Mail Stop 3561
August 30, 2006
Ms. Elizabeth McLaughlin
Chief Executive Officer
Hot Topic, Inc.
18305 East San Jose Avenue
City of Industry, California 91748-
RE: Hot Topic, Inc.
Form 10-K for Fiscal Year Ended January 28, 2006
Form 10-Q for Fiscal Quarter Ended April 29, 2006
Form 10-Q for Fiscal Quarter Ended July 29, 2006
File No. 0-28784
Dear Ms. McLaughlin:
We have reviewed your filings and have the following
comments. We have limited our review of your filings to those
issues
we have addressed in our comments. Where indicated, we think you
should revise your documents in response to these comments. If
you
disagree, we will consider your explanation as to why our comments
are inapplicable or revisions are unnecessary. Please be as
detailed
as necessary in your explanation. In some of our comments, we may
ask you to provide us with information so we may better understand
your disclosure. After reviewing this information, we may raise
additional comments.
Please understand that the purpose of our review process
is
to assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for Fiscal Year Ended January 28, 2006
Management`s Discussion and Analysis, page 28
1. In future filings, please disclose how you treat stores closed
during the periods in your comparable store sales information.
Controls and Procedures, page 38
2. We note your statement that "a control system, no matter how
well
conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met."
Please
revise to state clearly, if true, that your disclosure controls
and
procedures are designed to provide reasonable assurance of
achieving
their objectives and that your principal executive officer and
principal financial officer concluded that your disclosure
controls
and procedures are effective at that reasonable assurance level.
In
the alternative, remove the reference to the level of assurance of
your disclosure controls and procedures. Please refer to Section
II.F.4 of Management`s Reports on Internal Control Over Financial
Reporting and Certification of Disclosure in Exchange Act Periodic
Reports, SEC Release No. 33-8238, available on our website at
http://www.sec.gov/rules/final/33-8238.htm. Please revise the
disclosures in your Form 10-Q for the quarters ended April 29,
2006
and July 29, 2006 as well. You should also revise your Form 10-Q
disclosures to state that you evaluated the effectiveness of your
disclosure controls and procedures at the end of the most recent
quarter rather than at the end of the most recent fiscal year.
Financial Statements, page F-1
Note 1. Organization and Summary of Significant Accounting
Policies,
page F-1
Organization and Business Activities, page F-6
3. You say you have one reportable segment given the similarities
of
the economic characteristics among the store formats. However, in
Management`s Discussion and Analysis on page 29 you state that the
Torrid business experiences different margins and that Torrid
stores
are larger and have a different merchandise mix than Hot Topic
stores. Please tell us what consideration you have given to
whether
the Torrid stores constitute a separate reportable segment in
light
of the increase in the number of Torrid stores. We may have
further
comment after reviewing your response.
Revenue Recognition, page F-7
4. You disclose that sales are recognized upon purchase by
customers
at your retail store locations and websites, less merchandise
returned by customers and that you provide a reserve for projected
merchandise returns based on historical experience. Please tell
us
your basis in GAAP for recognizing revenues from website sales
upon
purchase by customers rather than recognizing such revenues upon
either shipment or delivery and when title and risks and rewards
of
ownership have passed to the buyer. We may have further comment
after reviewing your response.
As appropriate, please amend your filings and respond to
these comments within 10 business days, or tell us when you will
provide us with a response. Please furnish a cover letter that
keys
your responses to our comments and provides any requested
information. Detailed letters greatly facilitate our review.
Please
understand that we may have additional comments after reviewing
your
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Sondra Snyder at (202) 551-3332, or in
her
absence, William Thompson at (202) 551-3344 if you have questions
regarding comments on the financial statements and related
matters.
Please contact me at (202) 551-3849 with any other questions.
Sincerely,
James A. Allegretto
Senior Assistant
Chief
Accountant
Ms. Elizabeth McLaughlin
Hot Topic, Inc.
August 30, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0405
DIVISION OF
CORPORATION FINANCE