Exhibit 99.1
** NEWS RELEASE ** Contact:
Mr. Jay A. Johnson
SVP, Strategic Analysis and
Investor Relations
Hot Topic, Inc.
(626) 839-4681 x2269
jjohnson@hottopic.com
HOT TOPIC, INC. REPORTS FIRST QUARTER EPS INCREASES 27% TO A
RECORD $0.14 PER DILUTED SHARE
CITY of INDUSTRY, CA, May 21, 2003 -- Hot Topic, Inc.(Nasdaq National
Market: HOTT), a mall-based specialty retailer of music-licensed and
music-influenced apparel, accessories and gift items for teens, reported
company-record results for the first quarter (13 weeks) ended May 3, 2003.
Net income in the first quarter increased to $4.4 million or $0.14 per
diluted share from $3.7 million or $0.11 per diluted share for the first quarter
of the last fiscal year. Net sales for the first quarter increased 26% to $100.7
million from $79.9 million for the first quarter of fiscal 2002.
As previously reported, comparable-store sales increased 2.6% for the
quarter compared to the first quarter of fiscal 2002. At the end of the quarter,
the Company operated 468 stores, including 34 Torrid stores, compared to 379
stores, including 7 Torrid stores, at the end of the first quarter of fiscal
2002.
A conference call to discuss first quarter results, business trends,
and other matters will be conducted today at 4:30pm Eastern time. The conference
call number is (888) 868-9080, and will be accessible to all interested parties.
It will also be webcast at www.streetevents.com. A replay will be available at
(973) 341-3080, pass code 3265628, and at www.streetevents.com for approximately
10 days.
Hot Topic, Inc. is a national mall-based specialty retailer of
music-licensed and music-influenced apparel, accessories and gift items for
young men and women principally between the ages of 12 and 22. Torrid, the
Company's second concept, is a mall-based specialty retailer of plus-sized
fashion-forward apparel and accessories that targets young women principally
between the ages of 15 and 29. The Company currently operates 437 Hot Topic
stores in 49 states throughout the United States, 37 Torrid stores and Internet
stores www.hottopic.com and www.torrid.com.
Except for the historical information contained herein, this news
release contains forward-looking statements, including statements relating to
financial results, 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 from time to time in the Company's SEC reports, including its
Annual Report on Form 10-K for the year ended February 1, 2003. The historical
results achieved are not necessarily indicative of the future prospects of the
Company.
HOT TOPIC, INC.
SUMMARY STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
First Quarter Ended
May 3, 2003 May 4, 2002
--------- ---------
Net sales $100,657 $ 79,909
Cost of goods sold, including buying,
distribution and occupancy costs 65,043 51,452
--------- ---------
Gross margin 35,614 28,457
Selling, general and administrative expenses 28,859 22,927
--------- ---------
Operating income 6,755 5,530
Interest income-net 358 410
--------- ---------
Income before income taxes 7,113 5,940
Provision for income taxes 2,703 2,257
--------- ---------
Net income $ 4,410 $ 3,683
========= =========
Earnings per share
Basic $ 0.14 $ 0.12
Diluted $ 0.14 $ 0.11
Weighted average shares outstanding
Basic 31,312 31,473
Diluted 32,378 33,315
HOT TOPIC, INC.
BALANCE SHEETS
(In thousands)
(unaudited)
May 3, 2003 May 4, 2002
--------- ---------
Current assets:
Cash and cash equivalents $ 34,389 $ 23,486
Short-term investments 37,131 37,643
Inventory 43,945 35,798
Prepaid expenses and other 8,950 7,272
Deferred tax assets 2,093 1,417
--------- ---------
Total current assets 126,508 105,616
Leaseholds, fixtures and equipment - net 76,547 62,208
Deposits and other 171 178
Deferred tax assets 683 847
--------- ---------
Total assets $203,909 $168,849
========= =========
Current liabilities:
Accounts payable $ 15,922 $ 13,303
Accrued liabilities 17,272 11,974
Income taxes payable 290 --
Current portion of obligations
under capital leases 22 26
--------- ---------
Total current liabilities 33,506 25,303
Deferred rent 2,528 1,889
Capital lease obligations, less current portion 84 147
--------- ---------
Total liabilities 36,118 27,339
Shareholders' equity 167,791 141,510
--------- ---------
Total liabilities and shareholders' equity $203,909 $168,849
========= =========
HOT TOPIC, INC.
OTHER DATA
(In thousands, except store count and square footage)
(unaudited)
First Quarter Ended
May 3, 2003 May 4, 2002
----------- -----------
Depreciation and amortization $ 4,359 $ 3,216
Capital expenditures $ 8,774 $ 11,602
Number of stores open at end of period:
Hot Topic 434 372
Torrid 34 7
Total store square footage 833,600 636,900