William Blair downgrades Torrid on larger than thought overhang

William Blair analyst Dylan Carden downgraded Torrid Holdings to Market Perform from Outperform without a price target. The company reported weaker than expected results for Q3 and lowered its full-year sales and earnings guidance, Carden tells investors in a research note. Torrid saw a slowdown in October during its key Torrid Cash promotional event, which exacerbated the impact on the quarter, contends the analyst. Carden says the magnitude of the inventory overhang is bigger than he thought, and the degree of discounting required to right-size inventory levels is deeper than he had hoped. To0rrid has a "tangible longer-term growth opportunity, though the timing has become less clear, being the biggest risk for shares," writes the analyst.