CITY of INDUSTRY, Calif., Jan. 4, 2006 (PRIMEZONE) -- Hot Topic, Inc. (Nasdaq:HOTT) today announced the following sales results for its fiscal month of December (five weeks ended December 31, 2005):
Comparable Store
Net Sales Sales % Change
------------------------ ----------------
% Increase This Last
$ Millions to Last Year Year Year
---------- ------------ ---- ----
December $132.9 6% -6.2% -6.2%
Quarter-to-date $187.6 8% -4.5% -6.7%
Year-to-date $682.3 10% -3.6% -2.9%
The company announced that as a result of the lower than expected December sales performance, it now estimates net income for the fourth quarter of 2005 will be in the range of approximately $0.21 to $0.24 per diluted share versus previous guidance of $0.30 to $0.38 per diluted share.
Betsy McLaughlin, Chief Executive Officer, said, "We are disappointed by our December results and their implications for the quarter. As a result of lower than expected traffic in the first three weeks of December, promotional activity was increased relative to our plans. Sales in our rock apparel classifications and women's fashion tops at the Hot Topic stores maintained their strong positive comp trend; however, the men's and accessories categories did not perform as anticipated. As a result, we are revising our earnings expectations for the fourth quarter. The revised guidance reflects a comparable store sales decline in the mid single digit range for the quarter and increased markdowns to aggressively address the resulting inventory risk. We expect inventories at the end of the fourth quarter to be flat to last year on a per square foot basis."
The company also announced that it expects a charge in the current quarter of approximately $250,000 as selling, general and administrative expense in connection with the anticipated resolution of two California wage and hour lawsuits for which an initial charge was taken in the company's third quarter.
For more detailed information on December sales results, please call 626-709-1209 to listen to a recorded commentary.
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. As of December 31, 2005 the Company operated 663 Hot Topic stores in all 50 states and Puerto Rico, 121 Torrid stores, and Internet stores www.hottopic.com and www.torrid.com.
In addition to historical information, this news release and the aforementioned prerecorded commentary contain forward-looking statements, which include statements relating to financial results, guidance, projections and other financial performance, managing growth, and litigation matters and contingent liabilities. 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, litigation proceedings and contingent liabilities, 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 29, 2005. 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.