Exhibit 99.1
Hot Topic, Inc. Reports 2nd Quarter Loss of $0.14 Per Share
Provides Guidance for the 3rd Quarter of 2010
CITY OF INDUSTRY, Calif.--(BUSINESS WIRE)--August 18, 2010--Hot Topic, Inc. (Nasdaq Global Select Market: HOTT) today announced that the company incurred a net loss in the second quarter of fiscal 2010 (13 weeks ended July 31, 2010) of $6.3 million, or $0.14 per share, compared with a net loss of $3.2 million, or $0.07 per share, in the second quarter of fiscal 2009 (13 weeks ended August 1, 2009). The results for the second quarter of fiscal 2010 and fiscal 2009 include approximately $0.02 per share of expense related to ShockHound (www.shockhound.com), the company’s online music site.
Total sales for the second quarter of fiscal 2010 decreased 4.9% to $150.0 million compared to $157.8 million for the second quarter last year. Total company comparable store sales declined 6.4% for the second quarter of fiscal 2010. 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 | $113.3 | -5.5% | -6.5% | -7.5% | ||||
Torrid | $36.7 | -3.4% | -6.0% | -8.4% | ||||
Total Co. | $150.0 | -4.9% | -6.4% | -7.7% |
At the end of the second quarter of fiscal 2010, the company operated 679 Hot Topic stores and 155 Torrid stores compared to 679 Hot Topic stores and 156 Torrid stores at the end of the second quarter of fiscal 2009. During the second quarter of fiscal 2010, the company opened one new Hot Topic store and one new Torrid store, and closed three Hot Topic stores and two Torrid stores. The company also remodeled or relocated six Hot Topic stores during the quarter.
The company issued third quarter (13 weeks ending October 30, 2010) guidance of earnings in the range of $0.05 to $0.08 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 18, 2010 at 4:30 PM (ET). The conference call number is 866-202-4367, 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 66128973, 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 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 genre-spanning music website where people of all ages can purchase MP3s and music merchandise, share their music interests, read the latest music news and view exclusive editorial content.
In addition to historical information, this news release and the aforementioned conference call 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, license 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 30, 2010 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 | ||||||
July 31, 2010 | Aug. 1, 2009 | |||||
Net sales | $150,007 | $157,793 | ||||
Cost of goods sold, including buying, distribution and occupancy costs | 103,985 | 108,135 | ||||
Gross margin | 46,022 | 49,658 | ||||
Selling, general & administrative expenses | 56,381 | 55,084 | ||||
Loss from operations | (10,359 | ) | (5,426 | ) | ||
Interest income-net | 58 | 183 | ||||
Loss before benefit for income taxes | (10,301 | ) | (5,243 | ) | ||
Benefit for income taxes | (4,032 | ) | (2,066 | ) | ||
Net loss | $(6,269 | ) | $(3,177 | ) | ||
Loss per share: | ||||||
Basic and Diluted | $(0.14 | ) | $(0.07 | ) | ||
Shares used in computing loss per share: | ||||||
Basic and Diluted | 44,563 | 44,064 | ||||
Six Months Ended | ||||||
July 31, 2010 | Aug. 1, 2009 | |||||
Net sales | $312,654 | $332,917 | ||||
Cost of goods sold, including buying, distribution and occupancy costs | 212,169 | 223,129 | ||||
Gross margin | 100,485 | 109,788 | ||||
Selling, general & administrative expenses | 113,836 | 113,362 | ||||
Loss from operations | (13,351 | ) | (3,574 | ) | ||
Interest income-net | 132 | 353 | ||||
Loss before benefit for income taxes | (13,219 | ) | (3,221 | ) | ||
Benefit for income taxes | (5,173 | ) | (1,269 | ) | ||
Net loss | $(8,046 | ) | $(1,952 | ) | ||
Loss per share: | ||||||
Basic and Diluted | $(0.18 | ) | $(0.04 | ) | ||
Shares used in computing loss per share: | ||||||
Basic and Diluted | 44,480 | 44,032 |
HOT TOPIC, INC. | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(In thousands) | ||||
(Unaudited) | ||||
July 31, 2010 | Aug. 1, 2009 | |||
Current Assets: | ||||
Cash, cash equivalents and short-term investments | $61,790 | $82,052 | ||
Inventory | 88,572 | 90,363 | ||
Prepaid expenses and other | 22,268 | 18,292 | ||
Deferred tax assets | 6,041 | 6,213 | ||
Total current assets | 178,671 | 196,920 | ||
Property and equipment, net | 135,095 | 148,954 | ||
Deposits and other | 3,860 | 2,901 | ||
Long-term investments | 6,614 | 5,170 | ||
Deferred tax assets | 5,532 | 8,440 | ||
Total assets | $329,772 | $362,385 | ||
Current Liabilities: | ||||
Accounts payable | $35,939 | $26,395 | ||
Accrued liabilities | 35,690 | 35,985 | ||
Income taxes payable | 538 | 910 | ||
Total current liabilities | 72,167 | 63,290 | ||
Deferred rent | 29,820 | 34,356 | ||
Deferred compensation liability | 3,609 | 2,601 | ||
Income taxes payable | 2,380 | 1,850 | ||
Total liabilities | 107,976 | 102,097 | ||
Total shareholders’ equity | 221,796 | 260,288 | ||
Total liabilities and shareholders’ equity | $329,772 | $362,385 | ||
OTHER DATA | ||||
(Dollars in thousands) | ||||
(Unaudited) | ||||
Six Months Ended | ||||
July 31, 2010 | Aug. 1, 2009 | |||
Depreciation and amortization | $19,626 | $18,980 | ||
Capital expenditures | $14,983 | $13,356 | ||
Total company store square footage | 1,583,600 | 1,582,500 | ||
Hot Topic average store size | 1,762 | 1,758 | ||
Torrid average store size | 2,497 | 2,493 |
CONTACT:
Hot Topic, Inc., City of Industry, CA
Jim McGinty, CFO, 626-839-4681 x2675