EXHIBIT 99.1
** NEWS RELEASE **
HOT TOPIC, INC. REPORTS THIRD QUARTER EPS DECREASES 13%
TO $0.27 PER DILUTED SHARE
CITY of INDUSTRY, CA, November 17, 2004 -- Hot Topic, Inc. (Nasdaq
National Market: HOTT) reported net income for its third quarter ended October
30, 2004 decreased to $12.6 million or $0.27 per diluted share, from $15.3
million or $0.31 per diluted share for the same period last fiscal year. Net
sales for the quarter increased 12% to $180.8 million, from $161.5 million for
the third quarter of fiscal 2003.
As previously reported, comparable store sales decreased 4.2% for the
quarter compared to the third quarter of fiscal 2003. At the end of the quarter,
the company operated 649 stores, including 69 Torrid stores, compared to 540
stores, including 49 Torrid stores, at the end of the third quarter of fiscal
2003.
For the first 39 weeks of fiscal 2004, net income was $22.6 million or
$0.47 per diluted share, compared to $25.6 million or $0.52 per diluted share
for the comparable period last year, an earnings per share decrease of 10%. Net
sales for the 39 weeks ended October 30, 2004 were $445.2 million, an increase
of 18% over net sales of $377.9 million for the first 39 weeks of fiscal 2003,
and comparable store sales decreased 1.3%.
The company also announced that it still expects to open 115 new stores
in 2004. This includes an estimated 91 new Hot Topic stores, one more than the
previously-announced 90 Hot Topic stores, and an estimated 24 new Torrid stores,
one less than the previously-announced 25 Torrid stores. The company expects to
end the year operating 76 Torrid stores and 592 Hot Topic stores.
A conference call to discuss third quarter results, business trends and
other matters is scheduled for today at 4:30 PM (ET). The conference call number
is 800-370-0869, and will be accessible to all interested parties. It will also
be webcast at www.companyboardroom.com. A replay will be available at
877-519-4471, pass code 5294345, 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 589 Hot Topic
stores in all 50 states and Puerto Rico, 75 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 Reports on
Form 10-Q and its Annual Report on Form 10-K for the year ended January 31,
2004. Historical results achieved are not necessarily indicative of the future
prospects of the company, and actual results or circumstances could differ
materially from the forward-looking statements.
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
2
HOT TOPIC, INC.
SUMMARY STATEMENTS OF INCOME
(Unaudited)
Third Quarter Ended
---------------------------------
Oct. 30, 2004 Nov. 1, 2003
------------- ------------
(In thousands, except per share amounts)
Net sales $180,808 $161,546
Cost of goods sold, including buying,
distribution and occupancy costs 116,054 98,503
Gross margin 64,754 63,043
Selling, general and administrative expenses 44,553 38,626
Operating income 20,201 24,417
Interest income-net 188 333
Income before income taxes 20,389 24,750
Provision for income taxes 7,809 9,479
Net income $ 12,580 $ 15,271
Earnings per share
Basic $0.27 $0.32
Diluted $0.27 $0.31
Weighted average shares outstanding
Basic 46,086 47,656
Diluted 47,202 49,917
Nine Months Ended
---------------------------------
Oct. 30, 2004 Nov. 1, 2003
------------- ------------
(In thousands, except per share amounts)
Net sales $445,214 $377,931
Cost of goods sold, including buying,
distribution and occupancy costs 289,300 237,643
Gross margin 155,914 140,288
Selling, general and administrative expenses 120,053 99,782
Operating income 35,861 40,506
Interest income-net 744 939
Income before income taxes 36,605 41,445
Provision for income taxes 14,020 15,873
Net income $ 22,585 $ 25,572
Earnings per share
Basic $ 0.48 $ 0.54
Diluted $ 0.47 $ 0.52
Weighted average shares outstanding
Basic 46,857 47,328
Diluted 48,468 49,263
3
HOT TOPIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Oct. 30, 2004 Nov. 1, 2003
------------- ------------
Current Assets:
Cash, cash equivalents and short-term investments $ 41,704 $ 96,506
Inventory 78,814 63,295
Prepaid expenses and other 14,953 11,318
Deferred tax assets 2,259 2,093
Total current assets 137,730 173,212
Leaseholds, fixtures and equipment - net 110,120 85,035
Deposits and other 242 189
Deferred tax assets - 683
Total assets $ 248,092 $ 259,119
Current Liabilities:
Accounts payable $ 16,498 $ 26,335
Accrued liabilities 28,185 26,040
Income taxes payable 8,322 7,050
Total current liabilities 53,005 59,425
Deferred rent 3,829 2,921
Deferred tax liability 3,316 -
Total liabilities 60,150 62,346
Shareholders' equity 187,942 196,773
Total liabilities and shareholders' equity $ 248,092 $ 259,119
HOT TOPIC, INC.
OTHER DATA
(Dollars in thousands)
(Unaudited)
Nine Months Ended
--------------- -----------------
Oct. 30, 2004 Nov. 1, 2003
------------- ------------
Depreciation and amortization $ 16,198 $ 13,820
Capital expenditures $ 38,311 $ 26,952
Number of stores open at end of period:
Hot Topic 580 491
Torrid 69 49
Total store square footage 1,177,000 971,000
4