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 FOURTH QUARTER NET INCOME INCREASES 36%
FY 2003 NET INCOME INCREASES 39% TO $48.0 MILLION
CITY of INDUSTRY, CA, March 3, 2004 -- 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 record
results for both the fourth quarter (13 weeks) and the 2003 fiscal year (52
weeks) ended January 31, 2004.
Net income in the fourth quarter increased to $22.5 million or $0.45
per diluted share from $16.6 million or $0.34 per diluted share for the fourth
quarter of the last fiscal year. Net sales for the fourth quarter increased 31%
to $194.1 million from $148.3 million for the fourth quarter of fiscal 2002.
As previously reported, comparable store sales increased 8.5% for the
quarter compared to the fourth quarter of fiscal 2002.
For the fiscal year ended January 31, 2004, net income was $48.0
million or $0.97 per diluted share, compared to $34.6 million or $0.70 per
diluted share for the comparable period last year, an earnings per share
increase of 39%. The Company previously reported its net sales for the fiscal
year ended January 31, 2004 were $572.0 million, an increase of 29% over net
sales of $443.3 million for fiscal year 2002, and comparable store sales
increased 7.4%.
At the end of the quarter, the Company operated 554 stores, including
52 Torrid stores, compared to 445 stores, including 27 Torrid stores, at the end
of the fourth quarter of fiscal 2002.
A conference call to discuss fourth 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 4469206, 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 509 Hot Topic
stores in 49 states throughout the United States and Puerto Rico, 52 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, 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 Report on
Form 10-Q for the quarter ended November 1, 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
Fourth Quarter Ended
Jan. 31, 2004 Feb. 1, 2003
------------ ------------
(In thousands, except per share amounts)
Net sales $ 194,108 $ 148,278
Cost of goods sold, including buying,
distribution and occupancy costs 113,899 86,169
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Gross margin 80,209 62,109
Selling, general and administrative expenses 44,169 35,721
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Operating income 36,040 26,388
Interest income-net 379 314
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Income before income taxes 36,419 26,702
Provision for income taxes 13,949 10,147
------------ ------------
Net income $ 22,470 $ 16,555
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Earnings per share
Basic $ 0.47 $ 0.35
Diluted $ 0.45 $ 0.34
Weighted average shares outstanding
Basic 47,932 46,639
Diluted 50,342 48,501
Fiscal Year Ended
Jan. 31, 2004 Feb. 1, 2003
------------ ------------
(In thousands, except per share amounts)
Net sales $ 572,039 $ 443,250
Cost of goods sold, including buying,
distribution and occupancy costs 351,542 273,132
------------ ------------
Gross margin 220,497 170,118
Selling, general and administrative expenses 143,952 115,634
------------ ------------
Operating income 76,545 54,484
Interest income-net 1,318 1,371
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Income before income taxes 77,863 55,855
Provision for income taxes 29,821 21,225
------------ ------------
Net income $ 48,042 $ 34,630
============ ============
Earnings per share
Basic $ 1.01 $ 0.74
Diluted $ 0.97 $ 0.70
Weighted average shares outstanding
Basic 47,479 47,027
Diluted 49,588 49,276
HOT TOPIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Jan. 31, 2004 Feb. 1, 2003
------------ ------------
Current Assets:
Cash, cash equivalents and
short-term investments $ 128,205 $ 83,418
Inventory 51,937 38,409
Prepaid expenses and other 10,654 7,866
Deferred tax assets 2,259 2,093
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Total current assets 193,055 131,786
Leaseholds, fixtures and equipment - net 88,348 72,146
Deposits and other 189 171
Deferred tax assets -- 683
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Total assets $ 281,592 $ 204,786
============ ============
Current Liabilities:
Accounts payable $ 15,841 $ 15,407
Accrued liabilities 28,133 19,639
Income taxes payable 7,242 6,453
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Total current liabilities 51,216 41,499
Deferred rent 3,155 2,358
Deferred tax liability 3,316 --
------------ ------------
Total liabilities 57,687 43,857
Shareholders' equity 223,905 160,929
------------ ------------
Total liabilities and shareholders' equity $ 281,592 $ 204,786
============ ============
HOT TOPIC, INC.
OTHER DATA
(Dollars in thousands)
Fiscal Year Ended
Jan. 31, 2004 Feb. 1, 2003
------------ ------------
Depreciation and amortization $ 18,793 $ 15,309
Capital expenditures $ 35,654 $ 33,879
Number of stores open at end of period:
Hot Topic 502 418
Torrid 52 27
Total store square footage 998,600 784,700