Torrid (NYSE: CURV) reported fiscal Q2 2026 net sales of $231.7 million, down 11.8% from $262.8 million, while diluted EPS increased to $0.05 from $0.02. For the quarter ended August 1, 2026, reported profitability benefited significantly from an IEEPA tariff refund, while comparable sales remained negative and the store base continued to shrink.
Core Earnings Data
The quarter featured a divergence between sales and reported profit. Gross profit declined in dollars, but gross margin, operating income, net income, and adjusted EBITDA improved on a reported basis because of the tariff refund and lower selling, general, and administrative expenses.
Comparable sales fell 6.3%, indicating that the smaller store base was not the only source of the overall revenue decline.
| Metric | Fiscal Q2 2026 | Fiscal Q2 2025 | Year-Over-Year Change |
|---|---|---|---|
| Net sales | $231.7 million | $262.8 million | -11.8% |
| Comparable sales | -6.3% | -6.9% | Improved 60 bps |
| Gross profit / margin | $89.7 million / 38.7% | $93.5 million / 35.6% | Profit -4.0%; margin +310 bps |
| Operating income / margin | $14.5 million / about 6.3% | $10.2 million / about 3.9% | Income +43.1% |
| Net income | $5.2 million | $1.6 million | About +230% |
| Diluted EPS | $0.05 | $0.02 | +150% |
| Adjusted EBITDA / margin | $23.3 million / 10.0% | $21.5 million / 8.2% | EBITDA +8.0%; margin +180 bps |
Adjusted EBITDA is a non-GAAP measure. Its reported improvement does not represent the underlying trend once the tariff refund is removed.
Business and Store Footprint
Torrid ended the quarter with 457 stores, down from 575 one year earlier. The company closed six stores during Q2 as part of its Store Footprint Optimization Project. The 11.8% decline in total sales was therefore accompanied by both a smaller store network and a 6.3% decline in comparable sales, which includes eligible stores and e-commerce operations.
Management said sales trends improved as the quarter progressed and described July as an inflection point. However, no monthly sales figures were disclosed, so the reported improvement did not change the negative comparable-sales result for the full quarter.
Tariff Refunds Reversed the Headline Margin Trend
Torrid received $11.4 million of IEEPA tariff benefits during Q2. Of that amount, $11.1 million reduced cost of goods sold and $0.3 million was recognized as interest income.
The cost-of-goods-sold benefit lifted reported gross margin to 38.7%. Excluding the refund, gross margin would have been 33.9%, or 170 basis points below the prior-year margin of 35.6%. That distinction reverses the apparent direction of the margin trend: reported margin expanded, but the underlying measure supplied by the company contracted.
Adjusted EBITDA shows the same pattern. Excluding tariff refunds, it was $12.1 million, or 5.2% of sales, compared with $21.5 million and 8.2% one year earlier. On that basis, adjusted EBITDA declined by about 44%, and margin contracted by 300 basis points. The refund also benefited GAAP earnings, although Torrid did not disclose its precise after-tax contribution to net income.
Profitability, Cash Flow, and Balance Sheet
Quarterly SG&A expenses declined 12.2% to $61.9 million from $70.5 million, helping offset lower sales and gross profit. Marketing expenses rose 4.0% to $13.3 million. Together with the tariff benefit, the lower SG&A base allowed operating income to rise despite the revenue contraction.
Cash flow figures were reported for the first six months rather than Q2 alone. Six-month operating cash flow improved to $10.1 million from a $2.3 million use of cash in the prior-year period, while capital expenditures increased to $7.4 million from $3.7 million.
At August 1, Torrid held $22.0 million in cash and cash equivalents and reported total liquidity of $74.4 million, including revolving-credit availability. Inventory was $125.6 million, down from $130.2 million one year earlier and $136.5 million at the end of fiscal 2025.
Borrowings under the revolving credit facility totaled $39.7 million. The balance sheet also included a $16.1 million current term-loan portion and $248.2 million of noncurrent debt, while quarterly interest expense was $7.8 million.
