Exhibit 99.1
** NEWS RELEASE **
HOT TOPIC, INC. REPORTS 1st QUARTER 2005 EPS
OF $0.11 PER DILUTED SHARE
CITY of INDUSTRY, CA, May 18, 2005 — Hot Topic, Inc. (Nasdaq National Market: HOTT) reported results for its first fiscal quarter (13 weeks) ended April 30, 2005.
Net income in the first quarter was $5.0 million or $0.11 per diluted share, compared to $5.3 million or $0.11 per diluted share for the comparable period last year. Net sales for the first quarter increased 17% to $149.8 million, from $128.1 million for the first quarter of fiscal 2004.
As previously reported, comparable store sales increased 0.9% for the quarter compared to an increase of 4.0% during the first quarter of fiscal 2004.
At the end of the first quarter, the Company operated 694 stores, including 87 Torrid stores, compared to 581 stores, including 52 Torrid stores, at the end of the first quarter of fiscal 2004.
A conference call to discuss first quarter results, business trends, and other matters will be conducted today at 4:30 PM Eastern time. The conference call number is 800-370-0869, 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 877-519-4471, pass code 5914323, 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. The Company currently operates 615 Hot Topic stores in all 50 states and Puerto Rico, 91 Torrid stores, and Internet storeswww.hottopic.com andwww.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, 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 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 29, 2005. 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.
Contact:
Hot Topic, Inc., City of Industry, CA
Mr. Jim McGinty, CFO 626-839-4681 x2675
Ms. Megan Hall, Manager of IR 626-839-4681 x2173
HOT TOPIC, INC.
SUMMARY STATEMENTS OF INCOME
(Unaudited)
First Quarter Ended | ||||||
(In thousands, except per share amounts)
| Apr. 30, 2005 | May 1, 2004 (restated) | ||||
Net sales | $ | 149,762 | $ | 128,143 | ||
Cost of goods sold, including buying, distribution and occupancy costs | 98,597 | 83,958 | ||||
Gross margin | 51,165 | 44,185 | ||||
Selling, general and administrative expenses | 43,401 | 35,985 | ||||
Operating income | 7,764 | 8,200 | ||||
Interest income-net | 338 | 352 | ||||
Income before income taxes | 8,102 | 8,552 | ||||
Provision for income taxes | 3,103 | 3,275 | ||||
Net income | $ | 4,999 | $ | 5,277 | ||
Earnings per share | ||||||
Basic | $ | 0.11 | $ | 0.11 | ||
Diluted | $ | 0.11 | $ | 0.11 | ||
Weighted average shares outstanding | ||||||
Basic | 44,748 | 48,019 | ||||
Diluted | 46,175 | 50,131 |
HOT TOPIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Apr. 30, 2005 | May 1, 2004 (restated) | |||||
Current Assets: | ||||||
Cash, cash equivalents and short-term investments | $ | 55,963 | $ | 86,271 | ||
Inventory | 69,255 | 57,623 | ||||
Prepaid expenses and other | 12,567 | 11,089 | ||||
Deferred tax assets | 2,541 | 2,259 | ||||
Total current assets | 140,326 | 157,242 | ||||
Leaseholds, fixtures and equipment – net | 146,437 | 112,140 | ||||
Deposits and other | 246 | 193 | ||||
Total assets | $ | 287,009 | $ | 269,575 | ||
Current Liabilities: | ||||||
Accounts payable | $ | 18,862 | $ | 22,042 | ||
Accrued liabilities | 29,637 | 22,913 | ||||
Income taxes payable | 2,224 | 2,305 | ||||
Total current liabilities | 50,723 | 47,260 | ||||
Deferred rent | 33,249 | 23,603 | ||||
Deferred tax liability | 6,076 | 1,657 | ||||
Total liabilities | 90,048 | 72,520 | ||||
Shareholders’ equity | 196,961 | 197,055 | ||||
Total liabilities and shareholders’ equity | $ | 287,009 | $ | 269,575 |
HOT TOPIC, INC.
OTHER DATA
(Dollars in thousands)
(Unaudited)
First Quarter Ended | ||||||
Apr. 30, 2005 | May 1, 2004 (restated) | |||||
Depreciation and amortization | $ | 6,897 | $ | 5,511 | ||
Capital expenditures | $ | 16,998 | $ | 14,885 | ||
Number of stores open at end of period: | ||||||
Hot Topic | 607 | 529 | ||||
Torrid | 87 | 52 | ||||
Total store square footage | 1,271,100 | 1,044,700 |