CITY OF INDUSTRY, Calif., May 23, 2007 (PRIME NEWSWIRE) -- Hot Topic, Inc. (Nasdaq:HOTT), today announced that the company incurred a net loss in the fiscal first quarter of 2007 (13 weeks ended May 5, 2007) of $0.8 million, or $0.02 per share, compared with a net loss of $1.4 million, or $0.03 per share, in the fiscal first quarter of 2006 (13 weeks ended April 29, 2006).
As previously reported, total sales for the 13 weeks ended May 5, 2007 increased 2% to $157.3 million compared to $154.0 million for the 13 week period ended April 29, 2006. Comparable store sales declined 2.3% for the first quarter of 2007. Due to a 53rd week in fiscal 2006, first quarter comparable store sales are compared to the corresponding 13 week period ended May 6, 2006.
At the end of first quarter fiscal 2007, the company operated 695 Hot Topic stores and 131 Torrid stores compared to 671 Hot Topic stores and 123 Torrid stores at the end of first quarter fiscal 2006. During first quarter fiscal 2007, the company opened a total of two Hot Topic stores and closed one Hot Topic store. The company also remodeled or relocated 17 Hot Topic stores during the quarter.
The company issued second quarter (13 weeks ending August 4, 2007) guidance of a loss in the range of $0.02 to $0.04 per share based upon a comparable store sales decline of mid-single digits. Included in the guidance is a charge of $0.02 to $0.03 per share for Hot Topic stores scheduled to be remodeled or relocated in fiscal 2007 prior to their natural lease expiration.
A conference call to discuss first quarter, business trends, guidance and other matters is scheduled for today at 4:30 PM (ET). The conference call number is 866-543-6405, pass code "Hot Topic", and the call will be accessible to all interested parties. It will also be webcast at www.earnings.com. A replay will be available at 888-286-8010, pass code 76826066, for approximately two weeks.
Hot Topic, Inc. is a national mall-based specialty retailer. Hot Topic offers apparel, accessories and gifts to young men and women principally between the ages of 12 and 22. Torrid, the company's second concept, provides plus-size fashion-forward apparel and accessories that target young women principally between the ages of 15 and 29. As of May 5, 2007 the company operated 695 Hot Topic stores in all 50 states and Puerto Rico, 131 Torrid stores, and Internet stores www.hottopic.com and www.torrid.com.
In addition to historical information, this news release and the aforementioned conference call contain forward-looking statements, which include statements relating to financial results, guidance, store operations, projections and other financial performance and managing growth. These statements involve risks and uncertainties, including risks and uncertainties associated with meeting expected financial results, management of growth, relationships with mall developers and operators, the risk that available cash or mall space will not be adequate for planned expansion, fluctuations in sales and comparable store sales results, risks and uncertainties with respect to new store openings including risks associated with the company's new store concepts and Internet stores, music and fashion trends, competition from other retailers, uncertainties generally associated with specialty retailing, the effect of economic conditions, 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, litigation proceedings and contingent liabilities, as well as other risks detailed in the company's SEC reports including its Quarterly Reports on Form 10-Q and its Annual Report on Form 10-K for the year ended February 3, 2007. 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 INCOME
(In thousands, except per share amounts)
(Unaudited)
First Quarter Ended
----------------------
May 5, Apr. 29,
2007 2006
--------- ---------
Net sales $ 157,282 $ 154,041
Cost of goods sold,
including buying,
distribution and
occupancy costs 105,695 105,784
Gross margin 51,587 48,257
Selling, general &
administrative expenses 53,404 50,942
Loss from operations (1,817) (2,685)
Interest income-net 506 403
Loss before benefit for
income taxes (1,311) (2,282)
Benefit for income taxes (502) (874)
Net loss $ (809) $ (1,408)
Loss per share
Basic $ (0.02) $ (0.03)
Diluted $ (0.02) $ (0.03)
Shares used in computing
loss per share:
Basic 44,245 44,065
Diluted 44,245 44,065
HOT TOPIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
May 5, Apr. 29,
2007 2006
-------- --------
Current Assets:
Cash, cash equivalents
and short-term investments $ 49,171 $ 26,424
Inventory 75,062 82,363
Prepaid expenses and other 13,621 17,014
Deferred tax assets 3,680 2,487
Total current assets 141,534 128,288
Property and equipment, net 165,970 173,198
Deposits and other 962 245
Deferred tax assets 4,059 --
Total assets $312,525 $301,731
Current Liabilities:
Accounts payable $ 21,587 $ 27,520
Accrued liabilities 27,667 30,250
Total current liabilities 49,254 57,770
Deferred rent 40,117 40,516
Deferred compensation
liability 762 --
Income taxes payable 1,258 --
Deferred tax liability -- 579
Total liabilities 91,391 98,865
Shareholders' equity 221,134 202,866
Total liabilities and
shareholders' equity $312,525 $301,731
HOT TOPIC, INC.
OTHER DATA
(Dollars in thousands)
(Unaudited)
Three Months Ended
----------------------
May 5, Apr. 29,
2007 2006
--------- ---------
Depreciation and
amortization $9,930 $9,201
Capital expenditures $9,428 $11,217
Number of stores open at end
of period:
Hot Topic 695 671
Torrid 131 123
Total store square footage 1,545,000 1,473,500