Provides guidance for the 2nd quarter of 2011
CITY OF INDUSTRY, Calif., May 18, 2011 (BUSINESS WIRE) -- Hot Topic, Inc. (Nasdaq Global Select Market: HOTT), reported results
for its first quarter of fiscal 2011 (13 weeks) ended April 30, 2011.
The company reported a net loss in the first fiscal quarter of $7.7
million, or $0.17 per share, compared to a net loss of $1.8 million, or
$0.04 per share, for the comparable period last year. The first quarter
results include $12.4 million of expenses, or $0.17 per share, for the
implementation of the previously announced charges for strategic
business changes and cost reduction plan. On a non-GAAP basis, which
excludes these charges, the first quarter results were $0.00 earnings
per share. (Refer to GAAP to non-GAAP reconciliation below).
Total sales for the first quarter of fiscal 2011 decreased 0.8% to
$161.3 million compared to $162.6 million for the first quarter last
year. Total company comparable store sales increased 0.2% for the first
quarter of fiscal 2011.
At the end of the first quarter of fiscal 2011, the company operated 642
Hot Topic stores and 151 Torrid stores compared to 681 Hot Topic stores
and 156 Torrid stores at the end of first quarter of fiscal 2010. During
the first quarter of fiscal 2011, the company opened one Torrid store
and closed fifteen Hot Topic stores and three Torrid stores. The company
also remodeled or relocated eleven Hot Topic stores during the quarter.
The company issued second quarter guidance (13 weeks ending July 30,
2011) of a loss per share in the range of $0.09 to $0.11, which excludes
approximately $3 million of costs associated with the above charges,
compared to a loss per share of $0.14 last year. This guidance is based
upon approximately flat comp sales for the second quarter.
As previously announced, the company will discontinue monthly sales
reporting, effective in the third quarter of fiscal 2011. The company
will report quarterly sales results on the first Wednesday following the
close of each fiscal quarter. The company will continue to report
monthly sales results through the end of the second quarter of fiscal
2011.
A conference call to discuss first quarter results, business trends,
guidance and other matters is scheduled for May 18, 2011 at 4:30 PM
(ET). The live conference call number is 800-638-4817, pass code "Hot
Topic", and will be accessible to all interested parties. It will also
be webcast on the company's Investor Relations website located at http://investorrelations.hottopic.com.
A replay of the conference call will be available at 888-286-8010, pass
code 89025792, for approximately two weeks. In addition, a webcast
replay of the conference call will be available on the company's
Investor Relations website for approximately two weeks.
Hot Topic, Inc. is a mall and web based specialty retailer operating the
Hot Topic and Torrid concepts. Hot Topic offers music/pop
culture-licensed and music/pop culture-influenced apparel, accessories,
music and gift items for young men and women principally between the
ages of 12 and 22. Torrid offers apparel, lingerie, shoes and
accessories designed for various lifestyles for plus-size females
principally between the ages of 15 and 29. As of April 30, 2011, the
company operated 642 Hot Topic stores in all 50 states, Puerto Rico and
Canada, 151 Torrid stores, and Internet stores www.hottopic.com
and www.torrid.com.
This news release and the aforementioned conference call contain
forward-looking statements, which may include statements relating to
financial results, guidance, store and online operations (including
closures, remodels and relocations), projections, financial performance
including cost reductions and changes in business operations, and
related matters. These statements involve risks and uncertainties,
including risks and uncertainties associated with meeting expected
financial results, fluctuations in sales and comparable store sales
results, music, license and fashion trends, competition from other
retailers, uncertainties generally associated with specialty retailing,
technology and other risks associated with Internet sales, the effect of
negative conditions in the economic environment (including global
capital and credit markets), 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, relationships
with mall developers and operators, relationships with our vendors,
litigation proceedings and contingent liabilities, as well as other
risks detailed in the company's SEC reports including its Annual Report
on Form 10-K for the year ended January 29, 2011 and its Quarterly
Reports on Form 10-Q. 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.
