Hot Topic Inc.
), a shopping-mall based retail chain, posted solid sales and
comparable store sales results for the first quarter ended April
Hot Topic's first-quarter 2012 comparable store sales (comps)
were up 7.5% compared with 1.2% reported in the year-ago period.
Comps increase in the quarter was driven by a 9.5% rise in comps at
the company's namesake stores and a 2.5% rise in Torrid stores.
Comps gain in the quarter also resulted from improvements in
fashion attire validating the company's planned direction and
positive comps at Torrid.
Hot Topic's net sales for the quarter increased 6.4% year over
year to $171.6 million, on account of robust sales in both namesake
and Torrid concepts. Quarterly sales also fared better than the
Zacks Consensus Estimate of $168 million.
On a segmental basis, net sales rose 7% year over year to $124.0
million at the company's namesake stores, while Torrid stores
registered a 5.0% increase with sales of $47.6 million.
Following better-than-expected sales results, Hot Topic lifted
its earnings guidance for the first quarter to 7 cents - 8 cents
per share, compared with its prior guidance range of 2 cents - 5
cents per share. The current Zacks Consensus Estimate for the first
quarter stands at 5 cents, which is below the company's revised
Additionally, the company initiated its second-quarter guidance
projecting a loss per share of 4 cents - 6 cents compared to a loss
per share of 14 cents recorded in the year-ago period. The
company's guidance is based on comparable-store sales growth in the
low to mid-single-digit range. The current Zacks Consensus Estimate
for second quarter stands at a loss of 5 cents per share.
Hot Topic is scheduled to release its first quarter 2012 results
on May 16, 2012.
Hot Topic mainly competes with teenage-focused retailers such as
Abercrombie & Fitch Company
American Eagle Outfitters Inc.
). The company also competes with
Wal-Mart Stores Inc.
Best Buy Company
), among others.
We reiterate our Neutral recommendation on Hot Topic as
macroeconomic headwinds, intense competition and seasonal nature of
the business undermine the company's future growth prospects.
However, the company has a Zacks #2 Rank, implying a short-term Buy
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