significant price reductions or other strategic actions by us or our competitors; • public reactions to our press releases, public announcements and/or filings with the SEC; • speculation in the press or investment community; • size of our public float; • stock price performance and valuations of our competitors; • fluctuations in stock market prices and volumes; • default on our indebtedness; • actions by competitors or other shopping center tenants; • changes in senior management or key personnel; • actions by our stockholders; • changes in financial estimates by securities analysts or our failure to meet any such estimates; • negative earnings or other announcements by us or other retail apparel companies; • downgrades in our credit ratings or the credit ratings of our competitors; • issuances (or sales by our stockholders) of capital stock; • general market conditions; • global economic, legal and regulatory factors unrelated to our performance; and • the realization of any of the risks described in this section, or other risks that may materialize in the future.
The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including: • quarterly variations in our operating results compared to market expectations; • changes in preferences of our customers; 24 • announcements of new products, significant price reductions or other strategic actions by us or our competitors; • public reactions to our press releases, public announcements and/or filings with the SEC; • speculation in the press or investment community; • size of our public float; • stock price performance and valuations of our competitors; • fluctuations in stock market prices and volumes; • default on our indebtedness; • actions by competitors or other shopping center tenants; • changes in senior management or key personnel; • actions by our stockholders; • changes in financial estimates by securities analysts or our failure to meet any such estimates; • negative earnings or other announcements by us or other retail apparel companies; • downgrades in our credit ratings or the credit ratings of our competitors; • issuances (or sales by our stockholders) of capital stock; • general market conditions; • global economic, legal and regulatory factors unrelated to our performance; and • the realization of any of the risks described in this section, or other risks that may materialize in the future.
Other events that could also cause disruptions to our supply chain include: • the imposition of additional trade law provisions or regulations; • the imposition of additional duties, tariffs and other charges on imports and exports, including as a result of the trade war between China and the United States; • quotas imposed by bilateral textile agreements; • foreign currency fluctuations; 16 • natural disasters; • public health issues and epidemic diseases, their effects (including any disruptions they may cause) or the perception of their effects; • theft; • terrorist threats such as pirate attacks at sea and other rogue activity; • restrictions on the transfer of funds; • the financial instability or bankruptcy of manufacturers; and • significant labor disputes, such as dock strikes.
Other events that could also cause disruptions to our supply chain include: • the imposition of additional trade law provisions or regulations; • the imposition of additional duties, tariffs and other charges on imports and exports, including as a result of the trade war between China and the United States or Canada and the United States; • quotas imposed by bilateral textile agreements; • foreign currency fluctuations; • natural disasters; • public health issues and epidemic diseases, their effects (including any disruptions they may cause) or the perception of their effects; • theft; • terrorist threats such as pirate attacks at sea and other rogue activity; • restrictions on the transfer of funds; • the financial instability or bankruptcy of manufacturers; and 16 • significant labor disputes, such as dock strikes.
See also "—The interruption of the flow of merchandise from international manufacturers could disrupt our supply chain, including as a result of the imposition of additional duties, tariffs and other charges on imports and exports" and "—Changes in tax laws or regulations or in our operations may impact our effective tax rate and may adversely affect our business, financial condition and results of operations." 17 If our distribution facility were to encounter difficulties or if it were to shut down for any reason, we could face shortages of inventory in our stores, delayed shipments to our e-Commerce customers and harm to our reputation.
See also "—The interruption of the flow of merchandise from international manufacturers could disrupt our supply chain, including as a result of the imposition of additional duties, tariffs and other charges on imports and exports" and "—Changes in tax laws or regulations or in our operations may impact our effective tax rate and may adversely affect our business, financial condition and results of operations." If our distribution facility were to encounter difficulties or if it were to shut down for any reason, we could face shortages of inventory in our stores, delayed shipments to our e-Commerce customers and harm to our reputation.
The U.S. government has enacted, has considered or is considering legislation or regulations that could significantly restrict the ability of companies and individuals to engage in these activities, such as by regulating the level of consumer notice and consent required before a company can employ cookies or other electronic tracking tools or the use of data gathered with such tools.
The U.S. government has enacted, has considered or is considering legislation or regulations that could significantly restrict the ability of companies and 18 individuals to engage in these activities, such as by regulating the level of consumer notice and consent required before a company can employ cookies or other electronic tracking tools or the use of data gathered with such tools.
Our failure to identify and react appropriately to new and changing product trends or tastes, to accurately forecast demand for certain product offerings or an overall decrease in the demand for plus-size products could lead to, among other things, excess or insufficient amounts of inventory, markdowns and write-offs, which could materially adversely affect our business and our brand image.
Our failure to identify and react appropriately to new and changing product trends or tastes, to accurately forecast demand for certain product offerings or an overall decrease in the demand for plus- and mid-size products could lead to, among other things, excess or insufficient amounts of inventory, markdowns and write-offs, which could materially adversely affect our business and our brand image.
Each of these privacy, security, and data protection laws and regulations, and any other such changes or new laws or regulations, could impose significant limitations, require changes to our business, or restrict our use or storage of personal information, which may increase our compliance expenses and make our business more costly or less efficient to conduct.
However, each of these privacy, security, and data protection laws and regulations, and any other such changes or new laws or regulations, could impose significant limitations, require changes to our business, or restrict our use or storage of personal information, which may increase our compliance expenses and make our business more costly or less efficient to conduct.
We face substantial competition in the plus-size women's apparel industry from both specialty and general retailers, including department stores, mass merchants, regional retail chains, web-based stores and other direct retailers that engage in the retail sale of apparel, accessories, footwear and other similar product categories.
We face substantial competition in the plus- and mid-size women's apparel industry from both specialty and general retailers, including department stores, mass merchants, regional retail chains, web-based stores and other direct retailers that engage in the retail sale of apparel, accessories, footwear and other similar product categories.
Any such claims, proceedings or actions may also hurt our reputation, brand and business, force us to incur significant expenses in defense of 18 such proceedings or actions, distract our management, increase our costs of doing business, result in a loss of customers, suppliers or vendors and result in the imposition of monetary penalties.
Any such claims, proceedings or actions may also hurt our reputation, brand and business, force us to incur significant expenses in defense of such proceedings or actions, distract our management, increase our costs of doing business, result in a loss of customers, suppliers or vendors and result in the imposition of monetary penalties.
If our manufacturers do not ship orders to us in a timely manner or meet our quality standards, it could cause delays in responding to consumer demands or inventory shortages and negatively affect consumer confidence in the quality and value of our brand or negatively impact our competitive position.
If our manufacturers do not ship orders to us in a timely manner or meet our quality standards, it could cause delays in responding to consumer demands or inventory shortages and negatively affect 15 consumer confidence in the quality and value of our brand or negatively impact our competitive position.
For a description of our debt service obligations, including mandatory repayments, under the New Term Loan Credit Agreement, see "Note 12—Debt Financing Arrangements." Our level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness. We also have, and will continue to have, significant lease obligations.
For a description of our debt service obligations, including mandatory repayments, under the Amended Term Loan Credit Agreement, see "Note 12—Debt Financing Arrangements." Our level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness. We also have, and will continue to have, significant lease obligations.
The harm may be immediate without affording us an opportunity for redress or correction and could have a material adverse effect on our reputation, business, operating results, financial condition and prospects. We may recognize impairments on long-lived assets. Our long-lived assets, primarily stores and intangible assets, are subject to periodic testing for impairment.
The harm may be immediate without affording us an opportunity for redress or correction and could have a material adverse effect on our reputation, business, operating results, financial condition and prospects. We may recognize impairments on definite-lived assets. Our definite-lived assets, primarily stores and intangible assets, are subject to periodic testing for impairment.
Any failure, or perceived failure, by us to comply with our posted privacy policies or with any federal or state privacy or consumer protection-related laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which we may be subject or other obligations relating to privacy or consumer protection could adversely affect our reputation, brand and business, and may result in claims, proceedings or actions against us by governmental entities, customers, suppliers or others or other liabilities or may require us to change our operations and/or cease using certain data sets.
Any failure, or perceived failure, by us to comply with our posted privacy policies or with any federal or state privacy or consumer protection-related laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which we may be subject, contracts by which we are bound, or other obligations relating to privacy or consumer protection could adversely affect our reputation, brand and business, and may result in claims, proceedings or actions against us by governmental entities, customers, suppliers or others or other liabilities or may require us to change our operations and/or cease using certain data sets.
The New Term Loan Credit Agreement and the agreement governing the Existing ABL Facility, as amended, contain, and the agreements evidencing or governing any other future indebtedness, may contain, financial restrictions on us and our restricted subsidiaries, including restrictions on our or our restricted subsidiaries' ability to, among other things: • place liens on our or our restricted subsidiaries’ assets; • make investments other than permitted investments; • incur additional indebtedness; • prepay or redeem certain indebtedness; • merge, consolidate or dissolve; • sell assets; • engage in transactions with affiliates; • change the nature of our business; 23 • change our or our subsidiaries' fiscal year or organizational documents; and • make restricted payments (including certain equity issuances).
The Amended Term Loan Credit Agreement and the ABL Facility contain, and the agreements evidencing or governing any other future indebtedness, may contain, financial restrictions on us and our restricted subsidiaries, including restrictions on our or our restricted subsidiaries' ability to, among other things: • place liens on our or our restricted subsidiaries’ assets; • make investments other than permitted investments; • incur additional indebtedness; • prepay or redeem certain indebtedness; • merge, consolidate or dissolve; • sell assets; • engage in transactions with affiliates; 23 • change the nature of our business; • change our or our subsidiaries' fiscal year or organizational documents; and • make restricted payments (including certain equity issuances).
We compete on the basis of a combination of factors, including among others, our knowledge of and focus on our target segment, price, breadth, quality, fit and style of merchandise offered, in-store experience, level of customer service, ability to identify and offer new and emerging product trends and brand image.
We compete on the basis of a combination of factors, including among others, our knowledge of and focus on our target segment, price, breadth, quality, commercial relevance, fit and style of merchandise offered, in-store experience, level of customer service, ability to identify and offer new and emerging product trends and brand image.
We are subject to risks associated with leasing substantial amounts of space, including future increases in occupancy costs and the need to generate cash flow to meet our lease obligations. We have, and will continue to have, significant lease obligations. We lease all of our store locations and our corporate headquarters.
We are subject to risks associated with leasing substantial amounts of space, including future increases in occupancy costs and the need to generate cash flow to meet our lease obligations. We have, and will continue to have, significant lease obligations. We lease all of our store locations, our corporate headquarters and our distribution center.
Additionally, as a direct-to-consumer brand focusing on young, plus-size women, we may not effectively identify product trends that appeal to our target segment or successfully adapt product trends prevailing in the market more broadly to this target segment.
Additionally, as a direct-to-consumer brand focusing on young, plus- and mid-size women, we may not effectively identify product trends that appeal to our target segment or successfully adapt product trends prevailing in the market more broadly to this target segment.
