CITY of INDUSTRY, Calif., Aug. 16, 2006 (PRIMEZONE) -- Hot Topic, Inc. (Nasdaq:HOTT) reported results for its second fiscal quarter (13 weeks) ended July 29, 2006.
The company incurred a net loss in the second quarter of $0.9 million, or $0.02 per diluted share, compared to net income of $0.9 million or $0.02 per diluted share for the comparable period last year. The second quarter 2006 results include approximately $0.02 per share of stock option expense. Net sales for the second quarter increased 5% to $160.3 million from $152.2 million for the second quarter of fiscal 2005.
As previously reported, comparable store sales decreased 5.5% for the quarter compared to a decrease of 3.5% during the second quarter of fiscal 2005.
At the end of the quarter, the company operated 682 Hot Topic stores and 127 Torrid stores compared to 628 Hot Topic stores and 100 Torrid stores at the end of the second quarter of fiscal 2005. During the second quarter of fiscal 2006, the company opened a total of 11 Hot Topic stores and 4 Torrid stores. The company also remodeled or relocated 8 Hot Topic stores during the quarter.
The company estimates that third quarter earnings will be in the range of $0.16 to $0.18 per diluted share based upon a mid-single digit comp store sales decline. For the fourth quarter, the company estimates earnings in the range of $0.44 to $0.48 per diluted share based upon flat comp sales.
A conference call to discuss second quarter, business trends, guidance and other matters is scheduled for today at 4:30 PM Eastern time. The conference call number is 866-202-4367, pass code "Hot Topic", and will be accessible to all interested parties. The conference call will also be webcast at www.companyboardroom.com. A replay will be available at 888-286-8010, pass code 10660381, 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 July 29, 2006 the company operated 682 Hot Topic stores in all 50 states and Puerto Rico, 127 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, projections and other financial performance, managing growth, and litigation matters and contingent liabilities. 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 January 28, 2006. 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)
Second Quarter Ended
---------------------
July 29, July 30,
2006 2005
-------- --------
Net sales $160,348 $152,234
Cost of goods sold, including buying,
distribution and occupancy costs 109,514 104,612
Gross margin 50,834 47,622
Selling, general & administrative
expenses 52,540 46,498
(Loss) Income from operations (1,706) 1,124
Interest income-net 239 323
(Loss) Income before income taxes (1,467) 1,447
(Benefit) Provision for income taxes (562) 554
Net (loss) income $ (905) $ 893
Net (loss) income per share
Basic $ (0.02) $ 0.02
Diluted $ (0.02) $ 0.02
Shares used in computing net (loss)
income per share:
Basic 44,180 45,065
Diluted 44,180 46,246
Six Months Ended
---------------------
July 29, July 30,
2006 2005
-------- --------
Net sales $314,389 $301,996
Cost of goods sold, including buying,
distribution and occupancy costs 215,295 203,208
Gross margin 99,094 98,788
Selling, general & administrative
expenses 103,485 89,899
(Loss) Income from operations (4,391) 8,889
Interest income-net 642 660
(Loss) Income before income taxes (3,749) 9,549
(Benefit) Provision for income taxes (1,436) 3,657
Net (loss) income (2,313) $ 5,892
Net (loss) income per share
Basic $ (0.05) $ 0.13
Diluted $ (0.05) $ 0.13
Shares used in computing net (loss)
income per share:
Basic 44,122 44,907
Diluted 44,122 46,207
HOT TOPIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
July 29, July 30,
2006 2005
-------- --------
Current Assets:
Cash, cash equivalents and
short-term investments $ 19,883 $ 33,760
Inventory 106,227 94,524
Prepaid expenses and other 17,277 18,330
Deferred tax assets 2,487 2,541
Total current assets 145,874 149,155
Property and equipment, net 174,070 171,022
Deposits and other 249 247
Total assets $320,193 $320,424
Current Liabilities:
Accounts payable and overdraft $ 47,429 $ 44,138
Accrued liabilities 27,595 32,350
Income taxes payable -- 76
Total current liabilities 75,024 76,564
Deferred rent 41,224 35,664
Deferred tax liability 209 6,076
Total liabilities 116,457 118,304
Shareholders' equity 203,736 202,120
Total liabilities and shareholders'
equity $320,193 $320,424
HOT TOPIC, INC.
OTHER DATA
(Dollars in thousands)
(Unaudited)
Six Months Ended
-----------------------
July 29, July 30,
2006 2005
---------- ----------
Depreciation and amortization $ 18,693 $ 14,587
Capital expenditures $21,753 $ 49,421
Number of stores open at end of
period:
Hot Topic 682 628
Torrid 127 100
Total store square footage 1,505,200 1,338,000