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Cost reduction hurts Hot Topic in fourth quarter
08
Mar '11
Hot Topic Inc reported results for its fiscal fourth quarter and fiscal year of 2010 (13 weeks and 52 weeks, respectively, ended January 29, 2011).

The company reported a net loss in the fourth quarter of $0.6 million, or $0.01 per share, compared to net income of $8.0 million, or $0.18 per diluted share, for the comparable period last year. The fourth quarter results include $9.8 million of expenses, or $0.13 per diluted share, for the implementation of the previously announced cost reduction plan.

For the fiscal year of 2010, the company reported a net loss of $8.2 million, or $0.18 per share, compared to net income of $11.9 million, or $0.27 per diluted share, for last year. The fiscal year of 2010 results include $12.8 million of expenses, or $0.17 per diluted share, for the implementation of the cost reduction plan and the non-cash impairment of ShockHound assets.

Total sales for the fourth quarter of fiscal 2010 decreased 0.8% to $212.4 million compared to $214.2 million for the fourth quarter last year. Total company comparable store sales declined 2.1% for the fourth quarter of fiscal 2010. A summary of the sales results by division was included in the January sales release.

At the end of the fourth quarter of fiscal 2010, the company operated 657 Hot Topic stores and 153 Torrid stores compared to 680 Hot Topic stores and 156 Torrid stores at the end of the fourth quarter of fiscal 2009. During the fourth quarter of fiscal 2010, the company closed 23 Hot Topic stores, opened one Torrid store and closed three Torrid stores. The company also remodeled four Hot Topic stores during the quarter, bringing the total number of remodeled or relocated stores during fiscal 2010 to 24.

During the fourth quarter of fiscal 2010, the company engaged an outside consulting and financial advisory firm to review the company's business and operations and make recommendations regarding potential future improvements. The conclusions from this review will be presented to the company's board of directors at an upcoming meeting scheduled for March 15-16, 2011.

Accordingly, the company is deferring its first quarter financial guidance, and postponing its conference call to discuss fourth quarter and fiscal year results and business trends, until the board has had an opportunity to evaluate the recommendations and approve any related initiatives or changes.

The company intends to reschedule its conference call for a date shortly following the upcoming board meeting, and will provide first quarter financial guidance at that time, along with a discussion of fourth quarter and fiscal year results and trends and any initiatives or changes approved. The company does not anticipate any changes to its reported financial results.

Hot Topic Inc

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