On or around 09/19/2023 (Date of last review)
Filing Date: November 16, 2022
According to the Complaint, Torrid Holdings Inc. is a fashion retailer specializing in plus-size apparel and intimates. Torrid sells direct to consumers through its e-commerce platform and via more than 600 physical stores located throughout North America.
This is a securities class action on behalf of all persons who purchased Torrid common stock in or traceable to the Company’s July 2021 initial public offering seeking to pursue remedies under the 1933 Act. Leading up to the IPO, Torrid claimed to be experiencing rapid sales growth and an impressive recovery following a temporary downturn in the face of the initial phases of the COVID-19 pandemic, which began in March 2020.
The Complaint alleges that the Registration Statement for the IPO created the misleading impression that Torrid’s impressive growth trajectory was then continuing and expected to continue following the IPO. Specifically, the Complaint alleges 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 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 March 16, 2023, the Court issued an Order appointing Lead Plaintiff and Counsel. Lead Plaintiff filed a consolidated Complaint on May 12.
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