Did you lose money on investments in Torrid Holdings? If so, please visit Torrid Holdings Inc. Shareholder Class Action Lawsuit or contact Peter Allocco at (212) 951-2030 or pallocco@bernlieb.com to discuss your rights.
NEW YORK, Nov. 18, 2022 (GLOBE NEWSWIRE) — Bernstein Liebhard LLP announces that a securities class action lawsuit has been filed on behalf of investors who purchased or otherwise acquired the common stock of Torrid Holdings Inc. (“Torrid” or the “Company”) (NYSE: CURV) in or traceable to the Company’s July 2021 initial public offering (the “IPO”). The lawsuit was filed in the United States District Court for the Central District of California and alleges violations of the Securities Act of 1933.
Torrid is a fashion retailer specializing in plus-size apparel and intimates. The Company is majority owned and controlled by New York private equity firm defendant Sycamore Partners Management, L.P. (“Sycamore”). Torrid sells direct to consumers through its e-commerce platform and via more than 600 physical stores located throughout North America.
On June 7, 2021, Torrid filed with the SEC a registration statement on Form S-1 for the IPO, which, after several amendments, was declared effective on June 30, 2021 (the “Registration Statement”). On July 2, 2021, the Company filed with the SEC a prospectus on Form 424B4 which incorporated and formed part of the Registration Statement. Defendants used the Registration Statement to sell 12.65 million shares of Torrid at $21 per share, generating over $265 million in gross offering proceeds. Notably, all of the shares sold were by Torrid insiders, including several of individual defendants, and none of the proceeds went to the Company.
The Registration Statement created the misleading impression that Torrid’s impressive growth trajectory was then continuing and expected to continue following the IPO. The complaint alleges that the Registration Statement failed to disclose that the following adverse facts existed at the time of the IPO: (i) in the first half of 2021, Torrid had experienced a temporary surge in demand as a result of changed consumer behaviors in response to the COVID-19 pandemic and government stimulus, and that such ephemeral demand trends had dissipated and were not internally projected to continue following the IPO; (ii) Torrid was suffering from severe supply chain disruptions caused by the emergence of the Delta variant of COVID-19, which had first emerged in May 2021; (iii) Torrid was running materially below historical inventory levels as a result of supply chain disruptions; (iv) as a result, Torrid did not have sufficient inventory to meet expected consumer demand for its fiscal third quarter of 2021; (v) as a result, late inventory arrival had materially impaired the Company from effectively matching consumer buying trends, creating an undisclosed risk of increased markdowns and promotional activities necessary to sell undesirable inventory; (vi) Torrid’s CFO planned to retire shortly after the IPO; and (vii) as a result of all of the above, the Registration Statement’s representations regarding Torrid’s historical financial and operational metrics and purported market opportunities did not accurately reflect the actual business, operations, financial results, and trajectory of the Company at the time of the IPO, and were materially false and misleading and lacked a reasonable factual basis.
On September 8, 2021, Torrid issued a release announcing the Company’s financial results for its second fiscal quarter ended July 31, 2021 – i.e., the quarter at the end of which the IPO was conducted. In the release, defendant George Wehlitz (“Wehlitz”) claimed that the quarter had “delivered strong financial results” but acknowledged Torrid was “carefully monitoring the global supply chain challenges that are expected to persist into the back half of the year.”
Then, on December 8, 2021, Torrid announced that defendant Wehlitz would be retiring shortly after the IPO. That same day, Torrid issued a release announcing the Company’s financial results for its third fiscal quarter ended October 30, 2021. The release revealed a further decline of the reported key financial and operating metrics.
On January 10, 2022, Torrid issued a press release lowering the Company’s already disappointing sales and earnings guidance. The release reduced Torrid’s net sales guidance to a range of $1.265 billion to $1.27 billion (compared to a range of $1.29 billion to $1.3 billion previously) and adjusted EBITDA guidance to a range of $240 million to $242 million (compared to a range of $252 million to $257 million previously).
On May 3, 2022, Torrid issued a release announcing that defendant Elizabeth Muñoz (“Muñoz”) would be stepping down as CEO of the Company and as a member of the Board and transition into a new role as Chief Creative Officer. The release also stated that defendant Lisa Harper (“Harper”) would become the new CEO of Torrid, effective immediately, among other management changes.
On June 7, 2022, Torrid issued a release announcing the Company’s financial results for its first fiscal quarter ended April 30, 2022. The release stated that Torrid’s comparable store sales had declined 2% during the quarter.
Finally, on September 7, 2022, Torrid announced its financial results for its second fiscal quarter ended July 30, 2022. The release revised downward Torrid’s annual 2022 net sales guidance from a range of $1.3 billion to $1.365 billion to a range of $1.26 billion to $1.3 billion, which would be essentially flat year-over-year, and revised downward Torrid’s annual 2022 adjusted EBITDA guidance from a range of $195 million to $220 million to a range of $160 million to $175 million, which would be significantly worse than Torrid’s fiscal 2021 adjusted EBITDA of $246 million.
By the end of September 2022, the price of Torrid stock fell to a low of just $4.06 per share, over 80% below the IPO price. At the time of the filing of the complaint, the price of Torrid common stock has remained significantly below the IPO price.
If you wish to serve as lead plaintiff, you must move the Court no later than January 17, 2023. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. Your ability to share in any recovery doesn’t require that you serve as lead plaintiff. If you choose to take no action, you may remain an absent class member.
If you purchased or otherwise acquired Torrid common stock, and/or would like to discuss your legal rights and options please visit Torrid Holdings Inc. Shareholder Class Action Lawsuit or contact Peter Allocco at (212) 951-2030 or pallocco@bernlieb.com.
Since 1993, Bernstein Liebhard LLP has recovered over $3.5 billion for its clients. In addition to representing individual investors, the Firm has been retained by some of the largest public and private pension funds in the country to monitor their assets and pursue litigation on their behalf. As a result of its success litigating hundreds of lawsuits and class actions, the Firm has been named to The National Law Journal’s “Plaintiffs’ Hot List” thirteen times and listed in The Legal 500 for ten consecutive years.
ATTORNEY ADVERTISING. © 2022 Bernstein Liebhard LLP. The law firm responsible for this advertisement is Bernstein Liebhard LLP, 10 East 40th Street, New York, New York 10016, (212) 779-1414. Prior results do not guarantee or predict a similar outcome with respect to any future matter.
Contact Information:
Peter Allocco
Bernstein Liebhard LLP
https://www.bernlieb.com
(212) 951-2030
pallocco@bernlieb.com
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