Plus-size women's apparel retailer Torrid is a sister brand to Hot Topic no longer, and investors appear to like what they see inside the newly minted public company. 

On Thursday, Torrid debuted on the New York Stock Exchange under the clever ticker symbol 'CURV.' It marked a rare public listing for a specialty apparel retailer, no less one that serves a severely under-represented corner of the market (plus-size women's clothes). Torrid shares surged more than 20% in early afternoon trading.  

But first, the quick backstory.

Torrid had long been part of edgy specialty apparel retailer Hot Topic. Hot Topic was acquired by private equity shop Sycamore Partners for $600 million in 2013. Torrid then branched out from Hot Topic in 2015. 

The brand's store base has swelled to 608 locations compared to about 230 at the time of the Sycamore deal. About 70% of Torrid's sales are done online, easily more than double the percentage seen at other sizable specialty apparel retailers. 

Torrid’s valuation alone based on its IPO pricing was $2.3 billion. The company's market valuation stands at roughly $2.5 billion based on today's IPO day pop.

Talk about PE unlocking value. 

"I think we are by far the most ignored and underserved customer in the apparel industry," Torrid CEO Liz Munoz said on Yahoo Finance Live. "I don't know that people fully understand what needs to be done. Fit is incredibly important, and that skill doesn't really exist in a lot of places."

Torrid

Munoz — a long-time designer — takes pride in how Torrid creates its clothes (they are fitted on Torrid employees, not mannequins) to ensure proper fit and how it uses data to understand its shoppers. 

The attention to detail appears to be paying off. 

Torrid is knocking on the doorstep of hitting $1 billion in annual sales, reaching $973 million in the pandemic plagued 2020. First quarter sales surged 109% year-over-year to $325.8 million. Adjusted operating profits hit $75.7 million compared to a loss of $8.2 million a year earlier at the height of the pandemic.

Story continues

The company says it retained 82% of net sales in 2020 from the prior year’s identifiable customers, underscoring brand loyalty and the lack of true competitors. 

"We have a tremendous amount of runway to continue to service this customer. We are very close to her, and excited about continuing to grow and find more women that are settling and wearing things they don't love," Munoz added.

Investors seem to agree, Liz.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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