CITY OF INDUSTRY, Calif., Aug. 22, 2007 (PRIME NEWSWIRE) -- Hot Topic, Inc. (Nasdaq:HOTT), today announced that the company incurred a net loss in the fiscal second quarter of 2007 (13 weeks ended August 4, 2007) of $1.7 million, or $0.04 per share, compared with a net loss of $0.9 million, or $0.02 per share, in the fiscal second quarter of 2006 (13 weeks ended July 29, 2006).
As previously reported, total sales for the 13 weeks ended August 4, 2007 increased 1% to $161.7 million compared to $160.3 million for the 13 week period ended July 29, 2006. Comparable store sales declined 5.8% for the second quarter of 2007. Due to a 53rd week in fiscal 2006, second quarter comparable store sales are compared to the corresponding 13 week period ended August 5, 2006.
At the end of second quarter fiscal 2007, the company operated 693 Hot Topic stores and 133 Torrid stores compared to 682 Hot Topic stores and 127 Torrid stores at the end of second quarter fiscal 2006. During second quarter fiscal 2007, the company opened a total of two Hot Topic stores and four Torrid stores and closed four Hot Topic stores and two Torrid stores. The company also remodeled or relocated 27 Hot Topic stores during the quarter, bringing the total number of remodeled or relocated stores during the year-to-date period to 44.
The company issued third quarter (13 weeks ending November 3, 2007) guidance of earnings in the range of $0.13 to $0.16 per diluted share based upon a comparable store sales decline of low-single digits. The company also issued fourth quarter (13 weeks ending February 2, 2008) guidance of earnings in the range of $0.29 to $0.33 per diluted share based upon a comparable store sales decline of low-single digits.
A conference call to discuss second quarter, business trends, guidance and other matters is scheduled for today at 4:30 PM (ET). The conference call number is 800-901-5218, 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 23534375, 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 August 4, 2007 the company operated 693 Hot Topic stores in all 50 states and Puerto Rico, 133 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)
Second Quarter Ended
----------------------------
Aug. 4, 2007 Jul. 29, 2006
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Net sales $161,684 $160,348
Cost of goods sold, including buying,
distribution and occupancy costs 110,728 109,514
Gross margin 50,956 50,834
Selling, general & administrative expenses 54,313 52,540
Loss from operations (3,357) (1,706)
Interest income-net 554 239
Loss before benefit for income taxes (2,803) (1,467)
Benefit for income taxes (1,074) (562)
Net loss (1,729) (905)
Loss per share
Basic $(0.04) $(0.02)
Diluted $(0.04) $(0.02)
Shares used in computing loss per share:
Basic 44,349 44,180
Diluted 44,349 44,180
Six Months Ended
----------------------------
Aug. 4, 2007 Jul. 29, 2006
------------ -------------
Net sales $318,966 $314,389
Cost of goods sold, including buying,
distribution and occupancy costs 216,422 215,295
Gross margin 102,544 99,094
Selling, general & administrative expenses 107,717 103,485
Loss from operations (5,173) (4,391)
Interest income-net 1,060 642
Loss before benefit for income taxes (4,113) (3,749)
Benefit for income taxes (1,575) (1,436)
Net loss (2,538) (2,313)
Loss per share
Basic $(0.06) $(0.05)
Diluted $(0.06) $(0.05)
Shares used in computing loss per share:
Basic 44,297 44,122
Diluted 44,297 44,122
HOT TOPIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Aug. 4, 2007 Jul. 29, 2006
------------ -------------
Current Assets:
Cash, cash equivalents and short-term
investments $49,071 $19,883
Inventory 93,515 106,227
Prepaid expenses and other 15,118 17,277
Deferred tax assets 3,973 2,487
Total current assets 161,677 145,874
Property and equipment, net 169,024 174,070
Deposits and other 1,130 249
Deferred tax assets 4,119 --
Total assets $335,950 $320,193
Current Liabilities:
Accounts payable $41,716 $47,429
Accrued liabilities 31,238 27,595
Total current liabilities 72,954 75,024
Deferred rent 39,375 41,224
Deferred compensation liability 890 --
Income taxes payable 1,258 --
Deferred tax liability -- 209
Total liabilities 114,477 116,457
Shareholders' equity 221,473 203,736
Total liabilities and shareholders' equity $335,950 $320,193
HOT TOPIC, INC.
OTHER DATA
(Dollars in thousands)
(Unaudited)
Six Months Ended
-----------------------------
Aug. 4, 2007 Jul. 29, 2006
------------ -------------
Depreciation and amortization $21,138 $18,693
Capital expenditures $23,956 $21,753
Number of stores open at end of period:
Hot Topic 693 682
Torrid 133 127
Total store square footage 1,549,700 1,505,200