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HOT TOPIC, INC.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(In thousands, except per share amounts)
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(Unaudited)
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First Quarter Ended
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Apr. 30, 2011
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May 1, 2010
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Net sales
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$161,273
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$162,648
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Cost of goods sold, including buying, distribution and occupancy
costs
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110,863
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108,185
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Gross margin
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50,410
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54,463
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Selling, general & administrative expenses
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62,799
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57,456
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Loss from operations
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(12,389
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)
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(2,993
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)
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Interest income, net
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52
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74
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Loss before benefit for income taxes
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(12,337
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)
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(2,919
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)
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Benefit for income taxes
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(4,676
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)
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(1,141
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)
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Net loss
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$(7,661
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)
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$(1,778
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)
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Loss per share:
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Basic
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$(0.17
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)
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$(0.04
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)
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Diluted
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$(0.17
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)
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$(0.04
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)
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Shares used in computing loss per share:
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Basic
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44,713
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44,398
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Diluted
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44,713
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44,398
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HOT TOPIC, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(In thousands)
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(Unaudited)
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Apr. 30, 2011
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May 1, 2010
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Current Assets:
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Cash, cash equivalents and short-term
investments
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$73,725
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$68,880
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Inventory
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62,564
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78,690
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Prepaid expenses and other
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27,655
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17,758
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Deferred tax assets
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4,488
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6,053
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Total current assets
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168,432
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171,381
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Property and equipment, net
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116,100
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136,058
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Deposits and other
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4,810
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3,585
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Long-term investments
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3,044
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8,040
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Deferred tax assets
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5,704
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5,083
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Total assets
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$298,090
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$324,147
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Current Liabilities:
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Accounts payable
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$27,218
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$24,369
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Accrued liabilities
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32,941
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32,759
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Income taxes payable
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665
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538
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Total current liabilities
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60,824
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57,666
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Deferred rent
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24,116
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31,002
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Deferred compensation liability
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4,738
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3,414
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Income taxes payable
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1,911
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2,380
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Total liabilities
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91,589
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94,462
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Total shareholders' equity
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206,501
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229,685
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Total liabilities and shareholders' equity
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$298,090
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$324,147
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OTHER DATA
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(Dollars in thousands)
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(Unaudited)
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First Quarter Ended
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Apr. 30, 2011
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May 1, 2010
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Depreciation and amortization
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$9,007
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$9,885
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Capital expenditures
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$5,437
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$5,734
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Total company store square footage
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1,513,600
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1,588,700
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Hot Topic average store size
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1,768
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1,760
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Torrid average store size
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2,496
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2,493
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| HOT TOPIC, INC. |
| RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES |
| (In thousands, except per share amounts) |
| (Unaudited) |
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First Quarter Ended |
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2011 |
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2010 |
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Reported |
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Charges |
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Non-GAAP |
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Reported |
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Charges |
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Non-GAAP |
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Net sales
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$161,273
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$-
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$161,273
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$162,648
|
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$-
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$162,648
|
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Cost of goods sold, including buying, distribution and occupancy
costs
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110,863
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5,370
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105,493
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108,185
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-
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108,185
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Gross margin
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50,410
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5,370
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55,780
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54,463
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-
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54,463
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Selling, general and administrative expenses
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62,799
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7,059
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55,740
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57,456
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-
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57,456
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(Loss) income from operations
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(12,389
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)
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12,429
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40
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(2,993
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)
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-
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(2,993
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)
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Interest income, net
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52
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-
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52
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74
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-
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74
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(Loss) income before (benefit) provision for income taxes
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(12,337
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)
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12,429
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92
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(2,919
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)
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-
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(2,919
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)
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(Benefit) provision for income taxes
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(4,676
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)
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4,711
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35
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(1,141
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)
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-
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(1,141
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)
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Net (loss) income
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($7,661
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)
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$7,718
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$57
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($1,778
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)
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$-
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($1,778
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)
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(Loss) earnings per share:
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Basic
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$(0.17
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)
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$0.00
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$(0.04
|
)
|
|
|
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$(0.04
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)
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Diluted
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$(0.17
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)
|
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$0.00
|
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$(0.04
|
)
|
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|
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$(0.04
|
)
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Shares used in computing (loss) earnings per share:
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Basic
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44,713
|
|
|
|
|
44,713
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44,398
|
|
|
|
|
44,398
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Diluted
|
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44,713
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|
|
|
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44,713
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44,398
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44,398
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NON-GAAP PERFORMANCE MEASURES - Hot Topic, Inc. reports its financial
results in accordance with generally accepted accounting principles
(GAAP). However, management believes that non-GAAP performance measures,
which exclude certain items that the Company does not consider part of
its ongoing operating results when assessing the performance of the
Company, present the operating results of the Company on a basis
consistent with those used in managing the Company's business, and
provide users of the Company's financial information with a more
meaningful report on the condition of the Company's business. Non-GAAP
performance measures should be viewed in addition to, and not as an
alternative for, the Company's reported results prepared in accordance
with GAAP.
Within this release, the Company has excluded the following items from
its non-GAAP performance measures:
First quarter of fiscal 2011:
- $12.8 million of charges,
comprising of $6 million in cost of goods sold and $6.8 million in
selling, general and administrative expenses, related to the strategic
business changes previously announced on March 28, 2011.
- $0.4
million net recovery of charges, comprising of $0.6 million recovery in
cost of goods sold and $0.2 million charge in selling, general and
administrative expenses, related to the implementation of the cost
reduction plan previously announced on November 16, 2010.
SOURCE: Hot Topic, Inc.
Hot Topic, Inc., City of Industry, CA
Jim McGinty, CFO, 626-839-4681 x2675
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