Fiscal 2026 Guidance
Torrid raised its full-year outlook solely to incorporate the tariff refund recognized in Q2. Management said the outlook was unchanged when that benefit was excluded, but the previous numerical guidance ranges were not provided in the release.
| Period and Metric | Latest Guidance |
|---|---|
| Q3 net sales | $230 million to $235 million |
| Q3 adjusted EBITDA | $15 million to $20 million |
| Fiscal 2026 net sales | $940 million to $960 million |
| Fiscal 2026 adjusted EBITDA | $76 million to $86 million |
| Fiscal 2026 capital expenditures | $8 million to $10 million |
The guidance assumes continued industry macroeconomic challenges and does not incorporate further tariff volatility or its potential effects on inflation and consumer demand.
Management Commentary
CEO Lisa Harper attributed the improvement in sales trends later in the quarter to early traction from Torrid’s customer-growth strategy and merchandising changes. Those changes included a more balanced mix of core and fashion products and a stronger footwear inventory position.
Management also pointed to growth in sub-brands, an opening-price-point strategy intended to support conversion and value perception, expansion through third-party marketplaces, more personalized marketing, and higher mobile-app engagement. Torrid did not provide separate revenue or customer metrics for these initiatives, making comparable sales the principal quantitative measure for evaluating their progress in coming quarters.
Recent Insider Transactions
The supplied six-month insider statistics classify 1,367,558 shares across nine transactions as purchases and 98,199 shares across three transactions as sales, resulting in net purchases of 1,269,359 shares. The latest ten reported entries consist of three sales and seven stock awards; stock grants should not be interpreted as open-market purchases.
| Date | Insider and Role | Transaction | Reported Value |
|---|---|---|---|
| July 16, 2026 | Chinwe Abaelu, Officer | Sale at $2.16-$2.29 per share | $54,996 |
| June 2, 2026 | Theo Killion, Director | Stock award at $0.00 | $0 |
| June 2, 2026 | Michael A. Shaffer, Director | Stock award at $0.00 | $0 |
| June 2, 2026 | Valeria Rico Nikolov, Director | Stock award at $0.00 | $0 |
| April 14, 2026 | Paula Salema Ribeiro Dempsey, CFO | Sale at $2.06 per share | $88,265 |
| April 13, 2026 | Ashlee R. Wheeler, Officer | Sale at $1.98 per share | $59,276 |
| March 16, 2026 | Lisa M. Harper, CEO | Stock award at $0.00 | $0 |
| March 16, 2026 | Hyon C. Park, COO | Stock award at $0.00 | $0 |
| March 16, 2026 | Bridgett Carlene Zeterberg, Officer | Stock award at $0.00 | $0 |
| March 16, 2026 | Chinwe Abaelu, Officer | Stock award at $0.00-$0.83 | $830 |
Risks Investors Should Watch
- Persistent sales pressure: Net sales declined 11.8% and comparable sales remained down 6.3%. Torrid still needs the improvement described for July to translate into sustained comparable-sales growth.
- Underlying margin contraction: Excluding the tariff refund, gross margin fell below the prior-year level and adjusted EBITDA margin dropped to 5.2% from 8.2%.
- Additional tariff volatility: The fiscal 2026 outlook includes the refund already received but excludes potential future tariff changes and their effects on costs, inflation, and demand.
- Store optimization execution: The store count fell to 457 from 575. A more productive store base could lower expenses, but continued closures also reduce physical distribution while comparable sales remain negative.
- Debt and interest burden: Quarterly interest expense of $7.8 million absorbed a substantial portion of operating income, while cash totaled $22.0 million and revolving-credit borrowings stood at $39.7 million.
Summary
Torrid’s fiscal Q2 2026 reported earnings improved despite lower sales, but the improvement was heavily influenced by a one-time tariff refund and lower SG&A expenses. Excluding the refund, both gross margin and adjusted EBITDA weakened from the prior year. The central questions for upcoming quarters are whether July’s reported sales improvement becomes sustained comparable growth, whether merchandising and customer-acquisition initiatives gain measurable traction, and whether margins stabilize without additional tariff benefits.
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