Political, social or economic instability in regions where our products are made, could cause disruptions in trade, including exports to the United States. Actions in various countries, particularly China and the United States, have created uncertainty with respect to tariff impacts on the costs of some of our merchandise.
Political, social or economic instability in regions where our products are made, could cause disruptions in trade, including exports to the United States. Actions in various countries, particularly China, and more recently, Canada, and the United States, have created uncertainty with respect to tariff impacts on the costs of some of our merchandise.
See "Note 12—Debt Financing Arrangements." Risks Related to Ownership of Our Common Stock We are a "controlled company" and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements. In addition, Sycamore’s interests may conflict with our interests and the interests of other stockholders. As of February 3, 2024, Sycamore Partners Management, L.P.
See "Note 12—Debt Financing Arrangements." Risks Related to Ownership of Our Common Stock We are a "controlled company" and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements. In addition, Sycamore’s interests may conflict with our interests and the interests of other stockholders. As of February 1, 2025, Sycamore Partners Management, L.P.
In addition, the New Term Loan Credit Agreement and the agreement governing the Existing ABL Facility, as amended, contain, and the agreements evidencing or governing any other future indebtedness may contain, restrictive covenants that will limit our ability to engage in activities that may be in our long-term best interests.
In addition, the Amended Term Loan Credit Agreement and the ABL Facility contain, and the agreements evidencing or governing any other future indebtedness may contain, restrictive covenants that will limit our ability to engage in activities that may be in our long-term best interests.
A failure by us or our subsidiaries to comply with the covenants under the New Term Loan Credit Agreement or the agreement governing the Existing ABL Facility, as amended, or to maintain the required financial ratios contained in the agreement governing the Existing ABL Facility, as amended, could result in an event of default under such indebtedness, which could adversely affect our ability to respond to changes in our business and manage our operations.
A failure by us or our subsidiaries to comply with the covenants under the Amended Term Loan Credit Agreement or the ABL Facility or to maintain the required financial ratios contained in the ABL Facility could result in an event of default under such indebtedness, which could adversely affect our ability to respond to changes in our business and manage our operations.
In addition to our distribution facility, our corporate offices are also vulnerable to damage from natural disasters, fire, public health issues and other unexpected events which could cause us to experience significant disruption in our business, resulting in lost sales and productivity, and causing us to incur significant costs to repair, any of which could have a material adverse effect on our business.
Any of these outcomes could have a material adverse effect on our business and harm our reputation. 17 In addition to our distribution facility, our corporate offices are also vulnerable to damage from natural disasters, fire, public health issues and other unexpected events which could cause us to experience significant disruption in our business, resulting in lost sales and productivity, and causing us to incur significant costs to repair, any of which could have a material adverse effect on our business.
Compliance with the GDPR may require adhering to stringent legal and operational obligations and therefore the dedication of substantial time and financial resources by the business, which may increase over time (in particular in relation to any transfers of any personal data to third parties located in certain jurisdictions).
Compliance with the GDPR may require adhering to stringent legal and operational obligations and therefore the dedication of substantial time and financial resources by the business, which may increase over time (in particular in relation to any transfers of any personal data of European or UK residents to third parties located in certain jurisdictions).
Additionally, a default by us under the New Term Loan Credit Agreement, the agreement governing the Existing ABL Facility, as amended, or an agreement governing any other future indebtedness may trigger cross-defaults under the New Term Loan Credit Agreement, the agreement governing the Existing ABL Facility, as amended, or any other future agreements governing our indebtedness.
Additionally, a default by us under the Amended Term Loan Credit Agreement, the ABL Facility or an agreement governing any other future indebtedness may trigger cross-defaults under the Amended Term Loan Credit Agreement, the ABL Facility or any other future agreements governing our indebtedness.
As of February 3, 2024, the estimated annual future occupancy payments for lease terms that include periods covered by options to extend some of our leases was $243.1 million. Our indebtedness and lease obligations could have other important consequences to you and significant effects on our business.
As of February 1, 2025, the estimated annual future occupancy payments for lease terms that include periods covered by options to extend some of our leases was $229.1 million. Our indebtedness and lease obligations could have other important consequences to you and significant effects on our business.
One or more of our suppliers might not adhere to product safety requirements or our quality control standards, and we might not identify the deficiency before such merchandise is received by our customers. Issues of product safety could result in a recall of products we sell.
We purchase merchandise from suppliers domestically as well as outside the United States. One or more of our suppliers might not adhere to product safety requirements or our quality control standards, and we might not identify the deficiency before such merchandise is received by our customers. Issues of product safety could result in a recall of products we sell.
The likelihood of these changes being enacted or implemented is unclear. We are currently unable to predict whether such changes will occur and, if so, the ultimate impact on us or our business.
Congress may produce changes to U.S. tax legislation. The likelihood of these changes being enacted or implemented is unclear. We are currently unable to predict whether such changes will occur and, if so, the ultimate impact on us or our business.
In addition, we are required to maintain compliance with various financial ratios in the agreement governing the Existing ABL Facility, as amended.
In addition, we are required to maintain compliance with various financial ratios in the ABL Facility.
We rely on vendors to handle PCI matters and to ensure PCI compliance. Despite our compliance efforts, we may become subject to claims that we have violated the PCI Data Security Standard, based on past, present, and future business practices, which could have an adverse impact on our business and reputation.
Despite our compliance efforts, we may become subject to claims that we have violated PCI-DSS, based on past, present, and future business practices, which could have an adverse impact on our business and reputation.
Laws, regulations and industry standards (including, for example, the Payment Card Industry Data Security Standard, or PCI-DSS) relating to privacy, data protection, marketing and advertising and consumer protection are evolving and subject to potentially differing interpretations.
Laws, regulations and industry standards (including, for example, the Payment Card Industry Data Security Standard, or PCI-DSS) relating to privacy, data protection, marketing and advertising and consumer protection continue to evolve as new, increasingly restrictive legislation and regulations are coming into force and subject to potentially differing interpretations.
For example, failure to comply with the GDPR, depending on the nature and severity of the breach (and with a requirement on regulators to ensure any enforcement action taken is proportionate), could (in the worst case) attract regulatory penalties of up to the greater of (i) €20 million / £17.5 million (as applicable); and (ii) 4% of an entire group's total annual worldwide turnover, as well as the possibility of other enforcement actions (such as suspension of processing activities and audits), and liabilities from third-party claims. 19 Further, we are subject to the Payment Card Industry, or PCI, Data Security Standard, which is a multifaceted security standard that is designed to protect credit card account data as mandated by payment card industry entities.
For example, failure to comply with the GDPR, depending on the nature and severity of the breach (and with a requirement on regulators to ensure any enforcement action taken is proportionate), could (in the worst case) incur regulatory penalties of up to the greater of (i) €20 million / £17.5 million (as applicable); and (ii) 4% of an entire group's total annual worldwide turnover, as well as the possibility of other enforcement actions (such as suspension of processing activities and audits), and liabilities from third-party claims.
See also "—The 21 interruption of the flow of merchandise from international manufacturers could disrupt our supply chain, including as a result of the imposition of additional duties, tariffs and other charges on imports and exports" and "—We source a significant amount of our product receipts from China, which exposes us to risks inherent in doing business there." Presidential and congressional elections in the United States could also result in significant changes in, and uncertainty with respect to, tax legislation, regulation and government policy directly affecting us and our business.
See also "—The interruption of the flow of merchandise from international manufacturers could disrupt our supply chain, including as a result of the imposition of additional duties, tariffs and other charges on imports and exports" and "—We source a significant amount of our product receipts from China, which exposes us to risks inherent in doing business there." As of January 2025, the change in U.S. presidential administration and control of U.S.
If search engines change their algorithms, terms of service, display or the featuring of search results, determine we are out of compliance with their terms of service or if competition increases for advertisements, we may be unable to cost-effectively attract customers.
If search engines change their algorithms, terms of service, display or the featuring of search results, determine we are out of compliance with their terms of service or if competition increases for advertisements, we may be unable to cost-effectively attract customers. Our relationships with our marketing vendors are not long-term in nature and do not require any specific performance commitments.
Our marketing initiatives may become increasingly expensive and generating a return on those initiatives may be difficult. Even if we successfully increase revenue as a result of our paid marketing efforts, such increase may not offset the additional marketing expenses we incur.
Even if we successfully increase revenue as a result of our paid marketing efforts, such increase may not offset the additional marketing expenses we incur.
In March 2024, the CFPB issued a final rule to amend Regulation Z to mandate significant decreases in credit card late fees and eliminate annual inflation adjustments for late fee safe harbor amounts.
In March 2024, the CFPB issued a final rule to amend Regulation Z to mandate significant decreases in credit card late fees and eliminate annual inflation adjustments for late fee safe harbor amounts. In May 2024, the United States District Court for the Northern District of Texas issued a preliminary injunction prohibiting the order from taking effect.
In particular, the political, legal and economic climate in China, both nationally and regionally, is fluid and unpredictable.
Sourcing our product receipts from China exposes us to political, legal and economic risks. In particular, the political, legal and economic climate in China, both nationally and regionally, is fluid and unpredictable.
Risks Related to Our Indebtedness Our indebtedness and lease obligations could adversely affect our financial flexibility and our competitive position. On June 14, 2021, we entered into the New Term Loan Credit Agreement in an initial aggregate amount of $350.0 million and used borrowings thereunder to, among other things, repay and terminate the Original Term Loan Credit Agreement.
On June 14, 2021, we entered into a term loan credit agreement (the "Term Loan Credit Agreement") in an initial aggregate amount of $350.0 million, which has a maturity date of June 14, 2028, and used borrowings thereunder to, among other things, repay and terminate an original term loan credit agreement.
Our relationships with our marketing vendors are not long term in nature and do not require any specific performance commitments. In addition, many of our online advertising vendors provide advertising services to other companies, including companies with whom we may compete. As competition for online advertising has increased, the cost for some of these services has also increased.
In addition, many of our online advertising vendors provide advertising services to other companies, including companies with whom we may compete. As competition for online advertising has increased, the cost for some of these services has also increased. Our marketing initiatives may become increasingly expensive and generating a return on those initiatives may be difficult.
In addition, we and our manufacturers and suppliers may not be able to find a sufficient number of qualified workers due to the intensely competitive and fluid market for skilled labor in China. Sourcing our product receipts from China exposes us to political, legal and economic risks.
Our results of operations will be materially and adversely affected if the labor costs of our third-party suppliers and manufacturers increase significantly. In addition, we and our manufacturers and suppliers may not be able to find a sufficient number of qualified workers due to the intensely competitive and fluid market for skilled labor in China.
Our target market of approximately 27 to 42 year old plus-size women has stylistic preferences that cannot be predicted with certainty and are subject to change. Our success depends in large part upon our ability to effectively identify and respond to changing product trends and consumer demands among this segment, and to translate market trends into appropriate, salable product offerings.
Our success depends in large part upon our ability to effectively identify and respond to changing product trends and consumer demands among this segment, and to translate market trends into appropriate, salable product offerings.
