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Business changes at Hot Topic for company growth
29
Mar '11
Hot Topic Inc announced the following business changes to better position the company for growth:

1. Discontinuation of the ShockHound.com business operations.
2. Write down of unproductive inventory.
3. Write down of fixed assets that are no longer critical to the strategic direction of the company.

The company estimates that implementing these changes, along with the severance costs related to recent changes in management, will result in a total pre-tax charge of approximately $15 million ($0.21 per diluted share) primarily in the first quarter of fiscal 2011.

The company issued first quarter (13 weeks ending April 30, 2011) guidance of a loss in the range of $0.01 to $0.04 per share, excluding the costs associated with the above changes. This guidance is based upon a low-single-digit decline in comparable store sales.

The company also announced full year (52 weeks ending January 28, 2012) guidance of earnings per diluted share of $0.05 to $0.15 based upon a comp performance that is in the range of flat to down low-single-digits, excluding the costs associated with the above changes. The company now estimates that capital expenditures for 2011 will be approximately $25 million.

The company announced that Amy Kocourek, the Chief Merchandising Officer of the company's Hot Topic division, has left the company effective March 28, 2011. Following the departure of Ms. Kocourek, Lisa Harper, Chief Executive Officer, will assume direct oversight for Hot Topic merchandising.

The company also announced the discontinuation of 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.

Hot Topic Inc

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