EXHIBIT 99.1
** NEWS RELEASE ** Contact:
Mr. Jim McGinty
Chief Financial Officer
Hot Topic, Inc.
(626) 839-4681 x2675
jmcginty@hottopic.com
HOT TOPIC, INC. REPORTS SECOND QUARTER EPS INCREASE OF 38%
TO A RECORD $0.18 PER DILUTED SHARE
CITY of INDUSTRY, CA, August 20, 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 second quarter (13 weeks) ended August 2, 2003.
Net income in the second quarter increased to $5.9 million or $0.18 per
diluted share from $4.3 million or $0.13 per diluted share for the second
quarter of the last fiscal year. Net sales for the second quarter increased 25%
to $115.7 million from $92.5 million for the second quarter of fiscal 2002.
As previously reported, comparable-store sales increased 5.2% for the
quarter compared to the second quarter of fiscal 2002. At the end of the
quarter, the Company operated 497 stores, including 40 Torrid stores, compared
to 415 stores, including 14 Torrid stores, at the end of the second quarter of
fiscal 2002.
For the first 26 weeks of fiscal 2003, net income was $10.3 million or
$0.32 per diluted share, compared to $8.0 million or $0.24 per diluted share for
the comparable period last year, an earnings per share increase of 33%. The
Company previously reported its net sales for the 26 weeks ended August 2, 2003
were $216.4 million, an increase of 26% over net sales of $172.4 million for the
first 26 weeks of fiscal 2002, and comparable-store sales increased 4.0%.
The Company also announced that it expects to open 80 new Hot Topic stores
in 2003, ten more than the previously announced 70 new Hot Topic stores. The
Company expects to end the year operating 52 Torrid stores and 498 Hot Topic
stores.
On August 12, 2003 the Company announced that its Board of Directors
declared a three-for-two split (in the form of a dividend) of its common stock.
On the effective date of September 2, 2003, shareholders will receive a dividend
of one additional share for every two shares they own at the close of business
on the record date of August 21, 2003. All share and per share information
presented in this release have not been adjusted to reflect the three-for-two
stock split.
A conference call to discuss second quarter results, business trends,
and other matters will be conducted today at 4:30 PM 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.companyboardroom.com. A
replay will be available at (973) 341-3080, pass code 3265628, and at
www.companyboardroom.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 463 Hot Topic
stores in 49 states throughout the United States and Puerto Rico, 42 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
Quarterly Report on Form 10-Q for the quarter ended May 3, 2003 and 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
Second Quarter Ended
Aug. 2, 2003 Aug. 3, 2002
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(In thousands, except per share)
Net sales $ 115,728 $ 92,473
Cost of goods sold, including buying,
distribution and occupancy costs 74,087 59,681
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Gross margin 41,641 32,792
Selling, general and administrative expenses 32,307 26,134
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Operating income 9,334 6,658
Interest income-net 247 349
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Income before income taxes 9,581 7,007
Provision for income taxes 3,691 2,663
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Net income $ 5,890 $ 4,344
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Earnings per share
Basic $ 0.19 $ 0.14
Diluted $ 0.18 $ 0.13
Weighted average shares outstanding
Basic 31,573 31,712
Diluted 32,751 33,493
Six Months Ended
Aug. 2, 2003 Aug. 3, 2002
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(In thousands, except per share)
Net sales $ 216,386 $ 172,382
Cost of goods sold, including buying,
distribution and occupancy costs 139,132 111,133
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Gross margin 77,254 61,249
Selling, general and administrative expenses 61,165 49,061
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Operating income 16,089 12,188
Interest income-net 606 759
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Income before income taxes 16,695 12,947
Provision for income taxes 6,394 4,920
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Net income $ 10,301 $ 8,027
============ ============
Earnings per share
Basic $ 0.33 $ 0.25
Diluted $ 0.32 $ 0.24
Weighted average shares outstanding
Basic 31,442 31,593
Diluted 32,555 33,393
HOT TOPIC, INC.
BALANCE SHEETS
(In thousands)
Aug.2, 2003 Aug. 3, 2002
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Current Assets:
Cash and cash equivalents $ 34,082 $ 18,171
Short-term investments 36,175 31,462
Inventory 63,985 50,251
Prepaid expenses and other 9,636 9,593
Deferred tax assets 2,093 1,417
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Total current assets 145,971 110,894
Leaseholds, fixtures and equipment - net 80,949 69,880
Deposits and other 182 187
Deferred tax assets 683 847
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Total assets $ 227,785 $ 181,808
============ ============
Current Liabilities:
Accounts payable $ 28,547 $ 22,453
Accrued liabilities 18,376 12,646
Current portion of obligations
under capital leases 19 26
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Total current liabilities 46,942 35,125
Deferred rent 2,708 2,022
Capital lease obligations, less current portion 83 139
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Total liabilities 49,733 37,286
Shareholders' equity 178,052 144,522
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Total liabilities and shareholders' equity $ 227,785 $ 181,808
============ ============
HOT TOPIC, INC.
OTHER DATA
(Dollars in thousands)
Six Months Ended
Aug. 2, 3003 Aug. 3, 2002
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Depreciation and amortization $ 8,946 $ 6,954
Capital expenditures $ 17,943 $ 23,079
Number of stores open at end of period:
Hot Topic 457 401
Torrid 40 14
Total store square footage 888,000 716,400