Friday, March 19, 2010

UPDATE: Hot Topic 4Q Drops 44% On Lower Margins, Sales

The Wall Street Journal

Hot Topic Inc. (HOTT) fiscal fourth-quarter profit slid 44% because of continued sales weakness and falling margins.
The teen retailer also projected a first-quarter loss of 2 cents to 5 cents a share, including 2 cents a share in expenses related to the company’s online music site, and based on a high-single-digit decline in same-store sales. Analysts surveyed by Thomson Reuters expected a 2-cent loss.

For months, Hot Topic’s results were bolstered by merchandise tied to the popular vampire film "Twilight," but sales have slid as the film’s sequel was "much less popular than management had planned for," according to Majestic Research. As a result, the firm sees more markdowns in the months ahead, given the inventory buildup.

Still, Hot Topic posted a less-than-feared decline in February same-store sales as it benefited from strong results at Torrid and products tied to Tim Burton’s "Alice In Wonderland," according to Brian Sozzi, an analyst at Wall Street Strategies.

Link to full article: http://online.wsj.com/article/BT-CO-20100310-715938.html