EXHIBIT 99.1
** NEWS RELEASE **
HOT TOPIC, INC. REPORTS SECOND QUARTER EPS DECREASES 17%
TO $0.10 PER DILUTED SHARE
CITY of INDUSTRY, CA, August 18, 2004 -- Hot Topic, Inc. (Nasdaq
National Market: HOTT), reported net income for the quarter ended July 31, 2004
decreased to $4.6 million or $0.10 per diluted share, from $5.9 million or $0.12
per diluted share for the same period last fiscal year. Net sales for the second
quarter increased 18% to $136.3 million, from $115.7 million for the second
quarter of fiscal 2003.
As previously reported, comparable store sales decreased 2.1% for the
quarter compared to the second quarter of fiscal 2003. At the end of the
quarter, the company operated 613 stores, including 59 Torrid stores, compared
to 497 stores, including 40 Torrid stores, at the end of the second quarter of
fiscal 2003.
For the first 26 weeks of fiscal 2004, net income was $10.0 million or
$0.20 per diluted share, compared to $10.3 million or $0.21 per diluted share
for the comparable period last year, an earnings per share decrease of 5%. The
Company previously reported its net sales for the 26 weeks ended July 31, 2004
were $264.4 million, an increase of 22% over net sales of $216.4 million for the
first 26 weeks of fiscal 2003, and comparable-store sales increased 0.8%.
The Company also announced that it expects to open 90 new Hot Topic
stores in 2004, ten more than the previously-announced 80 new Hot Topic stores.
The Company expects to end the year operating 77 Torrid stores and 591 Hot Topic
stores.
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 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 5019549, for approximately
10 days.
Hot Topic, Inc. is a national mall-based specialty retailer. Hot Topic
offers apparel, accessories and gifts 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 and accessories that target young women principally
between the ages of 15 and 29. The company currently operates 562 Hot Topic
stores in 50 states and Puerto Rico, 62 Torrid stores, and Internet stores
www.hottopic.com and www.torrid.com.
In addition to the historical information contained herein, this news
release contains forward-looking statements, which include 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 May 1, 2004 and the Annual Report on Form 10-K
for the year ended January 31, 2004. The historical results achieved are not
necessarily indicative of the future prospects of the company.
Contact:
Hot Topic, Inc., City of Industry, CA
Mr. Jim McGinty, CFO (626) 839-4681 x2675
Mr. Marc Campbell, Director of IR (626) 839-4681 x2419
HOT TOPIC, INC.
SUMMARY STATEMENTS OF INCOME
(Unaudited)
Second Quarter Ended
---------------------
July 31, Aug. 2,
2004 2003
-------- --------
(In thousands, except per share amounts)
Net sales $136,263 $115,728
Cost of goods sold, including buying,
distribution and occupancy costs 89,420 74,087
-------- --------
Gross margin 46,843 41,641
Selling, general and administrative expenses 39,515 32,307
-------- --------
Operating income 7,328 9,334
Interest income-net 204 247
-------- --------
Income before income taxes 7,532 9,581
Provision for income taxes 2,885 3,691
-------- --------
Net income $ 4,647 $ 5,890
======== ========
Earnings per share
Basic $ 0.10 $ 0.12
Diluted $ 0.10 $ 0.12
Weighted average shares outstanding
Basic 46,565 47,360
Diluted 48,023 49,127
Six Months Ended
---------------------
July 31, Aug. 2,
2004 2003
-------- --------
(In thousands, except per share)
Net sales $264,406 $216,386
Cost of goods sold, including buying,
distribution and occupancy costs 173,246 139,132
-------- --------
Gross margin 91,160 77,254
Selling, general and administrative expenses 75,500 61,165
-------- --------
Operating income 15,660 16,089
Interest income-net 556 606
-------- --------
Income before income taxes 16,216 16,695
Provision for income taxes 6,211 6,394
-------- --------
Net income $ 10,005 $ 10,301
======== ========
Earnings per share
Basic $ 0.21 $ 0.22
Diluted $ 0.20 $ 0.21
Weighted average shares outstanding
Basic 47,242 47,164
Diluted 49,055 48,833
HOT TOPIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
July 31, Aug. 2,
2004 2003
-------- --------
Current Assets:
Cash, cash equivalents and short-term investments $ 71,635 $ 70,257
Inventory 80,906 63,985
Prepaid expenses and other 11,704 9,636
Deferred tax assets 2,259 2,093
-------- --------
Total current assets 166,504 145,971
Leaseholds, fixtures and equipment - net 103,044 80,949
Deposits and other 204 182
Deferred tax assets -- 683
-------- --------
Total assets $269,752 $227,785
======== ========
Current Liabilities:
Accounts payable $ 47,060 $ 28,547
Accrued liabilities 22,966 18,478
Income taxes payable 1,094 --
-------- --------
Total current liabilities 71,120 47,025
Deferred rent 3,597 2,708
Deferred tax liability 3,316 --
-------- --------
Total liabilities 78,033 49,733
Shareholders' equity 191,719 178,052
-------- --------
Total liabilities and shareholders' equity $269,752 $227,785
======== ========
HOT TOPIC, INC.
OTHER DATA
(Dollars in thousands)
(Unaudited)
Six Months Ended
July 31, Aug. 2,
2004 2003
-------- --------
Depreciation and amortization $ 10,440 $ 8,946
Capital expenditures $ 25,338 $ 17,943
Number of stores open at end of period:
Hot Topic 554 457
Torrid 59 40
Total store square footage 1,107,000 888,000