Teen retailer Hot Topic's
CEO Betsy McLaughlin just got the boot, replaced by board member Lisa Harper. Now, Hot Topic merchandising chief Amy Kocoureke has left the company, too.
The company's shutting down its music site, Shockhound.com (as if that could compete with the likes of Apple's
A peek at Hot Topic's website makes me think things are truly, truly bad for the retailer. Admittedly, the company no longer looks like a trendy poseur in the alternative world anymore; instead, it looks like a purveyor of cheap, faddish schlock for tweens. (A tiny link for "old-school Hot Topic" still remains on the company's site, for any truly loyal fans.) Whatever some analysts might believe -- I ran across some commentary welcoming a "less intimidating" product line -- the company's latest new direction doesn't represent progress.
Even on a good day for the economy, this retailer's teen demographic is fickle; just ask longtime Abercrombie & Fitch
Speaking of comps, the last time Hot Topic experienced a meaningful increase in annual same-store sales was the 7.4% increase it reported in January 2004. Ouch.
Hot Topic's identity problem isn't new. For years, it catered to goth and punk kids, carrying dark merchandise, body jewelry, and alternative-music T-shirts. Thinking any of that was a particularly authentic purpose was a mistake; the company chased trends, jumping on pop culture bandwagons like the Twilight craze. Surf and skate company Volcom
For a long while, Hot Topic was fun to write about. In past years, I've taken a page from South Park to joke that it got goth-served, quoted Bauhaus lyrics, cited Siouxsie & the Banshees' Eve White/Eve Black in celebration of old-school goth, and made fun of new-school mall-based goth retailers. In general, I've had a grand time busting on a concept that seemed to think it could commoditize subculture, package it in a shopping mall, and succeed.
The topic of Hot Topic isn't amusing anymore; it's simply sad. Investing in teen retailers is always risky, given teenagers' fickle shopping habits, but this particular retailer should be low on anyone's watchlist. Avoid the misguided notion that Hot Topic shares are cheap right now. This retailer's lost, and the potential that it might find value in the long term seems highly unlikely.