The newly public Torrid is revving up its engines and sees ample opportunity for growth in the $85 billion market for plus sizes.
The company made its debut on on the New York Stock Exchange on July 1, trading under the symbol “Curv.” It’s the first time that private equity giant Sycamore Partners took one of the brands in its retail portfolio public through an initial public offering. And it comes amid a body-positive movement that has seen a number of brands embrace inclusivity.
On its first day of trading, Torrid sold 11 million shares priced at $21 each, the high end of a proposed range of $18 to $21, after upsizing the deal. It raised $231 million at a valuation of $2.3 billion.
“The timing is right for a plus-sized company," Torrid CEO Liz Muñoz said during an interview with Chain Store Age. "We are at the intersection of a body-positive movement that is truly empowering women.”
Based in City of Industry, Calif., Torrid operates 608 stores nationwide. It started out as a division of Hot Topic, which was acquired by Sycamore Partners in 2013. Torrid, which was spun off as its own entity in 2015, previously filed to go public in 2017, but eventually withdrew the filing.
Muñoz joined Torrid in 2010 as senior VP of product. She was named president in January 2018 and CEO several months after. She wasn't in charge back in 2017 when the company decided to withdraw its filing, but she knew the timing was not right. The company needed to take a step back. There was still work to be done, she said.
Torrid CEO Liz Muñoz
Torrid had experienced skyrocketing growth year over year but, as sometimes happens, it had skipped some critical steps that would become important at some point, Muñoz explained. Among other things, the chain had an inventory problem. And its IT functions were still being handled by Hot Topic.
"We didn't have our head around inventory management. We had no targets or disciplines around how we acquired inventory. And as a product person, I felt there was a constant proliferation of SKUs. So with not having our inventory problem sorted out, and not having all the right leadership in place, we pulled the filing. It just didn't feel like the right time."
Taking the reins of Torrid, Muñoz who describes herself as very action-oriented, wasted no time in putting things to order and implementing the changes needed to make it the fully-functioning independent company that it is today. She put in a new leadership team, including a COO who deployed core disciplines and targets, and reduced SKUs by 20%. Margins improved.
"So there a lot of reasons why the timing was right this time around for our IPO, both culturally as well as where we are as a company."
Torrid, which calls itself a direct-to-consumer company as opposed to a specialty retailer, generated 70% of its sales online last year. It posted net sales of $974 million in the pandemic year of 2020, compared to $1.04 billion in 2019. First-quarter sales jumped 109% year-over-year to $325.8 million.
While the business has made a number of investments to enhance and grow its digital operations, it also remains committed brick-and-mortar. It plans to open about 25 stores annually for the next few years, with no end date. Stores average 3,000 square feet.
“Our model doesn’t really rely on us opening stores to be successful, but they are very important to us. Most of our customers discover Torrid through our stores and they start their journey there, which we think helps them make better choices when they go online."
Approximately 90 million women — or 70% of the female population — qualify as plus-size as defined by Torrid (sizes 10 to 30). There are 1,100 freestanding stores to service those woman (including 608 Torrid stores) versus some 60,000 stores to service conventional sizes, according to Muñoz.
"It's crazy that 98% of women's specialty retail stores are dedicated to 30% of the population. We believe in stores. This customer deserves to have a store, she deserves that experience."
The CEO is a passionate advocate for a customer she believes has been ignored and underserved for too long. Stores have played a key role in helping to build loyalty with the brand.
"We provide an extraordinary, very personal experience in our stores to a customer who is generally invisible, unwanted and unheard. Our stores provide them with a place where they can feel 'they get me,' with a place they can build community and connect.”
Looking ahead, Muñoz said Torrid’s biggest growth opportunity is attracting new customers to the brand. It’s a shift in that Torrid has tended to market to the customers it had and focused on retention.
The company is deploying a digital strategy to spread brand awareness and get the word out. It includes social media, an online influencer program made up of brand ambassadors and more.
“Currently, our stores are the number one way customers find out about Torrid. We love that but want to augment it with a digital strategy.”
Torrid Curve, the intimates brand, is the second-biggest growth opportunity, Muñoz said. The line includes bras, sleepwear, lingerie, activewear and swim.
"Bras is the second leading product that a customer comes to us for, behind tops. A customer that buys a bra in the first year with with us is three times more valuable to us than one who doesn’t. We have patent-pending technology for our bras and are very focused on growing the category.”
Torrid has positioned itself as a one-stop shopping destination for plus-sized women. In addition to intimates, which account for a little over 20% of Torrid’s total business, the assortment ranges from wedding dresses to workwear to denim and nearly everything in between. Nearly every item at Torrid is designed and sourced in house, which helps drive consistent fit and quality. The company employs plus-size fit models rather than using mannequins during the fit process.
“The really remarkable thing about Torrid is that we make every possible thing this customer could need in her closet. It’s all proprietary product and it’s all about fit.”
Muñoz takes great pride in Torrid's focus on providing the right fit. Plus-size fitting is a big challenge, she said. It's not something that is taught in school in pattern-making.
"You have to learn it on the job and have a vision for it."
Despite its high volume of online shopping, Torrid has a low — 9% — return rate on online purchases (compared to an industry average of 30%.) Muñoz said she believes the company's stores and its great fit help keep returns down.
Torrid’s target customers range from 25- to 40-years of age. The core customer is 38 years old, with a higher income than average and a higher propensity to have children. The average size worn in 2020 was 18.
“I love that age range because the customer can really dig in. As a big girl myself, I know it takes a while to get here…to not be caught up in that ‘am I a plus or not’ thinking."
Torrid has thrived even as many traditional brick-and-mortar women’s plus-size retailers have struggled or, as in the case of Catherines and Avenue, closed their doors permanently. Muñoz believes the industry has been slow to keep up with the reality of who the plus-size customer is today.
"She is either young in spirit or young in age. Also, you have to focus on fit and the things that matter to your customer. I’m not sure that everyone did.”