Torrid Holdings Inc. (NYSE:CURV) Q4 2022 Earnings Call Transcript

So it’s – we’re not trying to get it all back in one year, but we also are telling a different promotional story than we had been telling and managing inventory more appropriately by channel, which allows us to pull back on the promotional messages as well.

Dylan Carden: So the offset then as it relates to kind of the language around gross margin guidance for the year would be input inflation, cost inflation?

Lisa Harper: I’m sorry, I don’t want to – could you ask that again?

Dylan Carden: Yes, so there is – so I thought that the gross margin commentary is more or less a stabilization of gross margin. And so, I guess if you are pulling back even to some extent on promotional activity, why you wouldn’t expect to give – why there would it be more flow through the gross margin?

Lisa Harper: There is flow through the gross margin. We’re just mitigating that to make sure that we’re not – that we are up against a highly promotional year. We don’t think we’re going to get it all back in one year, and we’re doing – we’re thinking about the recovery over a two-year period. The question is now quickly that comes through. And then – and we also, I would say, have factored in – is a variable related to an uncertain economic situation. And so, there is – a balance between what we’ve invested, margin recovery and some, I guess, some hedge against macro environment an economic issues. Does that make sense?

Dylan Carden: So gross margin, yes, I think I just misunderstood the language around the commentary for gross margin?

Lisa Harper: Gross margin – expands this year.

Tim Martin: Yes, we do expect expansion in gross margins.

Dylan Carden: And no – okay. I’ll take that offline. And my actual question was more along the lines. So it sounds like sort of inventory is a big piece of the recovery this year. Is that are you increasing the frequency of newness? How are you thinking about kind of like the architecture kind of coming out of this year, last year, yes?

Lisa Harper: The newness is similar to prior years. The breadth and depth of that newness is, it might be slightly different and shifted. But in general, we’re not changing the rhythm of the business. We’re changing how we’re buying it and how we’re promoting it. And that just the base level of inventory will help mitigate and soften the level of promotions. So – and we know that, but I’m just – what drives this customer are new ideas, new product, new fashion, studios, those types of things. And so, we’re – we have a calendar for the year of introducing new ideas to this customer, which – so there are two things that we really think about the business, is store expansion, customer acquisition related to that and the drive to omni. And then the launch of new ideas to the customer, not always just fashion, but core ideas as well. Because we can provide everything she needs to buy for her closet. And so, we focused on those – that as well as we move forward.

Dylan Carden: And then last year, as far as from a mix standpoint – am I correct in remembering that they’re sort of skewed more towards basics and less occasion?