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Torrid Files for IPO (Again) as Ssense Gets a Shot in the Arm

In a year ripe with IPOs in fashion, whether it’s Poshmark, or ThredUp, Torrid is the latest company looking to capitalize on a hot market.

The direct-to-consumer brand specializing in plus-size apparel and intimates filed an S-1 statement for an initial public offering with the Securities and Exchange Commission (SEC), marking the second time the City of Industry, Calif., company has filed for an IPO after withdrawing a July 2017 statement in April 2019.

The number of shares of common stock to be offered and the price range for the proposed offering have not yet been determined, although the company is raising $100 million for the listing—traditionally used as a placeholder total.

If Torrid elects to proceed with an IPO, the company says it would list the common stock on the New York Stock Exchange (NYSE) under the ticker symbol “CURV.”

Torrid targets 25-to-40-year old women who wear sizes 10 to 30, offering products across tops, bottoms, denim, dresses, intimates, activewear, footwear and accessories. Last year, it says it generated net sales of $974 million and served 3.2 million active customers. Even though the sales represented a 6 percent decline from the prior year, Torrid claims it was able to gain market share in women’s plus-size apparel and intimates.

This year has been a completely different story for Torrid, as net sales grew 108 percent to $326 million for the three months ended May 1, 2021 from $156 million in the prior-year period. Net income has grown 5 percent in that time span to $13 million, up from $12 million last year.

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Torrid now has 3.4 million active customers, and operates 608 stores as of May 1.

Comparable sales have grown 35 of the last 37 quarters, with the only two declining quarters coming in 2020 as a result of Covid-19 disruption.

The company outlined its case for going public. According to a third-party study Torrid commissioned, the women’s plus-size apparel and intimates market was valued at approximately $85 billion in 2019, compared to the women’s straight-size market of approximately $96 billion. Plus-size apparel is expected to grow at a 3 percent to 5 percent compound annual growth rate (CAGR), more than twice the rate of the overall U.S. women’s apparel and intimates market, Torrid said.

Based on its 3.4 million active customers, Torrid believes it less than 4 percent penetration among U.S. plus-size women.

Its consistent fit marks another potential advantage, according to Torrid, especially when poor fit and sizing can erode margins. Torrid touts a return rate of just 9 percent for e-commerce purchases in 2020, whereas return rates for e-commerce purchases can be as high as 30 percent, according to research from Optoro.

The brand says it has differentiated its technical fit by building and refining a database of fit specifications derived from testing, measuring and cataloging over 13,000 garments each year on fit models.

And Torrid has maintained its high e-commerce penetration even as stores reopened in 2021. While digital sales represented 70 percent of net sales last year, they have tallied 69 percent of net sales for the 12 months ended May 1, 2021. The company accelerated investments in omnichannel in the wake of the Covid-19 pandemic, rolling out BOPIS across all U.S. stores in June last year and curbside pickup and ship from store in select stores in August.

The fit-focused offering of basics and core styles, which together represented approximately 86 percent of total sales in 2020, gives Torrid what it says is a “low-risk assortment.” New product, which represents new or emerging styles, accounted for the remaining roughly 14 percent of net sales in 2020.

Product sourcing is not dependent on any one manufacturing facility, enabling a flexible and agile approach to sourcing. In this “vertical sourcing” process, Torrid internally designs and develops 89 percent of its products, giving the company more control to deliver consistent fit, quality and costs. The remaining 11 percent of products are primarily related to certain footwear and accessories categories, where the retailer does not control the entire design process.

The plus-size brand is well-diversified, with no single supplier accounting for more than 13 percent of merchandise purchased in 2020. Approximately 96 percent of its product receipts in 2020 were sourced internationally, primarily from Asia. But the company is making a point to cut supply from China, with share of products sourced from that market plummeting from 68 percent in 2019 to 49 percent in 2020.

Private equity firm Sycamore Partners Management, which has a significant portfolio of apparel investments including Belk, Express, Hot Topic, Loft/Ann Taylor, Talbots and The Limited, will remain the majority shareholder upon completion of the offering.

Morgan Stanley, BofA Securities, Goldman Sachs, Jefferies, Baird, Cowen, and William Blair are the joint bookrunners on the deal.

Ssense, a luxury seller of “fashion and everything else,” has received a minority investment from Sequoia Capital, giving the company a post-funding enterprise value of over 5 billion Canadian dollars ($4.1 billion).
Ssense kids WWD

Canadian luxury fashion seller Ssense is now valued at $4 billion

While Torrid appears to be on its way to going public, another retail company has seen its private value skyrocket via a recent investment.

Ssense, a luxury seller of “fashion and everything else,” has received a minority investment from Sequoia Capital, giving the company a post-funding enterprise value of over 5 billion Canadian dollars ($4.1 billion).

The online boutique offers a curated collection of more than 500 luxury labels, emerging designers and streetwear brands for both men and women. The company largely targets millennials and Gen Z audiences, with approximately 80 percent of its audience being between the ages of 18 to 40.

This is the first round of external funding in Ssense’s 18-year history. Proceeds from the transaction will be used to further accelerate the company’s global growth strategy, including an acceleration in the Chinese market.

Ssense generates an average of 100 million monthly page views, and has achieved high-double-digit annual growth and profitability since its inception.

“Ssense was founded on the principles of challenging convention and using our platform to amplify the voices that are changing the way we see the world,” said Rami Atallah, co-founder and CEO of Ssense. “I’m grateful to be surrounded by a diverse, world-class team who continues to contribute to the ongoing success of Ssense. We’ve found a like-minded partner who shares our belief in pushing boundaries as we advance in our next stages of growth. Together, I’m confident we’ll strengthen the strategic, operational and technological foundations to achieve our bold aspirations.”

Following the transaction, Angelica Cheung, venture partner for Sequoia Capital China, will join the Ssense board of directors.