[Management View]
Key metrics: Net sales of $266 million, adjusted EBITDA of $27.1 million, gross profit of $101.4 million.
Strategic priorities: Enhancing product assortment, driving customer growth, executing store optimization plan.

[Outlook]
Performance guidance: FY2025 net sales forecasted between $1.03 billion and $1.055 billion, adjusted EBITDA between $95 million and $105 million.
Future plans: Accelerate store closures, expand sub-brand launches, increase digital sales penetration to low to mid-70% range by 2026.

[Financial Performance]
YoY/QoQ trends: Net sales decreased from $279.8 million in Q1 FY2024 to $266 million in Q1 FY2025. Adjusted EBITDA declined from $38.2 million to $27.1 million. Gross profit fell from $115.4 million to $101.4 million. Comparable sales down 3.5%.

[Q&A Highlights]
Question 1: Could you talk a little bit about how we should think about the cadence of newness for the second half? (Line breaks here)
Answer: We have another new sub-brand launching in August, which is Lovesick, geared toward a younger customer at a slightly lower price point. StudioLuxe will launch in September, a higher-end desk-to-drinks concept. Existing brands Belle Isle, Festi, Nightfall, and Retro Chic will deliver monthly by the end of the year.

Question 2: What trends have you been seeing with new customers following their initial sub-brand purchase? Are you seeing them shop across the broader assortment and other sub-brands? (Line breaks here)
Answer: We are seeing positive movement in acquiring and reactivating new and younger customers. Existing customers show increased lifetime value and high transaction size. About 90% of sub-brand participants add core Torrid products to their basket. Demand is higher online than in stores, with Belle Isle distributed to 350 stores and Festi to 200-250 stores.

Question 3: The midpoint of your guidance implies a sizable sales growth deceleration. Is there anything going on there? (Line breaks here)
Answer: We are pausing our shoe business, impacting $40 million to $45 million in sales for the year. This business is lower margin, and we are reevaluating partners for reentry at higher margins. We continue to see choppy customer behavior but expect strong performance in digital channels and key events.

Question 4: Can you remind us of the promotional strategy from here? Should those things coexist with newness? (Line breaks here)
Answer: We will continue our typical promotional cadence, including Torrid Cash events four times a year and two semi-annual sales. We respond to consumer value orientation with promotional events, which are implied in our guidance.

Question 5: Can you explain the acceleration in store closures and the 75% online, 25% in-store split? (Line breaks here)
Answer: Customers prefer shopping online, with penetration growing and more customers acquired online. Closing underperforming stores will move fixed expenses to higher profitability and digital investment. We aim to rightsize the portfolio to 450 stores, transferring 60% of customers and sales to nearby stores or online.

Question 6: How do you achieve a neutral impact on sales with store closures? (Line breaks here)
Answer: Most closures will occur toward the end of the quarter, with ramped-up marketing spend to offset the small amount that doesn't naturally transfer. These stores are very low volume, making it easier to replace revenue dollars.

[Sentiment Analysis]
Tone of analysts: Inquisitive and focused on understanding strategic shifts and their implications.
Tone of management: Confident and detailed in explaining strategies and expected outcomes.

[Quarterly Comparison]
| Metric | Q1 FY2025 | Q1 FY2024 |
|-----------------------|-----------|-----------|
| Net Sales | $266M | $279.8M |
| Adjusted EBITDA | $27.1M | $38.2M |
| Gross Profit | $101.4M | $115.4M |
| Comparable Sales | -3.5% | N/A |
| SG&A Expense | $70M | $76.5M |
| Marketing Investment | $15.4M | $12.8M |
| Inventory | $149.6M | $144.8M |
| Cash and Equivalents | $23.7M | $20.5M |
| Total Debt | $284.5M | $300.7M |

[Risks and Concerns]
Risks: Projected revenue loss of $40 million to $45 million due to footwear business pause. Gross margin decline due to promotional initiatives. Tariff impacts expected to be $20 million for the remainder of the year.

[Final Takeaway]
Torrid's Q1 FY2025 performance met prior guidance, with strategic initiatives focused on digital transformation and sub-brand expansion. The company plans to accelerate store closures and increase digital sales penetration, aiming for a more balanced and profitable business model. Despite challenges such as gross margin decline and tariff impacts, Torrid remains committed to driving customer growth and enhancing product assortment to achieve long-term value creation.