Furthermore, pursuant to Chinese labor laws, employers in China are subject to various requirements when signing labor contracts, paying remuneration, determining the term of employees' probation and unilaterally terminating labor contracts. Our results of operations will be materially and adversely affected if the labor costs of our third-party suppliers and manufacturers increase significantly.
With the rapid development of the Chinese economy, the cost of labor has increased and may continue to increase in the future. Furthermore, pursuant to Chinese labor laws, employers in China are subject to various requirements when signing labor contracts, paying remuneration, determining the term of employees' probation and unilaterally terminating labor contracts.
We are subject to regulation by the Consumer Product Safety Commission and similar state and international regulatory authorities, and our products could be subject to involuntary recalls and other actions by these authorities. We purchase merchandise from suppliers domestically as well as outside the United States.
Government or consumer concerns about product safety could result in regulatory actions, recalls or changes to laws, which could harm our reputation, increase costs or reduce sales. We are subject to regulation by the Consumer Product Safety Commission and similar state and international regulatory authorities, and our products could be subject to involuntary recalls and other actions by these authorities.
Failure to achieve our future operating plans or generate sufficient levels of cash flow at our stores could result in impairment charges on long-lived assets, which could have a material adverse effect on our financial condition or results of operations. 15 Risks Related to the Manufacturing, Processing and Supply of Our Products We do not own or operate any manufacturing facilities and therefore depend upon third parties for the manufacture of all of our merchandise.
Store assets are reviewed using factors including, but not limited to, our future operating plans and projected future cash flows. Failure to achieve our future operating plans or generate sufficient levels of cash flow at our stores could result in impairment charges on definite-lived assets, which could have a material adverse effect on our financial condition or results of operations.
Our New Term Loan Credit Agreement has a maturity date of June 14, 2028. As of February 3, 2024, we had $312.0 million of outstanding indebtedness, net of unamortized original issue discount ("OID") and debt financing costs, consisting of loans under the New Term Loan Credit Agreement and borrowings under the Existing ABL, as amended.
On May 24, 2023, we entered into an amendment to the Term Loan Credit Agreement (the "Amended Term Loan Credit Agreement"). As of February 1, 2025, we had $288.6 million of outstanding indebtedness, net of unamortized original issue discount ("OID") and debt financing costs, consisting of loans under the Amended Term Loan Credit Agreement.
While we do not believe that the IR Act will have a material impact on our consolidated financial statements, any future corporate tax legislation could have that effect. Additionally, recent political developments have introduced greater uncertainty with respect to tax and trade policies, tariffs and government regulations affecting trade between the U.S. and other countries.
Additionally, recent political developments have introduced greater uncertainty with respect to tax and trade policies, tariffs and government regulations affecting trade between the U.S. and other countries. We source the majority of our merchandise from manufacturers located outside of the U.S., including a significant amount from Asia.
In fiscal year 2023, we sourced approximately 53% of our products from manufacturing partners in China. Additionally, our manufacturing partners outside of China may source their own raw materials from third parties in other countries, including China. With the rapid development of the Chinese economy, the cost of labor has increased and may continue to increase in the future.
Although we are actively diversifying our product sourcing options outside of China, in fiscal year 2024, we received approximately 48.5% of our products from manufacturing partners in China. Additionally, our manufacturing partners outside of China may source their own raw materials from third parties in other countries, including China.
We source the majority of our merchandise from manufacturers located outside of the U.S., including a significant amount from Asia. China and the United States have each previously imposed tariffs on exports from the other in a trade war, and an escalation of the trade war remains a possibility.
From time to time, countries including China, the United States and more recently, Canada, impose tariffs on exports from the other in a trade war, and an escalation of the trade war remains a possibility.
To the extent that such changes have a negative impact on us or our business, these changes may materially and adversely impact our business, financial condition and results of operations. Government or consumer concerns about product safety could result in regulatory actions, recalls or changes to laws, which could harm our reputation, increase costs or reduce sales.
To the extent that such changes 21 have a negative impact on us or our business, these changes may materially and adversely impact our business, financial condition and results of operations. In addition, aspects of U.S. tax laws may lead foreign jurisdictions to respond by enacting additional tax legislation that is unfavorable to us.
Four additional states (Virginia, Colorado, Utah and Connecticut) have enacted data privacy and security laws that have, or will in the near future, come into effect and other states may follow.
Additional states, including Colorado, Connecticut, Delaware, Florida, Iowa, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Texas, Utah and Virginia, have recently enacted data privacy and security laws that are effective, and Indiana, Kentucky, Maryland, Minnesota, Rhode Island, and Tennessee have enacted data privacy and security laws that will become effective in 2025 or 2026. Other states may follow.
Removed
Store assets are reviewed using factors including, but not limited to, our future operating plans and projected future cash flows.
Added
Our target market of approximately 30 to 44 year old plus- and mid-size women has stylistic preferences that cannot be predicted with certainty and are subject to change.
Removed
Any of these outcomes could have a material adverse effect on our business and harm our reputation.
Added
Risks Related to the Manufacturing, Processing and Supply of Our Products We do not own or operate any manufacturing facilities and therefore depend upon third parties for the manufacture of all of our merchandise.
Removed
For example, the U.S. government enacted the Inflation Reduction Act of 2022 (the "IR Act"), which includes changes to the U.S. corporate income tax system, including a 15% alternate minimum tax based on the adjusted financial statement income of corporations or their predecessors with a three-year taxable year average annual adjusted financial statement income in excess of $1 billion, and a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022.
Added
Further, we may publish privacy policies, marketing materials, and other statements, such as compliance with certain certifications or self-regulatory principles, regarding data privacy and security.
Removed
In addition, the current administration has announced a proposal to increase such excise tax to 4%. The IR Act also includes provisions intended to mitigate climate change by, among others, providing tax credit incentives for reductions in greenhouse gas emissions.
Added
If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair or misrepresentative of our practices, then we may be subject to investigation, enforcement actions by regulators or other adverse consequences.
Removed
For example, the United States government may enact significant changes to the taxation of business entities including, among others, a permanent increase in the corporate income tax rate, an increase in the tax rate applicable to the global intangible low-taxed income and elimination of certain exemptions, and the imposition of minimum taxes or surtaxes on certain types of income.
Added
For example, our compliance with our privacy policies and our general consumer data privacy and security practices may be subject to review by the Federal Trade Commission ("FTC"), which may bring enforcement actions to challenge allegedly unfair and deceptive trade practices, including the violation of privacy policies and representations or material omissions therein.
Added
Further, we are subject to the Payment Card Industry Data Security Standard, or PCI-DSS, which is a multifaceted security standard that is designed to protect credit card account data as mandated by payment card industry entities. We rely on vendors to handle PCI-DSS matters and to ensure PCI-DSS compliance.
Added
Given the rapidly evolving landscape of data privacy and security laws, we cannot yet determine the full impact these 19 privacy, security, and data protection laws and regulations, or other such future privacy, security, and data protection laws and regulations, may have on our current or future business.
Added
That litigation is still pending and the outcome, including potential appeals, is uncertain. Although the CFPB remains active, its operations have been significantly impacted by the actions of the Department of Government Efficiency, including a recent directive to halt most activities.
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As of December 31, 2024, numerous countries have now enacted the Organization of Economic Cooperation and Development’s model rules on a global minimum tax of 15%.
Added
Certain countries, including European Union member states, have enacted or are expected to enact legislation incorporating the global minimum tax with effect from 2024 and widespread implementation of a global minimum tax is expected by the end of 2025.
Added
Based on the guidance available thus far, we do not expect this legislation to have a material impact on our consolidated financial statements, but we will continue to evaluate it as additional guidance and clarification becomes available.
Added
As the legislation becomes effective in countries in which we do business, our taxes could increase and negatively impact our provision for income taxes. This increasingly complex global tax environment has in the past and could continue to increase tax uncertainty, resulting in higher compliance costs and adverse effects on our financial performance.
Added
Risks Related to Our Indebtedness Our indebtedness and lease obligations could adversely affect our financial flexibility and our competitive position.
Added
In May 2015, we entered into a credit agreement for a senior secured asset-based revolving credit facility which has been subsequently amended ("ABL Facility").

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeBased on the information available as of the date of this Annual Report, no material risks from known cybersecurity incidents have, either individually or in the aggregate, materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Biggest changeSee “Risks Related to Our Business” in Item 1A, “Risk Factors” in this Annual Report for a discussion of cybersecurity risks that may materially impact us. 29 Based on the information available as of the date of this Annual Report, no material risks from known cybersecurity incidents have, either individually or in the aggregate, materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
We are susceptible to a number of significant and persistent cybersecurity threats, including those common to most industries as well as those we face as a retailer, operating in an industry characterized by a high volume of 28 customer transactions and collection of sensitive data. These threats, which are constantly evolving, include data breaches, ransomware, and phishing attacks.
We are susceptible to a number of significant and persistent cybersecurity threats, including those common to most industries as well as those we face as a retailer, operating in an industry characterized by a high volume of customer transactions and collection of sensitive data. These threats, which are constantly evolving, include data breaches, 28 ransomware, and phishing attacks.
There is no guarantee that any risks from cybersecurity threats will not materially affect us in the future. 29 Cybersecurity Governance The Board oversees our overall risk assessment process, where we assess key enterprise risks within the company, and at least quarterly, senior management reviews these risks with the Board.
There is no guarantee that any risks from cybersecurity threats will not materially affect us in the future. Cybersecurity Governance The Board oversees our overall risk assessment process, where we assess key enterprise risks within the company, and at least quarterly, senior management reviews these risks with the Board.
Our employees undergo cybersecurity awareness training and regular phishing awareness campaigns that are based upon and designed to emulate real-world contemporary threats. We provide prompt feedback (and, if necessary, additional training or remedial action) based on the results of such exercises.
Our employees undergo cybersecurity awareness training and regular phishing simulation campaigns that are based upon and designed to emulate real-world contemporary threats. We provide prompt feedback (and, if necessary, additional training or remedial action) based on the results of such exercises.
Our processes also address cybersecurity risks associated with our use of third-party service providers used in different capacities to provide or operate some of our cybersecurity controls and technology systems.
Our processes also address cybersecurity risks associated with our use of third-party service providers used in different capacities to provide or operate some of our cybersecurity and technology systems.
Our cybersecurity risk management and strategy processes are led by our CTO, assisted by our Vice President of Infrastructure and Operations. Together, they have over 20 years of combined professional experience in various roles across multiple industries involving managing information security, developing cybersecurity strategy, implementing effective information and cybersecurity programs, and managing multiple industry and regulatory compliance environments.
Our cybersecurity risk management and strategy processes are led by our COO, assisted by our Vice President of Infrastructure and Operations. Together, they have over 20 years of combined professional experience in various roles across multiple industries involving managing information security, developing cybersecurity strategy, implementing effective information and cybersecurity programs, and managing multiple industry and regulatory compliance environments.
