Hot Topic Inc.
) posted positive sales and comparable-store sales (comps)
results in the fourth quarter ended Feb 2, 2013. Moreover, the
company skewed its fourth quarter fiscal 2012 earnings guidance
towards the higher end of the range and maintained its fiscal
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Hot Topic's fourth-quarter comps grew 2.6% compared with a 1.9%
increase reported in the comparable year-ago period. The increase
in comps was driven by strong performance at both namesake and
Torrid divisions. Comps at the company's namesake stores rose
2.0%, while Torrid stores witnessed a 5.4% hike in comps.
The company's net sales for the quarter increased 11.0% year over
year to $233.0 million, on account of robust sales at both store
concepts. Quarterly sales also beat the Zacks Consensus Estimate
of $229.0 million.
On a segmental basis, net sales escalated 6.8% year over year to
$180.5 million at the company's namesake stores, while Torrid
stores registered a 28.4% increase with sales of $52.5 million.
Management believes the success of the company's Torrid store
concepts, through new Torrid branding and vertical product
strategies has strengthened the brand's unit growth opportunity.
Fiscal 2012 Sales Data
During fiscal 2012, the company's total sales grew 6.3% to $741.8
million driven primarily by strong sales in both namesake and
Torrid concepts. Full year sales were also above the Zacks
Consensus Estimate of $738.0 million. Net sales improved 3.6%
year over year to $553.7 million at the company's namesake
stores, while Torrid stores registered a 15.1% increase with
sales of $188.1 million.
During the year, Hot Topic's comps were up 3.4% compared with
1.4% reported in the year-ago period. This increase was driven by
3.5% and 3.1% elevation in comps at the company's namesake stores
and Torrid stores, respectively.
Following the company's strong sales performance, management
narrowed its fourth quarter earnings guidance range, skewing
toward the higher end of its previous guidance. The company now
expects fourth quarter earnings in the range of 26 cents - 27
cents, against the previously formulated guidance range of 23
cents- 27 cents. This compares to the prior-year quarter earnings
of 21 cents per share. The current Zacks Consensus Estimate
stands at 25 cents per share for the quarter.
Moreover, the company retained its previously forecasted fiscal
2013 earnings growth guidance of 30% to 35% compared with
earnings reported in fiscal 2012. The guidance is based on the
comps growth in the low-single-digit range.
Hot Topic's core business strategy focuses on music/pop culture
related merchandise, based on the foundation of pop culture and
mainly targets customers in the teenage group. As of Feb 2, 2013,
the company operated 618 Hot Topic stores across 50 states and in
Puerto Rico as well as in Canada, 190 Torrid stores and 5
Blackheart stores. The company's e-Commerce business looks strong
and it runs three e-Commerce sites - hottopic.com, torrid.com and
Currently, Hot Topic has a Zacks Rank #2 (Buy). Other stocks that
continue to perform well in the apparel retailing space are
Abercrombie & Fitch Co.
), which has a Zacks Rank #1 (Strong Buy),
American Eagle Outfitters Inc.
), both of which carry a Zacks Rank #2 (Buy).