Torrid Holdings Inc. (CURV) stock intrinsic value fair value estimate & owner earnings analysis

Torrid is a specialty apparel and intimates retailer focused on plus-size women, selling through 483 stores across the United States (plus a small presence in Puerto Rico and Canada) and, increasingly, online - e-commerce made up 64% of sales last year, up from 59% two years earlier. The business has been shrinking. Net sales fell 9.4% in fiscal 2025 to $1.00 billion, continuing a decline that has run for four straight years. Most recently, the company closed 151 stores - almost a quarter of its fleet - as part of a deliberate "store optimization" plan aimed at shifting the footprint toward its stronger online channel and cutting costs; management has said it plans up to 40 further closures this year. Selling and administrative costs fell by nearly 11% in fiscal 2025, roughly in step with the smaller store base, and new tariffs on imported apparel took a further bite out of gross margin, which fell to 34.8% from 37.5%. We build our estimate of the cash the business actually generates for owners starting from operating cash flow, then strip out the swings caused by working-capital timing and the cost of stock-based compensation (which operating cash flow otherwise adds back), and subtract the capital spending needed just to maintain the current store base and systems (separating that from any spending tied to growth). On that basis, per-share owner earnings were volatile over the last four fiscal years - roughly $1.05, $0.59, $0.69 and $0.48 in fiscal 2022 through 2025 - and we use the median of the last three years, about $0.59 per share, as the anchor, treating fiscal 2021 (the IPO year) as distorted by a one-time, non-recurring $160 million stock-compensation charge tied to the vesting of pre-IPO awards. We modeled three cases: - In the bear case, the sales decline continues at close to last year's pace, tariff costs stay elevated, and the roughly $300 million of debt on the balance sheet - most of it a term loan that must be refinanced in 2028 - becomes more expensive to carry. Owner earnings fall toward roughly $0.08 per share within a few years and stay there. This produces a value of about $1.72 per share. - In the base case, the sharply slower pace of store closures planned for this year, together with cost discipline the company has already demonstrated, lets owner earnings stabilize in the $0.45-$0.50 per share range - below both the recent three-year median and well below the $1.05 the company earned in fiscal 2022, reflecting a permanently smaller store base rather than a return to its old footprint. This produces a value of about $8.23 per share. - In the bull case, the store-optimization plan finishes on schedule, the multi-year shift to online sales keeps supporting margins, and tariff-mitigation steps the company has already described (sourcing more goods from other countries, sharing costs with vendors) work reasonably well. Owner earnings recover toward $0.75-$0.78 per share, still below the fiscal 2022 peak. This produces a value of about $12.31 per share. A caution on the base and bull cases: the deceleration they assume is supported by the company's own stated plans and by two consecutive quarters of improved cash generation, but the two most recent quarters still show sales declining at close to last year's pace, so the improvement so far shows up in cost and cash discipline, not yet in the top line. That is the main way this thesis could be wrong. Given the size of the debt load, the still-unresolved sales trend, and the fact the cost-cutting plan is only partway through, the margin-of-safety price is set at a large discount to our base-case estimate - around $4.25 per share - and applies only after two consecutive quarters of gross margin at 35% or better alongside store closures running near the company's own planned pace confirm the turnaround.