At least quarterly, the Audit Committee, Chief Executive Officer and senior finance and legal management, evaluate, review and discuss with the CTO our cybersecurity, privacy and data security programs, the status of projects to strengthen internal cybersecurity, results from third-party assessments, recent cybersecurity incidents at other companies and the emerging threat landscape.
At least quarterly, the Audit Committee, Chief Executive Officer and senior finance and legal management, evaluate, review and discuss with the COO our cybersecurity, privacy and data security programs, the status of projects to strengthen internal cybersecurity, results from third-party assessments, recent cybersecurity incidents at other companies and the emerging threat landscape.
Efforts to assess, identify, and manage cybersecurity risk are led by our dedicated Chief Technology Officer (“CTO”), and supported by an experienced team, other members of management, and the Board. From time to time, we engage consultants, auditors, and other third parties to assist us in these efforts.
Efforts to assess, identify, and manage cybersecurity risk are led by our dedicated Chief Operating Officer (“COO”), and supported by an experienced team, other members of management, and the Board. From time to time, we engage consultants, auditors, and other third parties to assist us in these efforts.
Accordingly, we recognize the critical importance of maintaining the safety and security of these information systems and have implemented multiple layers of cybersecurity processes, technologies, and controls to aid in our efforts to assess, identify, and manage cybersecurity risk. Our enterprise risk management framework considers cybersecurity risk alongside other company risks as part of our overall risk assessment process.
Accordingly, we recognize the critical importance of protecting and securing these information systems and have implemented multiple layers of cybersecurity processes, technologies, and controls to aid in our efforts to assess, identify, and manage cybersecurity risk. Our enterprise risk management framework considers cybersecurity risk alongside other company risks as part of our overall risk assessment process.
We assess our information security program using an industry-leading cybersecurity framework, the Center for Internet Security Critical Security Controls. A risk assessment along with risk-based analysis and judgment are used to select security controls to address risks.
We assess our information security program using an industry-leading cybersecurity framework, the National Institute of Standards and Technology ("NIST") Cybersecurity Framework ("CSF"). A risk assessment along with risk-based analysis and judgment are used to select security controls to address risks.
Removed
See “Risks Related to Our Business” in Item 1A, “Risk Factors” in this Annual Report for a discussion of cybersecurity risks that may materially impact us.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeState Number of Stores AK 2 ME 2 SC 5 AL 7 MI 20 SD 2 AR 6 MN 14 TN 13 AZ 15 MO 12 TX 59 CA 63 MS 5 UT 6 CO 12 MT 2 VA 18 CT 8 NC 17 VT 1 DE 3 ND 3 WA 16 FL 38 NE 3 WI 15 GA 19 NH 6 WV 5 HI 3 NJ 16 WY 1 IA 8 NM 5 ID 3 NV 8 Number of Stores IL 21 NY 21 Canada IN 16 OH 27 CAN-AB 8 KS 3 OK 6 CAN-BC 3 KY 9 OR 8 CAN-HAL 1 LA 10 PA 24 CAN-MB 2 MA 10 PR 2 CAN-NB 2 MD 13 RI 2 CAN-NL 1 CAN-NS 1 CAN-ON 21 CAN-SK 2 CAN-WN 1
Biggest changeState Number of Stores AK 2 ME 2 SC 5 AL 7 MI 19 SD 2 AR 6 MN 13 TN 13 AZ 15 MO 10 TX 56 CA 64 MS 5 UT 6 CO 12 MT 2 VA 17 CT 7 NC 16 VT 1 DE 2 ND 3 WA 16 FL 37 NE 3 WI 14 GA 15 NH 6 WV 5 HI 3 NJ 11 WY 1 IA 8 NM 5 ID 3 NV 8 Number of Stores IL 19 NY 20 Canada IN 16 OH 27 CAN-AB 10 KS 4 OK 7 CAN-BC 5 KY 9 OR 8 CAN-MB 3 LA 8 PA 22 CAN-NB 2 MA 9 PR 3 CAN-NL 1 MD 13 RI 2 CAN-NS 3 CAN-ON 21 CAN-SK 2
The leases also generally require us to pay real estate taxes, insurance and certain common area costs. We renegotiate with landlords to obtain more favorable terms as opportunities arise. 30 The table below sets forth the number of Torrid stores by U.S. state or territory or Canadian province that we operated as of February 3, 2024. U.S.
The leases also generally require us to pay real estate taxes, insurance and certain common area costs. We renegotiate with landlords to obtain more favorable terms as opportunities arise. 30 The table below sets forth the number of Torrid stores by U.S. state or territory or Canadian province that we operated as of February 1, 2025. U.S.
These clauses provide us the contractual flexibility to exit a store or renegotiate rent in the event a store’s performance deteriorates. Approximately 90% of current leases will have a termination or kickout within 3 years of the end of fiscal year 2022, providing us with significant flexibility.
These clauses provide us the contractual flexibility to exit a store or renegotiate rent in the event a store’s performance deteriorates. Approximately 94% of current leases will have a termination or kickout within three years of the end of fiscal year 2024, providing us with significant flexibility.
The average remaining lease term was 3.1 years as of February 3, 2024, before the assumed benefit of kickout clauses. Assuming termination of each lease at the earlier of its first available kickout date or full term, the average remaining lease term was 2.1 years as of February 3, 2024.
The average remaining lease term was 2.7 years as of February 1, 2025, before the assumed benefit of kickout clauses. Assuming termination of each lease at the earlier of its first available kickout date or full term, the average remaining lease term was 1.8 years as of February 1, 2025.
As of February 3, 2024, 17% of our total leases were on variable rent structures, providing additional flexibility to our store fleet going forward. A number of our leases have built-in options to extend our tenancy for periods of up to five years.
As of February 1, 2025, 16% of our total leases were on variable rent structures, providing additional flexibility to our store fleet going forward. A number of our leases have built-in options to extend our tenancy for periods of up to five years.
Our stores are located primarily in premium malls, strip centers, lifestyle centers or outlet locations. They perform consistently across all formats because, we believe, our stores serve as a shopping destination for our customers and are therefore less dependent on broader traffic trends. The average size of our stores is approximately 3,100 square feet.
They perform consistently across all formats because, we believe, our stores serve as a shopping destination for our customers and are therefore less dependent on broader traffic trends. The average size of our stores is approximately 3,100 square feet.
Item 2. Properties We are headquartered in City of Industry, California. Our principal executive offices are leased under a lease agreement expiring in 2027, with an option to renew thereafter. We do not own any real property. As of February 3, 2024, we operated 655 stores in 50 U.S. states, Puerto Rico and Canada.
Item 2. Properties We are headquartered in City of Industry, California. Our principal executive offices are leased under a lease agreement expiring in 2027, with an option to renew thereafter. We lease a 750,000 square foot distribution facility located in West Jefferson, Ohio. The lease agreement expires in 2030, with options to renew thereafter.
Added
We do not own any real property. As of February 1, 2025, we operated 634 stores in 50 U.S. states, Puerto Rico and Canada. Our stores are located primarily in premium malls, strip centers, lifestyle centers or outlet locations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(in dollars) July 1, 2021 February 3, 2024 Torrid Holdings Inc. $ 100.00 $ 20.58 S&P 500 $ 100.00 $ 114.78 S&P 500 Retail Select Industry $ 100.00 $ 73.12 Dividends We have never declared nor paid any cash dividends on our common stock.
Biggest change(in dollars) July 1, 2021 February 1, 2025 Torrid Holdings Inc. $ 100.00 $ 29.23 S&P 500 $ 100.00 $ 139.83 S&P 500 Retail Select Industry $ 100.00 $ 83.40 Dividends We have never declared nor paid any cash dividends on our common stock.
Additionally, our operating subsidiaries are currently restricted from paying cash dividends by the agreements governing their indebtedness, and we expect these restrictions to continue in the future. We are not obligated to pay dividends on our common stock. 32 Recent Sales of Unregistered Securities and Use of Proceeds None.
Additionally, our operating 32 subsidiaries are currently restricted from paying cash dividends by the agreements governing their indebtedness, and we expect these restrictions to continue in the future. We are not obligated to pay dividends on our common stock. Recent Sales of Unregistered Securities and Use of Proceeds None.
The graph assumes $100 was invested at the market close on July 1, 2021, which was the first day our common stock began trading and its relative performance is tracked through February 2, 2024. Data for the S&P 500 Index and the S&P Retail Select Industry Index assume reinvestment of dividends, if any.
The graph assumes $100 was invested at the market close on July 1, 2021, which was the first day our common stock began trading and its relative performance is tracked through February 1, 2025. Data for the S&P 500 Index and the S&P Retail Select Industry Index assume reinvestment of dividends, if any.
The number of holders of record of our common stock as of March 28, 2024 was 37 . Stock Performance Graph This performance graph shall not be deemed "filed" with the SEC for purposes of Section 18 of the Exchange Act or incorporated by reference into any filing of Torrid Holdings Inc. under the Securities Act or the Exchange Act.
The number of holders of record of our common stock as of March 27, 2025 was 37. Stock Performance Graph This performance graph shall not be deemed "filed" with the SEC for purposes of Section 18 of the Exchange Act or incorporated by reference into any filing of Torrid Holdings Inc. under the Securities Act or the Exchange Act.
During the three months ended February 3, 2024, we did not repurchase any shares of our common stock. As of February 3, 2024, we had approximately $44.9 million remaining under the repurchase program. Item 6. [Reserved] 33
During the three months ended February 1, 2025, we did not repurchase any shares of our common stock. As of February 1, 2025, we had approximately $44.9 million remaining under the repurchase program. Item 6. [Reserved] 33

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

121 edited+16 added−61 removed84 unchanged
Biggest changeThe following table provides a reconciliation of net income to Adjusted EBITDA for the periods presented (dollars in thousands): Fiscal Year Ended February 3, 2024 January 28, 2023 Net income $ 11,619 $ 50,209 Interest expense 39,203 29,736 Interest income, net of other (income) expense (90) 207 Provision for income taxes 6,416 21,473 Depreciation and amortization (A) 36,484 36,074 Share-based compensation (B) 8,042 9,980 Noncash deductions and charges (C) 816 2,493 Other expenses (D) 3,729 2,178 Adjusted EBITDA $ 106,219 $ 152,350 (A) Depreciation and amortization excludes amortization of debt issuance costs and original issue discount that are reflected in interest expense.
