EXHIBIT 99.1
** NEWS RELEASE **
HOT TOPIC, INC. REPORTS 4TH QUARTER AND FISCAL YEAR 2004 EARNINGS
4TH QUARTER EPS OF $0.38 PER DILUTED SHARE
CITY of INDUSTRY, CA, March 16, 2005 -- Hot Topic, Inc. (Nasdaq
National Market: HOTT) reported net income for its fourth quarter ended January
29, 2005 of $17.4 million or $0.38 per diluted share, compared to $22.5 million
or $0.45 per diluted share for the same period last fiscal year.
At the end of the fourth quarter, the Company operated 668 stores,
including 76 Torrid stores, compared to 554 stores, including 52 Torrid stores,
at the end of the fourth quarter of fiscal 2003.
For the fiscal year ended January 29, 2005, net income was $39.7 million or
$0.83 per diluted share, compared to $47.6 million or $0.96 per diluted share
for the comparable period last year.
The Company also stated that all financial results presented, both for
current and prior year, reflect the restatement related to accounting for leases
as discussed in the press release and 8K filing on March 2, 2005.
The Company also reiterated that it expects to open 110 new stores in
2005. This includes an estimated 65 new Hot Topic stores and an estimated 45 new
Torrid stores. The Company expects to end the year operating 121 Torrid stores
and 657 Hot Topic stores.
A conference call to discuss fourth 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 5620263, 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 600 Hot Topic
stores in all 50 states and Puerto Rico, 79 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
Ms. Megan Hall, Manager of IR 626-839-4681 x2173
HOT TOPIC, INC.
SUMMARY STATEMENTS OF INCOME
(Unaudited)
Fourth Quarters Ended
------------------------------
Jan. 29, 2005 Jan. 31, 2004
------------- -------------
(restated)
(In thousands, except per share amounts)
Net sales $ 211,254 $ 194,108
Cost of goods sold, including buying,
distribution and occupancy costs 132,873 113,847
Gross margin 78,381 80,261
Selling, general and administrative expenses 50,331 44,170
Operating income 28,050 36,091
Interest income-net 175 380
Income before income taxes 28,225 36,471
Provision for income taxes 10,805 13,969
Net income $ 17,420 $ 22,502
Earnings per share
Basic $ 0.39 $ 0.47
Diluted $ 0.38 $ 0.45
Weighted average shares outstanding
Basic 44,944 47,932
Diluted 46,127 50,342
Fiscal Years Ended
------------------------------
Jan. 29, 2005 Jan. 31, 2004
------------- -------------
(restated)
(In thousands, except per share amounts)
Net sales $ 656,468 $ 572,039
Cost of goods sold, including buying,
distribution and occupancy costs 422,712 352,277
Gross margin 233,756 219,762
Selling, general and administrative expenses 170,384 143,952
Operating income 63,372 75,810
Interest income-net 919 1,318
Income before income taxes 64,291 77,128
Provision for income taxes 24,618 29,539
Net income $ 39,673 $ 47,589
Earnings per share
Basic $ 0.86 $ 1.00
Diluted $ 0.83 $ 0.96
Weighted average shares outstanding
Basic 46,379 47,479
Diluted 47,875 49,588
HOT TOPIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Jan. 29, 2005 Jan. 31, 2004
------------- -------------
(restated)
Current Assets:
Cash, cash equivalents and short-term
investments $ 66,339 $ 128,205
Inventory 60,481 51,937
Prepaid expenses and other 12,390 10,654
Deferred tax assets 2,541 2,259
Total current assets 141,751 193,055
Leaseholds, fixtures and equipment - net 136,401 102,838
Deposits and other 243 189
Total assets $ 278,395 $ 296,082
Current Liabilities:
Accounts payable $ 17,874 $ 15,841
Accrued liabilities 27,769 28,133
Income taxes payable 8,887 7,278
Total current liabilities 54,530 51,252
Deferred rent 30,227 21,843
Deferred tax liability 6,076 1,708
Total liabilities 90,833 74,803
Shareholders' equity 187,562 221,279
Total liabilities and shareholders' equity $ 278,395 $ 296,082
HOT TOPIC, INC.
OTHER DATA
(Dollars in thousands)
(Unaudited)
Fiscal Years Ended
--------------------------------
Jan. 29, 2005 Jan. 31, 2004
------------- -------------
(restated)
Depreciation and amortization $ 24,635 $ 20,360
Capital expenditures $ 57,853 $ 41,959
Number of stores open at end of period:
Hot Topic 592 502
Torrid 76 52
Total store square footage 1,214,400 998,600
HOT TOPIC, INC.
SUMMARY STATEMENTS OF INCOME
(Unaudited)
Quarters Ended
-----------------------------------------
Oct. 30, 2004 July 31, 2004 May 1, 2004
------------- ------------- -----------
(restated) (restated) (restated)
(In thousands, except per share amounts)
Net sales $ 180,808 $ 136,263 $ 128,143
Cost of goods sold, including buying,
distribution and occupancy costs 116,268 89,613 83,958
Gross margin 64,540 46,650 44,185
Selling, general and administrative
expenses 44,553 39,515 35,985
Operating income 19,987 7,135 8,200
Interest income-net 188 204 352
Income before income taxes 20,175 7,339 8,552
Provision for income taxes 7,727 2,811 3,275
Net income $ 12,448 $ 4,528 $ 5,277
Earnings per share
Basic $ 0.27 $ 0.10 $ 0.11
Diluted $ 0.26 $ 0.09 $ 0.11
Weighted average shares outstanding
Basic 46,086 46,565 48,019
Diluted 47,202 48,023 50,131