Investment Potential in Women's Plus-Size Apparel Niche

Archive edition · Market data and company circumstances reflect 13 July 2024, when this newsletter was sent.

Torrid and the plus-size apparel market

Torrid Holdings Inc. is a leading player in the women’s plus-size apparel and intimates market in North America. Established in 2019 and headquartered in California, the company designs, develops, and merchandises products under the Torrid, Torrid Curve, CURV, and Lovesick brand names.

With a focus on providing unparalleled fit and experience, Torrid empowers curvy women to love the way they look and feel.

Torrid, with a market cap of $776.36 million, operates through an e-commerce platform as well as its network of over 600 physical stores, reaching over 3 million active customers. Its inclusive and welcoming environment fosters long-standing relationships with its customers, driven by a maniacal focus on fit, which is their highest priority.

Overview of Plus Size Women’s Clothing Market

The global plus size women’s clothing market size was valued at USD 290.04 billion in 2023 and is anticipated to reach around USD 506.34 billion by 2033, growing at a CAGR of 5.73% from 2024 to 2033.

Plus Size Women’s Clothing Market Forecast (Source: Precedence Research)

The rise in body positivity and acceptance has driven the demand for stylish oversized clothing. Retailers are responding by expanding their product offerings, contributing to the market's growth. Plus-size women, as a result, benefit from access to fashionable, well-fitting apparel, boosting their confidence and self-esteem.

Despite the market's growth, there are notable restraints, including the limited availability of fashionable and trendy options compared to standard sizes and the higher costs associated with plus-size clothing.

The fashion industry has historically underserved the plus-size market, often offering outdated or unflattering designs. Moreover, plus-size clothing is frequently priced higher than standard sizes due to specialized production processes, greater material costs, and lower economies of scale. This pricing gap can deter some consumers and perpetuate negative body image judgments, as well as the perception that plus-size individuals are not worthy of stylish attire.

The market also presents significant opportunities, particularly in the demand for stylish and functional activewear and the development of innovative fabrics and technologies.

The fashion industry is increasingly recognizing the need for diversity and representation, with plus-size women pushing for greater visibility in advertising campaigns and access to clothing that fits their body types. Companies that embrace this demand can build loyal customer bases by demonstrating an understanding and appreciation of plus-size consumers.

Additionally, innovative fabrics and technologies, such as antimicrobial treatments and adaptive clothing with magnetic fastenings and adjustable closures, can significantly enhance comfort, hygiene, and ease of dressing for plus-size women. These advancements offer inclusivity and dignity in fashion, accommodating a range of body types and abilities.

• Growing Acceptance of Diverse Body Types: Inclusivity and body positivity movements have led to increased demand for stylish plus-size clothing.
• Rise of Online Shopping: Online retailers offer a wider selection of plus-size clothing than physical stores, catering to the specific needs of plus-size consumers.
• Ageing Population: Older populations tend to have larger body sizes, increasing demand for plus-size clothing. Higher disposable incomes in developing countries also drive market growth.

Path to Growth for Torrid

As a young company in its growth phase, Torrid has taken several strategic initiatives to positions itself for continued expansion and success:

Torrid caters to the plus-size women's apparel market, a segment experiencing steady growth. This suggests a potential for exponential organic growth as the market expands.

Customer Acquisition and Retention

Torrid focuses on efficient and profitable customer acquisition while maintaining reasonable marketing costs relative to net sales and profit expectations. The company's ability to attract and retain customers cost-effectively ensures sustainable growth.

While overall economic trends impact consumer behavior, Torrid's focus on plus-size clothing, a segment less susceptible to fashion cycles, provides a degree of stability. Despite recent inflationary pressures, Torrid's ability to navigate economic fluctuations and manage costs positions it for long-term growth.

Torrid's target market, the plus-size population, is a growing demographic. As this segment continues to expand, particularly in key geographic markets, Torrid is well-positioned to capture a larger share of the market, driving growth.

Torrid continues to invest in its business by augmenting leadership, enhancing infrastructure and technology, expanding its store footprint, and improving the customer experience. These investments are aimed at increasing customer numbers and loyalty, leading to positive financial performance in the long term.

How Torrid (NYSE: CURV) has performed so far?

Torrid Holdings Inc.'s stock price has experienced significant volatility after going public in 2017, trading on the New York Stock Exchange (NYSE) under the ticker symbol CURV.

This chart provides a snapshot of CURV's performance since its listing.

Investors’ reactions to the company’s quarterly results, press releases, SEC filings, and speculation in the investment community played key role in dragging its stock prices down.

Company Fundamentals

Based on the Torrid Holdings Inc. 2023 Annual Report, here's a breakdown of their financial performance:

The company experienced fluctuating revenue over the past few years, with a noticeable decline in year-over-year (YoY) growth rates. From Q3 '22 to Q1 '24, revenue ranged from $275.41 million to $301.23 million per quarter, peaking at $301.23 million in Q4 '22 and then showing a downward trend, reaching $279.77 million in Q1 '24.

The company maintains an attractive valuation with a low EV/sales ratio compared to industry benchmarks, suggesting potential undervaluation in relation to revenue generation capabilities.

This chart provides a snapshot of CURV's ratings. (Source: Market Screener)

What Experts are Saying?

Analysts that track the stock seem neutral on the stock’s potential with all of them recommending holding the stock at current levels. The highest target in the next 12 months assigned for the stock by the analysts is 8 signifying an up move of 8% from the current levels.

Technically Speaking…

CURV is in the process of breaking out of an Inverted Head & Shoulder Pattern which is what brought the stock on our radar at the first place.

The breakout materialized in the month of May and is still running valid.

Archive note

This article preserves the analysis in our weekly newsletter sent 13 July 2024. Market prices, forecasts and company circumstances reflect the time of publication and may have changed.

This material is general information, not personal financial advice or a recommendation to trade. Investing and trading involve risk, including loss of capital.