Biggest changeFiscal Year 2024 Compared to Fiscal Year 2023 The following table summarizes our consolidated results of operations for the periods indicated (dollars in thousands): Fiscal Year Ended February 1, 2025 % of Net Sales February 3, 2024 % of Net Sales Net sales $ 1,103,737 100.0 % $ 1,151,945 100.0 % Cost of goods sold 690,266 62.5 % 745,967 64.8 % Gross profit 413,471 37.5 % 405,978 35.2 % Selling, general and administrative expenses 302,032 27.4 % 293,331 25.5 % Marketing expenses 54,231 4.9 % 55,499 4.8 % Income from operations 57,208 5.2 % 57,148 5.0 % Interest expense 35,633 3.2 % 39,203 3.4 % Interest income, net of other (income) expense (28) 0.0 % (90) 0.0 % Income before provision for income taxes 21,603 2.0 % 18,035 1.6 % Provision for income taxes 5,285 0.5 % 6,416 0.6 % Net income $ 16,318 1.5 % $ 11,619 1.0 % The following table provides a reconciliation of net income to Adjusted EBITDA for the periods presented (in thousands): Fiscal Year Ended February 1, 2025 February 3, 2024 Net income $ 16,318 $ 11,619 Interest expense 35,633 39,203 Interest income, net of other (income) expense (28) (90) Provision for income taxes 5,285 6,416 Depreciation and amortization (A) 35,721 36,484 Share-based compensation (B) 7,634 8,042 Noncash deductions and charges (C) 347 816 Other expenses (D) 8,210 3,729 Adjusted EBITDA $ 109,120 $ 106,219 (A) Depreciation and amortization excludes amortization of debt issuance costs and original issue discount that are reflected in interest expense.
Among other limitations, Adjusted EBITDA does not reflect: • interest expense; • interest income, net of other expense (income); • provision for income taxes; • depreciation and amortization; • share-based compensation; • noncash deductions and charges; and • other expenses.
Among other limitations, Adjusted EBITDA does not reflect: • interest expense; • interest income, net of other (income) expense; • provision for income taxes; • depreciation and amortization; • share-based compensation; • noncash deductions and charges; and • other expenses.
If we elect the SOFR rate, interest is due and payable on the last day of each interest period, unless an interest period exceeds three months, then the respective dates that fall every three months after the beginning of the interest period shall also be interest payment dates.
If we elect the SOFR rate, interest is due and payable on the last day of each interest period, unless an interest period exceeds three months, then the respective dates that fall every three months after the beginning of the interest period shall also be interest payment dates.
Based upon historical experience, we estimate the value of outstanding gift cards that will ultimately not be redeemed (breakage) nor escheated under statutory unclaimed property laws. This amount is recognized as revenue over the time pattern established by our historical gift card redemption experience. We monitor our gift card redemption experience and associated accounting on an ongoing basis.
Based upon historical experience, we 45 estimate the value of outstanding gift cards that will ultimately not be redeemed (breakage) nor escheated under statutory unclaimed property laws. This amount is recognized as revenue over the time pattern established by our historical gift card redemption experience. We monitor our gift card redemption experience and associated accounting on an ongoing basis.
Material Events and Uncertainties Affecting Our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and elsewhere in this Annual Report on Form 10-K in the section titled "Risk Factors." Customer Acquisition and Retention.
Material Events and Uncertainties Affecting Our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and elsewhere in this Annual Report on Form 10-K in the section titled "Risk Factors." 35 Customer Acquisition and Retention.
We do not apply ASU 2016-02, Leases , and all related guidance ("ASC 842") requirements to leases that have lease terms of 12 months or less upon commencement, and instead recognize short-term lease payments, if applicable, in the consolidated statements of operations and comprehensive income (loss) on a straight-line basis over the lease term.
We do not apply ASU 2016-02, Leases , and all related guidance ("ASC 842") requirements to leases that have lease terms of 12 months or less upon commencement, and instead recognize short-term lease payments, if applicable, in the consolidated statements of operations and comprehensive income on a straight-line basis over the lease term.
Our primary cash needs are for merchandise inventories, payroll, rent for our stores, headquarters and distribution center, capital expenditures associated with opening new stores and updating existing stores, logistics and information technology. We also need cash to fund our interest and principal payments on the New Term Loan Credit Agreement and make discretionary repurchases of our common stock.
Our primary cash needs are for merchandise inventories, payroll, rent for our stores, headquarters and distribution center, capital expenditures associated with opening new stores and updating existing stores, logistics and information technology. We also need cash to fund our interest and principal payments on the Amended Term Loan Credit Agreement and make discretionary repurchases of our common stock.
Management evaluates its policies and assumptions on an ongoing basis. Our significant accounting estimates related to these accounts in the preparation of our consolidated financial statements are 47 described below (see Note 2 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding our critical accounting policies).
Management evaluates its policies and assumptions on an ongoing basis. Our significant accounting estimates related to these accounts in the preparation of our consolidated financial statements are described below (see Note 2 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding our critical accounting policies).
The New Term Loan Credit Agreement provides for term loans in an initial aggregate amount of $350.0 million ("Principal"), which is recorded net of OID of $3.5 million and has a maturity date of June 14, 2028. In connection with the New Term Loan Credit Agreement, we paid financing costs of approximately $6.0 million.
The Term Loan Credit Agreement provides for term loans in an initial aggregate amount of $350.0 million ("Principal"), which is recorded net of OID of $3.5 million and has a maturity date of June 14, 2028. In connection with the Term Loan Credit Agreement, we paid financing costs of approximately $6.0 million.
We define comparable sales for any given period as the sales of our e-Commerce operations and stores that we have included in our comparable sales base during that period. We include a store in our comparable sales base after it has been open for 15 full fiscal months.
We define comparable sales for any given period as the sales of our e-Commerce operations and stores that we have included in our comparable sales base during that period. We include a new store in our comparable sales base after it has been open for 15 full fiscal months.
Critical Accounting Estimates Our discussion of results of operations and financial condition is based upon the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, which have been prepared in accordance with GAAP.
Critical Accounting Policies and Estimates Our discussion of results of operations and financial condition is based upon the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, which have been prepared in accordance with GAAP.
We view the number of active customers as a key indicator of our performance, the reach of our e-Commerce and stores platform, the value proposition and consumer awareness of our brand and our customers' desire to purchase our products. Net Sales per Active Customer.
We view the number of active customers as a key indicator of our performance, the reach of our e-Commerce and stores platform, the value proposition and consumer awareness of our brand and our customers' desire to purchase our products. 34 Net Sales per Active Customer.
Variable lease payments associated with retail space leases are recognized as occupancy costs within cost of goods sold in the consolidated statements of operations and comprehensive income (loss) in the period in which the obligation for those payments is incurred.
Variable lease payments associated with retail space leases are recognized as occupancy costs within cost of goods sold in the consolidated statements of operations and comprehensive income in the period in which the obligation for those payments is incurred.
We view net sales per active customer as a key indicator of our customers' purchasing patterns, including their initial and repeat purchase behavior and we continue to closely monitor this metric each year. 34 Comparable Sales.
We view net sales per active customer as a key indicator of our customers' purchasing patterns, including their initial and repeat purchase behavior, and we continue to closely monitor this metric each year. Comparable Sales.
We generally consider all other lease payments to be fixed in nature and the sum of all the discounted remaining fixed payments in the lease terms make up the lease liabilities in our consolidated balance sheet (if the lease terms are longer than 12 months).
We generally 46 consider all other lease payments to be fixed in nature and the sum of all the discounted remaining fixed payments in the lease terms make up the lease liabilities in our consolidated balance sheet (if the lease terms are longer than 12 months).
This reclassification does not have any impact on income from operations, income before provision for income taxes, net income (loss) or earnings (loss) per share and there was no cumulative effect to stockholders’ deficit or net assets.
This reclassification does not have any impact on income from operations, income before provision for income taxes, net income or earnings per share and there was no cumulative effect to stockholders’ deficit or net assets.
Prepayments, if applicable, commence at the end of fiscal year 2022 and represent between 0% and 50% (depending on our first lien net leverage ratio) of Excess Cash Flow (as defined in the New Term Loan Credit Agreement) in excess of $10.0 million, minus prepayments of Principal, the Existing ABL Facility, as amended (to the extent accompanied by a permanent reduction in the commitments thereunder) and certain other specified indebtedness and amounts in connection with certain other enumerated items.
Prepayments, if applicable, commence at the end of fiscal year 2022 and represent between 0% and 50% (depending on our first lien net leverage ratio) of Excess Cash Flow (as defined in the Amended Term Loan Credit Agreement) in excess of $10.0 million, minus prepayments of Principal, the ABL Facility (to the extent accompanied by a permanent reduction in the commitments thereunder) and certain other specified indebtedness and amounts in connection with certain other enumerated items.
Revenue from our stores is recognized at the time of sale and revenue from our e-Commerce channel is recognized upon shipment of the merchandise to the home of the customer; except in cases where the merchandise is shipped to a store and revenue is recognized when the customer retrieves the merchandise from the store.
Revenue from our stores is recognized at the time of sale and revenue from our e-Commerce channel is recognized upon shipment of the merchandise to the customer; except in cases where the merchandise is shipped to a store and revenue is recognized when the customer retrieves the merchandise from the store.
Adjusted EBITDA represents GAAP net income (loss) plus interest expense less interest income, net of other expense (income), plus provision for less (benefit from) income taxes, depreciation and amortization ("EBITDA"), and share-based compensation, noncash deductions and charges and other expenses.
Adjusted EBITDA represents GAAP net income plus interest expense less interest income, net of other (income) expense, plus provision for less (benefit from) income taxes, depreciation and amortization ("EBITDA"), and share-based compensation, noncash deductions and charges and other expenses.
Under the new policy, we record PLCC Funds (as defined in “Note 2–Summary of Significant Accounting Policies”) in net sales in the consolidated statements of operations and comprehensive income (loss).
Under the new policy, we record PLCC Funds (as defined in “Note 2–Summary of Significant Accounting Policies”) in net sales in the consolidated statements of operations and comprehensive income.
The New Term Loan Credit Agreement also contains a number of covenants that, among other things and subject to certain exceptions, will restrict our ability and the ability of our subsidiaries to: create, incur or assume liens on our assets or property; incur additional indebtedness; issue preferred or disqualified stock; consolidate or merge; sell assets; pay dividends or make distributions, make investments, or engage in transactions with our affiliates.
The Amended Term Loan Credit Agreement also contains a number of covenants that, among other things and subject to certain exceptions, will restrict our ability and the ability of our subsidiaries to: create, incur or assume liens on our assets or property; incur additional indebtedness; issue preferred or disqualified stock; consolidate or merge; sell assets; pay dividends or make distributions, make investments, or engage in transactions with our affiliates.
The decrease in net cash used in financing activities is primarily as a result of a $31.7 million decrease in share repurchases and a $4.4 million decrease in principal payments on the New Term Loan Credit Agreement due to the timing of payments relative to the end of our fiscal quarter, partially offset by a $9.5 million decrease in net borrowing from the Existing ABL Facility, as amended.
The decrease in net cash used in financing activities is primarily as a result of a $31.7 million decrease in share repurchases and a $4.4 million decrease in principal payments on the Amended Term Loan Credit Agreement due to the timing of payments relative to the end of our fiscal quarter, partially offset by a $9.5 million decrease in net borrowing from the ABL Facility.
Based on these criteria, we have operating lease agreements for our retail stores, distribution center and headquarter office space; and vehicles and equipment; under primarily non-cancelable leases with terms ranging from approximately one to seventeen years. Certain of our operating lease agreements contain one or more options to extend the leases at our sole discretion.
