CITY OF INDUSTRY, Calif., Aug. 19, 2009 (GLOBE NEWSWIRE) -- Hot Topic, Inc. (Nasdaq:HOTT), today announced that the company incurred a net loss in the second quarter of fiscal 2009 (13 weeks ended August 1, 2009) of $3.2 million, or $0.07 per share, compared with a net loss of $0.4 million, or $0.01 per share, in the second quarter of fiscal 2008 (13 weeks ended August 2, 2008). The results for the second quarter of fiscal 2009 and fiscal 2008 include approximately $0.02 and $0.01 per share of expense, respectively, related to ShockHound (www.shockhound.com), the company's online music site.
Total sales for the second quarter of fiscal 2009 decreased 5.4% to $157.8 million compared to $166.8 million for the second quarter last year. Total company comparable store sales declined 7.7% for the second quarter of fiscal 2009. A summary of the sales results by division (including internet) is as follows:
Comparable Store
Net Sales Sales % Change
-------------------- --------------------
% Change
$ To Last This Last
Millions Year Year Year
--------- --------- --------- ---------
SECOND QUARTER:
Hot Topic $119.8 -6.0% -7.5% -0.6%
Torrid $38.0 -4.0% -8.4% -2.1%
Total Co. $157.8 -5.4% -7.7% -0.9%
At the end of the second quarter of fiscal 2009, the company operated 679 Hot Topic stores and 156 Torrid stores compared to 684 Hot Topic stores and 158 Torrid stores at the end of the second quarter of fiscal 2008. During the second quarter of fiscal 2009, the company opened one Torrid store and closed three Torrid stores. The company also remodeled or relocated five Hot Topic stores during the quarter.
The company issued third quarter (13 weeks ending October 31, 2009) guidance of earnings in the range of $0.11 to $0.13 per diluted share based upon a mid-single-digit decline in comparable store sales. Included in the guidance is expense related to ShockHound (www.shockhound.com), the company's online music site, of approximately $0.02 per share.
A conference call to discuss second quarter results, business trends, guidance and other matters is scheduled for August 19, 2009 at 4:30 PM (ET). The conference call number is 800-299-7635, pass code "Hot Topic", and will be accessible to all interested parties. It will also be webcast on the company's Investor Relations website located at http://investorrelations.hottopic.com. A replay of the conference call will be available at 888-286-8010, pass code 16121790, for approximately two weeks. In addition, a webcast replay of the conference call will be available on the company's Investor Relations website for approximately two weeks.
Hot Topic, Inc. is a mall and web based specialty retailer operating the Hot Topic and Torrid concepts, as well as the e-space music discovery concept, ShockHound. Hot Topic offers music/pop culture-licensed and music/pop culture-influenced apparel, accessories, music and gift items for young men and women principally between the ages of 12 and 22. Torrid offers apparel, lingerie, shoes and accessories designed for various lifestyles for plus-size females principally between the ages of 15 and 29. ShockHound (www.shockhound.com) is a one-stop, genre-spanning music website where people of all ages can purchase MP3s and music merchandise, share their music interests and read music news and editorial content. As of August 1, 2009, the company operated 679 Hot Topic stores in all 50 states and Puerto Rico, 156 Torrid stores, and Internet stores www.hottopic.com, www.torrid.com and www.shockhound.com.
In addition to historical information, this news release and the aforementioned prerecorded commentary contain forward-looking statements, which may include statements relating to financial results, guidance, store operations, closures, remodels and relocations, projections and other financial performance. These statements involve risks and uncertainties, including risks and uncertainties associated with meeting expected financial results, fluctuations in sales and comparable store sales results, our online music site, music and fashion trends, competition from other retailers, uncertainties generally associated with specialty retailing, technology and other risks associated with Internet sales, the effect of negative conditions in the economic environment (including global capital and credit markets), the effect of severe weather or natural disasters, political and/or social changes or events that could negatively impact shopping patterns and/or mall traffic, relationships with mall developers and operators, relationships with our vendors, litigation proceedings and contingent liabilities, as well as other risks detailed in the company's SEC reports including its Annual Report on Form 10-K for the year ended January 31, 2009 and its Quarterly Reports on Form 10-Q. Historical results achieved are not necessarily indicative of the future prospects of the company, and actual results or circumstances could differ materially from the forward-looking statements.
HOT TOPIC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Second Quarter Ended
--------------------------
Aug. 1, 2009 Aug. 2, 2008
------------ ------------
Net sales $157,793 $166,814
Cost of goods sold, including buying,
distribution and occupancy costs 108,135 111,246
Gross margin 49,658 55,568
Selling, general & administrative expenses 55,084 56,722
Loss from operations (5,426) (1,154)
Interest income-net 183 413
Loss before benefit for income taxes (5,243) (741)
Benefit for income taxes (2,066) (291)
Net loss $(3,177) $(450)
Loss per share:
Basic and Diluted $(0.07) $(0.01)
Shares used in computing loss per share:
Basic and Diluted 44,064 43,756
Six Months Ended
--------------------------
Aug. 1, 2009 Aug. 2, 2008
------------ ------------
Net sales $332,917 $325,792
Cost of goods sold, including buying,
distribution and occupancy costs 223,129 218,599
Gross margin 109,788 107,193
Selling, general & administrative expenses 113,362 111,034
Loss from operations (3,574) (3,841)
Interest income-net 353 787
Loss before benefit for income taxes (3,221) (3,054)
Benefit for income taxes (1,269) (1,198)
Net loss $(1,952) $(1,856)
Loss per share:
Basic and Diluted $(0.04) $(0.04)
Shares used in computing loss per share:
Basic and Diluted 44,032 43,736
HOT TOPIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Aug. 1, 2009 Aug. 2, 2008
------------ ------------
Current Assets:
Cash, cash equivalents and short-term
investments $82,052 $51,652
Inventory 90,363 91,136
Prepaid expenses and other 18,292 18,281
Deferred tax assets 6,213 4,683
Total current assets 196,920 165,752
Property and equipment, net 148,954 164,690
Deposits and other 2,901 1,611
Long-term investments 5,170 10,246
Deferred tax assets 8,440 6,652
Total assets $362,385 $348,951
Current Liabilities:
Accounts payable $26,395 $36,611
Accrued liabilities 35,985 34,875
Income taxes payable 910 984
Total current liabilities 63,290 72,470
Deferred rent 34,356 38,901
Deferred compensation liability 2,601 1,368
Income taxes payable 1,850 844
Total liabilities 102,097 113,583
Total shareholders' equity 260,288 235,368
Total liabilities and shareholders' equity $362,385 $348,951
OTHER DATA
(Dollars in thousands)
(Unaudited)
Six Months Ended
--------------------------
Aug. 1, 2009 Aug. 2, 2008
------------ ------------
Depreciation and amortization $18,980 $19,316
Capital expenditures $13,356 $13,068
Total company store square footage 1,582,500 1,595,700
Hot Topic average store size 1,758 1,756
Torrid average store size 2,493 2,498