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Related Party Transactions
 9 Months Ended
Oct. 28, 2023
Related Party Transactions [Abstract]  
Related Party Transactions Related Party Transactions
Services Agreements with Hot Topic
Hot Topic Inc. ("Hot Topic") is an entity indirectly controlled by affiliates of Sycamore. From June 2, 2017 until its termination on March 21, 2019, we had a services agreement ("Third Party Services Agreement") with Hot Topic, pursuant to which Hot Topic provided us (or caused applicable third parties to provide) certain services, including information technology, distribution and logistics management, real estate leasing and construction management and other services as may have been specified. On March 21, 2019, we entered into an amended and restated services agreement ("Amended and Restated Services Agreement") with Hot Topic under which Hot Topic provided us (or caused applicable third parties to provide) substantially similar services to those provided under the Third Party Services Agreement. The term of the Amended and Restated Services Agreement was three years, unless we or Hot Topic extended the agreement, or we terminated the agreement (or certain services under the agreement). In connection with the Reverse Services Agreement (as defined below), we entered into an amendment to the Amended and Restated Services Agreement ("Amendment to Amended and Restated Services Agreement") with Hot Topic on August 1, 2019, pursuant to which sections pertaining to Hot Topic's provision of information technology services to Torrid were removed. Effective April 30, 2023, we entered into a second amendment to the Amended and Restated Services Agreement ("Second Amendment to Amended and Restated Services Agreement") with Hot Topic, under which Hot Topic will continue to provide us (or cause applicable third parties to provide) real estate leasing and construction management services. The Second Amendment to Amended and Restated Services Agreement will terminate on April 6, 2024. We record payments made to Hot Topic under these service agreements in the applicable expense category in either cost of goods sold, or selling, general and administrative expenses.
During the three- and nine-month periods ended October 28, 2023, Hot Topic charged us $0.4 million and $1.5 million, respectively, for various services under the applicable services agreements, all of which were recorded as a component of selling, general and administrative expenses. During the three- and nine-month periods ended October 29, 2022, Hot Topic charged us $0.6 million and $1.8 million, respectively, for various services under the applicable services agreements, all of which were recorded as a component of selling, general and administrative expenses. As of the end of the third quarter of fiscal year 2023, and as of the end of fiscal year 2022, we owed $0.1 million and $0.2 million, respectively, to Hot Topic for these services which is included in due to related parties in our condensed consolidated balance sheets.
On August 1, 2019, we entered into a services agreement ("Reverse Services Agreement") with Hot Topic, under which Torrid provided Hot Topic with certain information technology services. The term of the Reverse Services Agreement was three years, unless we or Hot Topic extended the agreement, or Hot Topic terminated the agreement. Torrid provided Hot Topic with the specified information technology services at no cost for the first three years of the Reverse Services Agreement, however Hot Topic bore certain capital and operating expenses that it incurred. Costs incurred in connection with providing the specified information technology services to Hot Topic were expensed as incurred in our condensed consolidated statements of operations and comprehensive (loss) income. During the three- and nine-month periods ended October 29, 2022, we incurred costs of $0.5 million and $2.1 million, respectively, in connection with providing these information technology services to Hot Topic. On July 31, 2022, we entered into a first amendment to the Reverse Services Agreement (“Amended Reverse Services Agreement”) with Hot Topic, under which Torrid provided Hot Topic with certain information technology services for a fixed fee. The term of the Amended Reverse Services Agreement was two months while both parties negotiated a longer-term amendment to the Reverse Services Agreement with modified terms and conditions. On September 30, 2022, we entered into a second amendment to the Reverse Services Agreement (“Second Amended Reverse Services Agreement”) with Hot Topic,
under which Torrid provides Hot Topic with certain information technology services for a fixed fee. The term of the Second Amended Reverse Services Agreement was five months while both parties negotiated a longer-term amendment to the Reverse Services Agreement with modified terms and conditions. Effective December 1, 2022, we entered into a third amendment to the Reverse Services Agreement (“Third Amended Reverse Services Agreement”) with Hot Topic, under which Torrid provides Hot Topic with certain information technology services for a fixed fee. The term of the Third Amended Reverse Services Agreement ends on May 4, 2024, unless we and Hot Topic mutually agree to extend the agreement, or we or Hot Topic terminate the agreement (or certain services under the agreement), upon written notice. During the three- and nine-month periods ended October 28, 2023, we charged Hot Topic $0.4 million and $1.3 million, respectively, for these services. As of the end of the third quarter of fiscal year 2023, and as of the end of fiscal year 2022, Hot Topic owed us $0.1 million for these services.
Hot Topic incurs certain direct expenses on our behalf, such as payments to our non-merchandise vendors and each month, we pay Hot Topic for these pass-through expenses. As of the end of the third quarter of fiscal year 2023 and as of the end of fiscal year 2022, the net amount we owed Hot Topic for these expenses was $0.1 million and $1.1 million, respectively, which is included in due to related parties in our condensed consolidated balance sheets.
Sponsor Advisory Services Agreement
On May 1, 2015, we entered into an advisory services agreement with Sycamore, pursuant to which Sycamore agreed to provide strategic planning and other related services to us. We are obligated to reimburse Sycamore for its expenses incurred in connection with providing such advisory services to us. As of the end of the third quarter of fiscal year 2023 and as of the end of fiscal year 2022, there were no amounts due, and during the three- and nine-month periods ended October 28, 2023 and October 29, 2022, no amounts were paid under this agreement.
From time to time, we reimburse Sycamore for certain management expenses it pays on our behalf. During the three-month period ended October 28, 2023, we did not make any reimbursements to Sycamore. During the nine-month period ended October 28, 2023, the amount paid to Sycamore for these expenses was not material. During the three- and nine-month periods ended October 29, 2022, we did not make any reimbursements to Sycamore. As of the end of the third quarter of fiscal year 2023 and as of the end of fiscal year 2022, there was no amount due.
Other Related Party Transactions
MGF Sourcing US, LLC, an entity indirectly controlled by affiliates of Sycamore, is one of our suppliers. During the three- and nine-month periods ended October 28, 2023, cost of goods sold included $14.6 million and $45.5 million, respectively, related to the sale of merchandise purchased from this supplier. During the three- and nine-month periods ended October 29, 2022, cost of goods sold included $16.8 million and $52.9 million, respectively, related to the sale of merchandise purchased from this supplier. As of the end of the third quarter of fiscal year 2023 and as of the end of fiscal year 2022, the net amounts we owed MGF Sourcing US, LLC for these purchases were $6.7 million and $11.6 million, respectively. This liability is included in due to related parties in our condensed consolidated balance sheets.
HU Merchandising, LLC, a subsidiary of Hot Topic, is one of our suppliers. During the three- and nine-month periods ended October 28, 2023, cost of goods sold related to the sale of merchandise purchased from this supplier included $0.1 million and $0.3 million, respectively, related to the sale of merchandise purchased from this supplier. During the three- and nine-month periods ended October 29, 2022, cost of goods sold included $0.1 million and $0.3 million, respectively, related to the sale of merchandise purchased from this supplier. As of the end of the third quarter of fiscal year 2023 and as of the end of fiscal year 2022, there were no amounts due to HU Merchandising, LLC.
Staples, Inc., an entity indirectly controlled by affiliates of Sycamore, is one of our suppliers. During the three- and nine-month periods ended October 28, 2023 and October 29, 2022, purchases from this supplier were not material. As of the end of the third quarter of fiscal year 2023, there was no amount due and as of the end of fiscal year 2022, the amount due to Staples, Inc. was not material.