Based on these criteria, we have operating lease agreements for our retail stores, distribution center and headquarter office space; and vehicles and equipment; under primarily non-cancelable leases with terms ranging from approximately one to 17 years. Certain of our operating lease agreements contain one or more options to extend the leases at our sole discretion.
Borrowings under the Existing ABL Facility, as amended, bear interest at an annual rate equal to, at our option, either (a) a base rate determined by reference to the highest of (1) the prime rate of Bank of America, N.A., (2) the federal funds effective rate plus 0.50% and (3) a SOFR rate for an interest period of one month adjusted for certain costs, plus 1.00%, in each case, plus an applicable margin that ranges from 0.25% to 0.75% based on average daily availability; or (b) at a SOFR rate for the interest period relevant to such borrowing adjusted for certain costs ("Adjusted SOFR"), in each case plus an applicable margin that ranges from 1.25% to 1.75%, based on average daily availability.
Borrowings under the ABL Facility bear interest at an annual rate equal to, at our option, either (a) a base rate determined by reference to the highest of (1) the prime rate of Bank of America, N.A., (2) the federal funds effective rate plus 0.50% and (3) a SOFR rate for an interest period of one month adjusted for certain costs, plus 1.00%, in each case, plus an applicable margin that ranges from 0.25% to 0.75% based on average daily availability; or (b) at a SOFR rate for the interest period relevant to such borrowing adjusted for certain costs ("Adjusted SOFR"), in each case plus an applicable margin that ranges from 1.25% to 1.75%, based on average daily availability.
We use historical redemption rates to estimate the value of future award redemptions and we recognize the estimated value of these future awards as a reduction of revenue in the consolidated statements of operations and comprehensive income (loss) in the period the points are earned by the customer. 48 Inventory Inventory consists of finished goods merchandise held for sale to our customers.
We use historical redemption rates to estimate the value of future award redemptions and we recognize the estimated value of these future awards as a reduction of revenue in the consolidated statements of operations and comprehensive income in the period the points are earned by the customer. Inventory Inventory consists of finished goods merchandise held for sale to our customers.
Restricted cash units ("RCUs") are awarded to certain employees, non-employee directors and consultants and represent the right to receive a cash payment at the end of a vesting period, subject to the employee's continued employment or service as a director or consultant. In general, RCUs vest in equal installments each year over 4 years.
Restricted cash units ("RCUs") are awarded to certain employees, non-employee directors and consultants and represent the right to receive a cash payment at the end of a vesting period, subject to the employee's continued employment or service as a director or consultant. In general, RCUs vest in equal installments each year over four years.
Loans made pursuant to the New Term Loan Credit Agreement bear interest at an annual rate equal to, at our option, either (a) a base rate determined by reference to the highest of (1) the prime rate quoted by The Wall Street Journal, (2) the federal funds effective rate plus 0.50% and (3) a SOFR rate for an interest period of one month, plus 1.00% (in each case, subject to a floor of 1.75%); or (b) at a SOFR rate for the interest period relevant to such borrowing (subject to a floor of 0.75%), in each case plus an applicable margin of 5.50% for SOFR borrowings and 4.50% for base rate borrowings.
Loans made pursuant to the Amended Term Loan Credit Agreement bear interest at an annual rate equal to, at our option, either (a) a base rate determined by reference to the highest of (1) the prime rate quoted by The Wall Street Journal, (2) the federal funds effective rate plus 0.50% and (3) a SOFR rate for an interest period of one month, plus 1.00% (in each case, 41 subject to a floor of 1.75%); or (b) at a SOFR rate for the interest period relevant to such borrowing (subject to a floor of 0.75%), in each case plus an applicable margin of 5.50% for SOFR borrowings and 4.50% for base rate borrowings.
If we made Optional Prepayments before June 14, 2023, we would have been subject to penalties ranging from 1.00% to 2.00% of the aggregate principal amount. All of Torrid LLC’s existing domestic subsidiaries and Torrid Intermediate LLC unconditionally guarantee all obligations under the New Term Loan Credit Agreement.
If we made Optional Prepayments before June 14, 2023, we would have been subject to penalties ranging from 1.00% to 2.00% of the aggregate principal amount. All of Torrid LLC’s existing domestic subsidiaries and Torrid Intermediate LLC unconditionally guarantee all obligations under the Amended Term Loan Credit Agreement.
We recognize interest payments, together with amortization of the OID and financing costs, in interest expense in our consolidated statements of operations and comprehensive income (loss).
We recognize interest payments, together with amortization of the OID and financing costs, in interest expense in our consolidated statements of operations and comprehensive income.
If we were to request any such additional commitments and the existing lenders or new lenders were to agree to provide such commitments, the size of the Existing ABL Facility, as amended, could increase to up to $200.0 million, but our ability to borrow under this facility would still be limited by the amount of the borrowing base.
If we were to request any such additional commitments and the existing lenders or new lenders were to agree to provide such commitments, the size of the ABL Facility could increase to up to $200.0 million, but our ability to borrow under this facility would still be limited by the amount of the borrowing base.
In addition, due to the uncertainty regarding the timing of future cash outflows associated with noncurrent unrecognized tax benefits of $2.1 million, we are unable to make a reliable estimate of the periods of cash settlement with the respective tax authorities and have not included such amounts in the contractual obligations table above.
In addition, due to the uncertainty regarding the timing of future cash outflows associated with noncurrent unrecognized tax benefits of $2.0 million, we are unable to make a reliable estimate of the periods of cash settlement with the respective tax authorities and have not included such amounts in the contractual obligations table above.
In addition to paying interest on the outstanding Principal under the New Term Loan Credit Agreement, we are required to make fixed mandatory repayments of the Principal on the last business day of each fiscal quarter until maturity commencing with the second full fiscal quarter following the closing date ("Repayment").
In addition to paying interest on the outstanding Principal under the Amended Term Loan Credit Agreement, we are required to make fixed mandatory repayments of the Principal on the last business day of each fiscal quarter until maturity commencing with the second full fiscal quarter following the closing date ("Repayment").
The Existing ABL Facility, as amended, contains a number of other covenants that, among other things and subject to certain exceptions, will restrict our ability and the ability of our subsidiaries to: incur additional indebtedness; pay dividends on our capital stock or redeem, repurchase or retire our capital stock or our other indebtedness; make investments, loans and acquisitions; engage in transactions with our affiliates; sell assets, including capital stock of our subsidiaries; alter the business we conduct; consolidate or merge; and incur liens.
The ABL Facility contains a number of other covenants that, among other things and subject to certain exceptions, will restrict our ability and the ability of our subsidiaries to: incur additional indebtedness; pay dividends on our capital stock or redeem, repurchase or retire our capital stock or our other indebtedness; make investments, loans and acquisitions; engage in transactions with our affiliates; sell assets, including capital stock of our subsidiaries; alter the business we conduct; consolidate or merge; and incur liens.
The Existing ABL Facility, as amended, requires us to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 if we fail to maintain Specified Availability (as defined by the Existing ABL Facility, as amended) of at least the greater of 10% of the Loan Cap, as defined by the Existing ABL Facility, as amended, and $7.0 million.
The ABL Facility requires us to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 if we fail to maintain Specified Availability (as defined by the ABL Facility) of at least the greater of 10% of the Loan Cap, as defined by the ABL Facility and $7.0 million.
Under the New Term Loan Credit Agreement, we are also required to make variable mandatory prepayments of the Principal, under certain conditions as described below, approximately 102 days after the end of each fiscal year (each, a "Prepayment").
Under the Amended Term Loan Credit Agreement, we are also required to make variable mandatory prepayments of the Principal, under certain conditions as described below, approximately 102 days after the end of each fiscal year (each, a "Prepayment").
The borrowing base for the Existing ABL Facility, as amended, at any time equals the sum of 90% of eligible credit card receivables, plus 90% of the appraised net orderly liquidation value of eligible inventory and eligible in-transit inventory multiplied by the cost of such eligible inventory and eligible in-transit inventory (to be increased to 92.5% during the period beginning on September 1 of each year and ending on December 31 of each year).
The borrowing base for the ABL Facility at any time equals the sum of 90% of eligible credit card receivables, plus 90% of the appraised net orderly liquidation value of eligible inventory and eligible in-transit inventory multiplied by the cost of such eligible inventory and eligible in-transit inventory (to be increased to 92.5% during the period beginning on September 1 of each year and ending on December 31 of each year).
Liquidity and Capital Resources General Our business relies on cash flows from operations as our primary source of liquidity. We do, however, have access to additional liquidity, if needed, through borrowings under our Existing ABL Facility, as amended.
Liquidity and Capital Resources General Our business relies on cash flows from operations as our primary source of liquidity. We do, however, have access to additional liquidity, if needed, through borrowings under our ABL Facility.
If at any time the aggregate amount of outstanding loans, unreimbursed letter of credit drawings and undrawn letters of credit under the Existing ABL Facility, as amended, exceeds the lesser of (a) the commitment amount and (b) the borrowing base, we will be required to repay outstanding loans and/or cash collateralize letters of credit in an aggregate amount equal to such excess, with no reduction of the commitment amount.
If at any time the aggregate amount of outstanding loans, unreimbursed letter of credit drawings and undrawn letters of credit under the ABL Facility exceeds the lesser of (a) the commitment amount and (b) the borrowing base, we will be required to repay outstanding loans and/or cash collateralize letters of credit in an aggregate amount equal to such excess, with no reduction of the commitment amount.
Historically, we recorded PLCC Funds (as 36 defined in “Note 2–Summary of Significant Accounting Policies”) as a reduction to selling, general and administrative expenses in the consolidated statements of operations and comprehensive income (loss).
Historically, we recorded PLCC Funds (as defined in “Note 2–Summary of Significant Accounting Policies”) as a reduction to selling, general and administrative expenses in the consolidated statements of operations and comprehensive income.
However, dividends and distributions are permitted at any time that either (1) availability under the Existing ABL Facility, as amended, is equal to or greater than 15% of the maximum borrowing amount on a pro forma basis and we are pro forma compliant with a 1.00 to 1.00 fixed charge coverage ratio or (2) availability under the Existing ABL Facility, as amended, is equal to or greater than 20% of the maximum borrowing amount on a pro forma basis.
However, dividends and distributions are permitted at any time that either (1) availability under the ABL Facility is equal to or greater than 15% of the maximum borrowing amount on a pro forma basis and we are pro forma compliant with a 1.00 to 1.00 fixed charge coverage ratio or (2) availability under the ABL Facility is equal to or greater than 20% of the maximum borrowing amount on a pro forma basis.
The Existing ABL Facility, as amended, includes borrowing capacity for letters of credit and for borrowings on same-day notice, referred to as Swing Line Loans, and is available in U.S. dollars.
The ABL Facility includes borrowing capacity for letters of credit and for borrowings on same-day notice, referred to as Swing Line Loans, and is available in U.S. dollars.
