Exhibit 99.1
** NEWS RELEASE **
HOT TOPIC, INC. REPORTS 2nd QUARTER LOSS OF $0.01 PER SHARE
Provides guidance for the 2nd half of 2008
CITY of INDUSTRY, CA, August 20, 2008 -- Hot Topic, Inc. (Nasdaq Global Select Market: HOTT), today announced that the company incurred a net loss in the second quarter of fiscal 2008 (13 weeks ended August 2, 2008) of $0.4 million, or $0.01 per share, compared with a net loss of $1.7 million, or $0.04 per share, in the second quarter of fiscal 2007 (13 weeks ended August 4, 2007). The second quarter of fiscal 2008 results include approximately $0.01 per share of expense related to the company’s online music initiative.
As previously reported, total sales for the second quarter of fiscal 2008 increased 3.2% to $166.8 million compared to $161.7 million for the second quarter last year. Total company comparable store sales declined 0.9% for the second quarter of fiscal 2008. A summary of the sales results by division (including internet) is as follows:
Net Sales | Comparable Store Sales% Change | |||||||||||
$ Millions | % Change To Last Year | This Year | Last Year | |||||||||
SECOND QUARTER: | ||||||||||||
Hot Topic | $ | 127.2 | -0.2 | % | -0.6 | % | -7.7 | % | ||||
Torrid | $ | 39.6 | 15.5 | % | -2.1 | % | 2.9 | % | ||||
Total Co. | $ | 166.8 | 3.2 | % | -0.9 | % | -5.8 | % |
At the end of the second quarter of fiscal 2008, the company operated 684 Hot Topic stores and 158 Torrid stores compared to 693 Hot Topic stores and 133 Torrid stores at the end of the second quarter of fiscal 2007. During the second quarter of fiscal 2008, the company opened two Hot Topic stores and four Torrid stores, and closed four Hot Topic stores. The company also relocated three Hot Topic stores during the quarter.
The company issued third quarter (13 weeks ending November 1, 2008) guidance of earnings in the range of $0.12 to $0.15 per diluted share based upon a comparable store sales decline of low-single digits. The company also issued fourth quarter (13 weeks ending January 31, 2009) guidance of earnings in the range of $0.25 to $0.28 per diluted share based upon a comparable store sales decline of low-single digits. Included in the guidance is expense related to the launch of the company’s online music initiative of approximately $0.02 and $0.01 per share, for the third and fourth quarter, respectively.
A conference call to discuss second quarter results, business trends, guidance and other matters is scheduled for August 20, 2008 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 athttp://investorrelations.hottopic.com. A replay of the conference call will be available at 888-286-8010, pass code 44743739, 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 shopping mall-based specialty retailer operating the Hot Topic and Torrid concepts. Hot Topic offers music/pop culture licensed and influenced apparel, accessories, music and gift items 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, lingerie, shoes and accessories that target young women principally between the ages of 15 and 29. As of August 2, 2008, the company operated 684 Hot Topic stores in all 50 states and Puerto Rico, 158 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 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, risks and uncertainties with respect to new store openings, the online music initiative, music 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 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, the risk that available cash or mall space will not be adequate for planned expansion, 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 February 2, 2008. 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
Jim McGinty, CFO 626-839-4681 x2675
Megan Hall, Investor Relations 626-839-4681 x2173
HOT TOPIC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Second Quarter Ended | ||||||||
Aug. 2, 2008 | Aug. 4, 2007 | |||||||
Net sales | $ | 166,814 | $ | 161,684 | ||||
Cost of goods sold, including buying, distribution and occupancy costs | 111,246 | 110,728 | ||||||
Gross margin | 55,568 | 50,956 | ||||||
Selling, general & administrative expenses | 56,722 | 54,313 | ||||||
Loss from operations | (1,154 | ) | (3,357 | ) | ||||
Interest income-net | 413 | 554 | ||||||
Loss before benefit for income taxes | (741 | ) | (2,803 | ) | ||||
Benefit for income taxes | (291 | ) | (1,074 | ) | ||||
Net loss | $ | (450 | ) | $ | (1,729 | ) | ||
Loss per share: | ||||||||
Basic and Diluted | $ | (0.01 | ) | $ | (0.04 | ) | ||
Shares used in computing loss per share: | ||||||||
Basic and Diluted | 43,756 | 44,349 |
Six Months Ended | ||||||||
Aug. 2, 2008 | Aug. 4, 2007 | |||||||
Net sales | $ | 325,792 | $ | 318,966 | ||||
Cost of goods sold, including buying, distribution and occupancy costs | 218,599 | 216,422 | ||||||
Gross margin | 107,193 | 102,544 | ||||||
Selling, general & administrative expenses | 111,034 | 107,717 | ||||||
Loss from operations | (3,841 | ) | (5,173 | ) | ||||
Interest income-net | 787 | 1,060 | ||||||
Loss before benefit for income taxes | (3,054 | ) | (4,113 | ) | ||||
Benefit for income taxes | (1,198 | ) | (1,575 | ) | ||||
Net loss | $ | (1,856 | ) | $ | (2,538 | ) | ||
Loss per share: | ||||||||
Basic and Diluted | $ | (0.04 | ) | $ | (0.06 | ) | ||
Shares used in computing loss per share: | ||||||||
Basic and Diluted | 43,736 | 44,297 |
HOT TOPIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Aug. 2, 2008 | Aug. 4, 2007 | |||||
Current Assets: | ||||||
Cash, cash equivalents and short-term investments | $ | 51,652 | $ | 49,071 | ||
Inventory | 91,136 | 93,515 | ||||
Prepaid expenses and other | 18,281 | 15,118 | ||||
Deferred tax assets | 4,683 | 3,973 | ||||
Total current assets | 165,752 | 161,677 | ||||
Property and equipment, net | 164,690 | 169,024 | ||||
Deposits and other | 1,611 | 1,130 | ||||
Long-term investments | 10,246 | — | ||||
Deferred tax assets | 6,652 | 4,119 | ||||
Total assets | $ | 348,951 | $ | 335,950 | ||
Current Liabilities: | ||||||
Accounts payable | $ | 36,611 | $ | 41,716 | ||
Accrued liabilities | 34,875 | 31,238 | ||||
Income taxes payable | 984 | — | ||||
Total current liabilities | 72,470 | 72,954 | ||||
Deferred rent | 38,901 | 39,375 | ||||
Deferred compensation liability | 1,368 | 890 | ||||
Income taxes payable | 844 | 1,258 | ||||
Total liabilities | 113,583 | 114,477 | ||||
Total shareholders’ equity | 235,368 | 221,473 | ||||
Total liabilities and shareholders’ equity | $ | 348,951 | $ | 335,950 |
OTHER DATA
(Dollars in thousands)
(Unaudited)
Six Months Ended | ||||||
Aug. 2, 2008 | Aug. 4, 2007 | |||||
Depreciation and amortization | $ | 19,316 | $ | 21,138 | ||
Capital expenditures | $ | 13,068 | $ | 23,956 | ||
Total company store square footage | 1,595,700 | 1,549,700 | ||||
Hot Topic average store size | 1,756 | 1,753 | ||||
Torrid average store size | 2,498 | 2,515 |