The OID and financing costs are amortized over the New Term Loan Credit Agreement’s seven-year term and are reflected as a direct deduction of the face amount of the term loan in our consolidated balance sheets.
The OID and financing costs are amortized over the Amended Term Loan Credit Agreement’s seven-year term and are reflected as a direct deduction of the face amount of the term loan in our consolidated balance sheets.
All obligations under the Existing ABL Facility, as amended, are unconditionally guaranteed by substantially all of Torrid Intermediate LLC’s existing majority-owned domestic subsidiaries and will be required to be guaranteed by certain of Torrid Intermediate LLC’s future domestic majority-owned subsidiaries.
All obligations under the ABL Facility are unconditionally guaranteed by substantially all of Torrid Intermediate LLC’s existing majority-owned domestic subsidiaries and will be required to be guaranteed by certain of Torrid Intermediate LLC’s future domestic majority-owned subsidiaries.
This measure is not a measurement of our financial performance under GAAP and should not be considered in isolation or as an alternative to or substitutes for net income (loss), income (loss) from operations or any other performance measures determined in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity.
This measure is not a measurement of our financial performance under GAAP and should not be considered in isolation or as an alternative to or substitute for net income, income from operations or any other performance measures determined in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity.
(D) Other expenses include severance costs for certain key management positions, certain litigation fees, and the reimbursement of certain management expenses, primarily for travel, incurred by Sycamore on our behalf, which are not considered to be part of our core business.
(D) Other expenses include severance costs for certain key management positions, certain transaction and litigation fees (including certain settlement costs), and the reimbursement of certain management expenses, primarily for travel, incurred by Sycamore on our behalf, which are not considered to be part of our core business.
There can be no assurance, however, that our business will generate sufficient cash flows from operations or that future borrowings will be available under our Existing ABL Facility, as amended, or otherwise to enable us to service our indebtedness, or to make capital expenditures in the future.
There can be no assurance, however, that our business will generate sufficient cash flows from operations or that future borrowings will be available under our ABL Facility or otherwise to enable us to service our indebtedness, or to make capital expenditures in the future.
Under the Existing ABL Facility, as amended, we have the right to request up to $50.0 million of additional commitments plus the aggregate principal amount of any permanent principal reductions we may take plus the amount by which the borrowing base exceeds the aggregate commitments (subject to customary conditions precedent).
Under the ABL Facility we have the right to request up to $50.0 million of additional commitments plus the aggregate principal amount of any permanent principal reductions we may take plus the amount by which the borrowing base exceeds the aggregate commitments (subject to customary conditions precedent).
If we elect the base rate (including a Swing Line Loan), interest is due and payable on the first business day of each month and on the maturity date. 45 In addition to paying interest on outstanding principal under the Existing ABL Facility, as amended, we are required to pay a commitment fee in respect of unutilized commitments.
If we elect the base rate (including a Swing Line Loan), interest is due and payable on the first business day of each month and on the maturity date. In addition to paying interest on outstanding principal under the ABL Facility we are required to pay a commitment fee in respect of unutilized commitments.
On May 24, 2023, we entered into an amendment to the New Term Loan Credit Agreement (the "1st Amendment to the New Term Loan Credit Agreement"). The 1st Amendment to the New Term Loan Credit Agreement replaced the London Interbank Offered Rate ("LIBOR") interest rate benchmark with the Secured Overnight Financing Rate ("SOFR") benchmark.
On May 24, 2023, we entered into an amendment to the Term Loan Credit Agreement (the "Amended Term Loan Credit Agreement"). The Amended Term Loan Credit Agreement replaced the London Interbank Offered Rate ("LIBOR") interest rate benchmark with the Secured Overnight Financing Rate ("SOFR") benchmark.
We believe that cash generated from operations and the availability of borrowings under our Existing ABL Facility, as amended, or 41 other financing arrangements will be sufficient to meet working capital requirements and anticipated capital expenditures for at least the next 12 months.
We believe that cash generated from operations and the availability of borrowings under our ABL Facility or other financing arrangements will be sufficient to meet working capital requirements and anticipated capital expenditures for at least the next 12 months.
We have not included any income tax audit settlement payments due in less than one year in the contractual obligations table above as we do not have any open income tax audits as of February 3, 2024 or any material gross unrecognized tax benefits for which the statutes of limitations are expected to expire in fiscal year 2024.
We have not included any income tax audit settlement payments due in less than one year in the contractual obligations table above as we do not have any open income tax audits as of February 1, 2025 or any material gross unrecognized tax 44 benefits for which the statutes of limitations are expected to expire in fiscal year 2025.
As of February 3, 2024, we did not meet the Excess Cash Flow threshold to require a Prepayment. In addition to mandatory Repayment and Prepayment obligations, we may at our option, prepay a portion of the outstanding Principal ("Optional Prepayment").
As of February 1, 2025, we did not meet the Excess Cash Flow threshold to require a Prepayment. In addition to mandatory Repayment and Prepayment obligations, we may at our option, prepay a portion of the outstanding Principal ("Optional Prepayment").
All obligations under the Existing ABL Facility, as amended, and the guarantees of those obligations, will be secured, subject to certain exceptions, by substantially all of Torrid Intermediate LLC’s assets.
All obligations under the ABL Facility and the guarantees of those obligations, will be secured, subject to certain exceptions, by substantially all of Torrid Intermediate LLC’s assets.
(2) Assumes an interest rate of approximately 11% per annum, consistent with the interest rate at February 3, 2024. (3) Amounts listed above do not include cash obligations related to relocation expenses in connection with the involuntary separation of certain employees due to the uncertainty regarding the amount of such expenses.
(2) Assumes an interest rate of approximately 10% per annum, consistent with the interest rate at February 1, 2025. (3) Amounts listed above do not include cash obligations related to relocation expenses in connection with the involuntary separation of certain employees due to the uncertainty regarding the amount of such expenses.
Interest expense consists primarily of interest expense and other fees associated with our Existing ABL Facility, as amended, and New Term Loan Credit Agreement, as amended. Provision for Income Taxes.
Interest expense consists primarily of interest expense and other fees associated with our ABL Facility and Amended Term Loan Credit Agreement. Provision for Income Taxes.
(B) Share-based compensation in fiscal year 2023 includes $1.2 million for awards that will be settled in cash as they are accounted for as share-based compensation in accordance with ASC 718, Compensation—Stock Compensation, similar to awards settled in shares. (C) Noncash deductions and charges includes losses on property and equipment disposals and the net impact of noncash rent expense.
(B) Share-based compensation in fiscal year 2024 includes $3.0 million for awards that will be settled in cash as they are accounted for as share-based compensation in accordance with ASC 718, Compensation—Stock Compensation, similar to awards settled in shares. (C) Noncash deductions and charges includes losses on property and equipment disposals and the net impact of noncash rent expense.
We elected to apply the practical expedients included in ASU 2020-04 and 2021-01, accordingly, the 4th Amendment did not have a material impact on our consolidated financial statements.
We elected to apply the practical expedients included in ASU 2020-04 and 2021-01, accordingly, the April 21, 2023 amendment did not have a material impact on our consolidated financial statements.
The $346.5 million proceeds of the New Term Loan Credit Agreement, net of OID, were used to (i) repay and terminate the Amended Term Loan Credit Agreement (as defined below); (ii) make a $131.7 million distribution to the direct and indirect holders of our equity interests; and (iii) pay for financing costs associated with the New Term Loan Credit Agreement.
The $346.5 million proceeds of the Term Loan Credit Agreement, net of OID, were used to (i) repay and terminate the original term loan credit agreement; (ii) make a $131.7 million distribution to the direct and indirect holders of our equity interests; and (iii) pay for financing costs associated with the Term Loan Credit Agreement.
If we elect the Base rate, interest is due and payable the last day of each calendar quarter. The elected interest rate at the end of fiscal year 2023 was approximately 11%.
If we elect the Base rate, interest is due and payable the last day of each calendar quarter. The elected interest rate at the end of fiscal year 2024 was approximately 10%.
We did not make any share repurchases during the quarter ended February 3, 2024. As of February 3, 2024, we had approximately $44.9 million remaining under the repurchase program. Contractual Obligations We enter into long-term contractual obligations and commitments in the normal course of business, primarily debt obligations, purchase obligations and non-cancelable operating leases.
We did not make any share repurchases during the fiscal year ended February 1, 2025. As of February 1, 2025, we had approximately $44.9 million remaining under the repurchase program. Contractual Obligations We enter into long-term contractual obligations and commitments in the normal course of business, primarily debt obligations, purchase obligations and non-cancelable operating leases.
At the end of fiscal year 2023, we were compliant with our debt covenants under the Existing ABL Facility, as amended. The Existing ABL Facility, as amended, specifically restricts dividends and distributions, aside from amounts to cover ordinary operating expenses and taxes, between our subsidiaries and to us.
At the end of fiscal year 2024, we were compliant with our debt covenants under the ABL Facility. 43 The ABL Facility specifically restricts dividends and distributions, aside from amounts to cover ordinary operating expenses and taxes, between our subsidiaries and to us.
Marketing expenses as a percentage of net sales increased by 0.1% to 4.8% in fiscal year 2023 from 4.7% in fiscal year 2022. This increase was due to deleverage of marketing expenses as a result of lower net sales. Interest Expense Interest expense was $39.2 million for fiscal year 2023, compared to $29.7 million for fiscal year 2022.
Marketing expenses as a percentage of net sales increased by 0.1% to 4.9% in fiscal year 2024 from 4.8% in fiscal year 2023. This increase was due to deleverage of marketing expenses as a result of lower net sales. Interest Expense Interest expense was $35.6 million for fiscal year 2024, compared to $39.2 million for fiscal year 2023.
Net cash provided by operating activities during fiscal year 2023 was $42.8 million compared to $53.3 million during fiscal year 2022. The decrease in cash provided by operating activities during fiscal year 2023 was primarily as a result of a decrease in net income of $38.6 million mainly due to a decrease in sales transactions during the current year.
The decrease in cash provided by operating activities during fiscal year 2023 was primarily as a result of a decrease in net income of $38.6 million mainly due to a decrease in sales transactions during the current year.
As of February 3, 2024, our contractual cash obligations over the next several periods are set forth below (dollars in thousands).
As of February 1, 2025, our contractual cash obligations over the next several periods are set forth below (dollars in thousands).
All other material terms of the New Term Loan Credit Agreement remained substantially the same after giving effect to the 1st Amendment to the New Term Loan Credit Agreement.
All other material terms of the Term Loan Credit Agreement remained substantially the same after giving effect to the Amended Term Loan Credit Agreement.
Debt Financing Arrangements For the stated periods, our debt financing arrangements consisted of the following (in thousands): February 3, 2024 January 28, 2023 Existing ABL Facility, as amended $ 7,270 $ 8,380 Term loan New Term Loan Credit Agreement 310,625 328,125 Less: current portion of unamortized original issue discount and debt financing costs (1,356) (1,356) Less: noncurrent portion of unamortized original issue discount and debt financing costs (4,572) (5,928) Total term loan outstanding, net of unamortized original issue discount and debt financing costs 304,697 320,841 Less: current portion of term loan, net of unamortized original issue discount and debt financing costs (16,144) (16,144) Total term loan, net of current portion and unamortized original issue discount and debt financing costs $ 288,553 $ 304,697 New Term Loan Credit Agreement On June 14, 2021, we entered into a term loan credit agreement (the "New Term Loan Credit Agreement") among Bank of America, N.A., as agent, and the lenders party thereto.
Debt Financing Arrangements For the stated periods, our debt financing arrangements consisted of the following (in thousands): February 1, 2025 February 3, 2024 ABL Facility $ — $ 7,270 Term loan Amended Term Loan Credit Agreement 293,125 310,625 Less: current portion of unamortized original issue discount and debt financing costs (1,356) (1,356) Less: noncurrent portion of unamortized original issue discount and debt financing costs (3,216) (4,572) Total term loan outstanding, net of unamortized original issue discount and debt financing costs 288,553 304,697 Less: current portion of term loan, net of unamortized original issue discount and debt financing costs (16,144) (16,144) Total term loan, net of current portion and unamortized original issue discount and debt financing costs $ 272,409 $ 288,553 Term Loan Credit Agreement On June 14, 2021, we entered into a term loan credit agreement (the "Term Loan Credit Agreement") among Bank of America, N.A., as agent, and the lenders party thereto.
The Existing ABL Facility increased the aggregate commitments available under the Original ABL Facility from $50.0 million to $100.0 million (subject to a borrowing base); and increased our right to request additional commitments from up to $30.0 million to up to $30.0 million plus the aggregate principal amount of any permanent principal reductions we may take (subject to customary conditions precedent).
Under the ABL Facility the aggregate commitments available are $150.0 million (subject to a borrowing base), and we have the right to request additional commitments up to $50 million plus the aggregate principal amount of any permanent principal reductions we may take (subject to customary conditions precedent).
Cash Flow Analysis A summary of operating, investing and financing activities are shown in the following table (dollars in thousands): Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Net cash provided by operating activities $ 42,771 $ 53,311 $ 121,220 Net cash used in investing activities (26,002) (23,369) (17,552) Net cash used in financing activities (18,517) (45,117) (197,809) Net Cash Provided By Operating Activities Operating activities consist primarily of net income (loss) adjusted for noncash items, including depreciation and amortization and share-based compensation, the effect of working capital changes and taxes paid.
Cash Flow Analysis A summary of operating, investing and financing activities are shown in the following table (in thousands): Fiscal Year Ended February 1, 2025 February 3, 2024 January 28, 2023 Net cash provided by operating activities $ 77,390 $ 42,771 $ 53,311 Net cash used in investing activities (14,392) (26,002) (23,369) Net cash used in financing activities (24,500) (18,517) (45,117) Net Cash Provided By Operating Activities Operating activities consist primarily of net income adjusted for noncash items, including depreciation and amortization and share-based compensation, the effect of working capital changes and taxes paid.
Provision for Income Taxes The provision for income taxes for fiscal year 2023 decreased by $15.1 million to $6.4 million, from $21.5 million for fiscal year 2022. Our effective tax rate was 35.6% for fiscal year 2023 as compared to 30.0% for fiscal year 2022.
Provision for Income Taxes The provision for income taxes for fiscal year 2024 decreased by $1.1 million to $5.3 million, from $6.4 million for fiscal year 2023. Our effective tax rate was 24.5% for fiscal year 2024 as compared to 35.6% for fiscal year 2023.
At the end of fiscal year 2023, we were compliant with our financial covenants under the New Term Loan Credit Agreement. At the end of fiscal year 2023, the fair value of the New Term Loan Credit Agreement was approximately $259.4 million.
At the end of fiscal year 2024, we were compliant with our financial covenants under the Amended Term Loan Credit Agreement. At the end of fiscal year 2024, the fair value of the Amended Term Loan Credit Agreement was approximately $274.1 million.
We have improved our customer tracking capabilities and have maintained the proportion of our net sales attributable to active customers over time. The proportion of net sales, excluding PLCC Funds (as defined in “Note 2–Summary of Significant Accounting Policies”), that we are able to attribute to active customers was 97% for each of fiscal years 2023, 2022 and 2021.
The proportion of net sales, excluding PLCC Funds (as defined in “Note 2–Summary of Significant Accounting Policies”), that we are able to attribute to active customers was 97% for each of fiscal years 2024, 2023 and 2022.
The increase in cash used in investing activities was primarily as a result of an increase in capital expenditures related to the 42 opening of new stores, partially offset by a decrease in investments in our West Jefferson, Ohio distribution center during fiscal year 2023, compared to fiscal year 2022.
The decrease in cash used in investing activities was primarily as a result of a decrease in capital expenditures related to the opening of new stores and investment in our West Jefferson, Ohio distribution center during fiscal year 2024, compared to fiscal year 2023.
Fiscal Year Ended (in thousands, except net sales per active customer, number of stores and percentages) February 3, 2024 January 28, 2023 January 29, 2022 Active customers (as of end of period) (A) 3,761 3,902 3,821 Net sales per active customer (A) $ 306 $ 330 $ 340 Comparable sales (B) (12) % (3) % 31 % Number of stores (as of end of period) 655 639 624 Net income (loss) $ 11,619 $ 50,209 $ (29,944) Adjusted EBITDA (C) $ 106,219 $ 152,350 $ 245,853 (A) Active customers and net sales per active customer calculated on a preceding four quarters basis.
Fiscal Year Ended (in thousands, except net sales per active customer, number of stores and percentages) February 1, 2025 February 3, 2024 January 28, 2023 Active customers (as of end of period) (A) 3,656 3,761 3,902 Net sales per active customer (A) $ 302 $ 306 $ 330 Comparable sales (B) (5) % (12) % (3) % Number of stores (as of end of period) 634 655 639 Net income $ 16,318 $ 11,619 $ 50,209 Adjusted EBITDA (C) $ 109,120 $ 106,219 $ 152,350 (A) Active customers and net sales per active customer calculated on a preceding four quarters basis.
At the same time, we introduce new lines of merchandise approximately 16 times per year, thus providing a consistent flow of fresh merchandise to keep our customer engaged, encourage repeat business and attract new customers.
Our strategy is built around a base of core products that provide our customer with year-round style. At the same time, we introduce new lines of merchandise approximately 16 times per year, thus providing a consistent flow of fresh merchandise to keep our customer engaged, encourage repeat business and attract new customers.
At the end of fiscal year 2023, the applicable interest rate for borrowings under the Existing ABL Facility, as amended, was approximately 9% per annum.
At the end of fiscal year 2024, the applicable interest rate for borrowings under the ABL Facility was approximately 8% per annum.
At the end of fiscal year 2023, the maximum restricted payment utilizing the Existing ABL Facility, as amended, that our subsidiaries could make from its net assets was $103.2 million.
At the end of fiscal year 2024, the maximum restricted payment utilizing the ABL Facility that our subsidiaries could make from its net assets was $102.8 million.
The increase was primarily due to an increase in the variable interest rate associated with the 1st Amendment to the New Term Loan Credit Agreement, dated as of May 24, 2023, during fiscal year 2023 compared to fiscal year 2022.
The decrease was primarily due to a decrease in the variable interest rate associated with the Amended Term Loan Credit Agreement, dated as of May 24, 2023, during fiscal year 2024 compared to fiscal year 2023.
Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in the section entitled "Risk Factors." Overview Torrid is a direct-to-consumer brand of apparel, intimates and accessories in North America aimed at fashionable women who are curvy and wear sizes 10 to 30.
Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in the section entitled "Risk Factors." Overview We are a direct-to-consumer brand in North America dedicated to offering a diverse assortment of stylish apparel, intimates, and accessories skillfully designed for the curvy woman.
Selling, general and administrative expenses as a percentage of net sales increased by 2.4% to 25.5% in fiscal year 2023 from 23.1% in fiscal year 2022. This increase was primarily driven by increased headquarter general and administrative expenses and deleverage of store and e-Commerce payroll costs and other store operating costs as a result of lower net sales.
Selling, general and administrative expenses as a percentage of net sales increased by 1.9% to 27.4% in fiscal year 2024 from 25.5% in fiscal year 2023. This increase was primarily driven by increased headquarter general and administrative expenses and performance bonuses, partially offset by decreased store and e-Commerce payroll costs.
The total number of stores we operate increased by 16 stores, or 2.5%, to 655 stores at the end of fiscal year 2023, from 639 stores at the end of fiscal year 2022. 38 Gross Profit Gross profit for fiscal year 2023 decreased by $53.6 million, or 11.7%, to $406.0 million, from $459.5 million for fiscal year 2022.
The total number of stores we operate decreased by 21 stores, or 3.2%, to 634 stores at the end of fiscal year 2024, from 655 stores at the end of fiscal year 2023. 38 Gross Profit Gross profit for fiscal year 2024 increased by $7.5 million, or 1.8%, to $413.5 million, from $406.0 million for fiscal year 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of February 3, 2024, we had $304.7 million of outstanding variable rate loans under the New Term Loan Credit Agreement and $7.3 million of borrowings under the Existing ABL Facility, as amended.
Biggest changeAs of February 1, 2025, we had $288.6 million of outstanding variable rate loans under the Amended Term Loan Credit Agreement and no borrowings under the ABL Facility.
On June 14, 2021, we entered into the New Term Loan Credit Agreement and used borrowings thereunder to, among other things, repay and terminate the Amended Term Loan Credit Agreement.
On June 14, 2021, we entered into the Amended Term Loan Credit Agreement and used borrowings thereunder to, among other things, repay and terminate the Amended Term Loan Credit Agreement.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk We are subject to interest rate risk in connection with borrowings under our Existing ABL Facility, as amended, and New Term Loan Credit Agreement,as amended, which bear interest at a variable rate equal to SOFR plus an applicable margin.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk We are subject to interest rate risk in connection with borrowings under our ABL Facility and Amended Term Loan Credit Agreement, as amended, which bear interest at a variable rate equal to SOFR plus an applicable margin.
However, these purchases are made in U.S. dollar-denominated purchase contracts. We do not currently hedge foreign currency fluctuations and do not intend to do so for the foreseeable future. 51
However, these purchases are made in U.S. dollar-denominated purchase contracts. We do not currently hedge foreign currency fluctuations and do not intend to do so for the foreseeable future. 48
An increase or decrease of 1% in the variable rates on the amount outstanding under the New Term Loan Credit Agreement will increase or decrease our annual interest expense by approximately $3.1 million. Foreign Exchange Risk The reporting currency for our consolidated financial statements is U.S. dollars.
An increase or decrease of 1% in the variable rates on the amount outstanding under the Amended Term Loan Credit Agreement will increase or decrease our annual interest expense by approximately $2.9 million. Foreign Exchange Risk The reporting currency for our consolidated financial statements is U.S. dollars.

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