The trendy chain, which not only runs its namesake, music-driven stores, but also Torrid, a retailer for plus-sized young women, reported fourth-quarter net income up 36% at $22.5 million, or $0.45 per share. This compares to $16.6 million, or $0.34 per share, in the same quarter last year. Same-store sales were up 8.5% for the quarter, with a strong December to show for it.
For the full fiscal year, total sales rose 29% to $572 million, while net income popped 39% to $48 million, or $0.97 per share. Same-store sales for the year increased by 7.4%.
Hot Topic has been undeniably hot for quite some time. The company has been on a tear, with an ability to woo fickle teen shoppers, again and again. Way back in 2001, Tom Jacobs explored the idea that Hot Topic could be the next Gap
In addition to its goth and punk fashions, what else makes it different from teen-oriented retailers like Aeropostale
It's hard to tell why investors gave Hot Topic's numbers such a cool reception today. If you look back at the third quarter, the fourth quarter wasn't quite as rockin' in terms of earnings growth. In addition, gross margin decreased by 60 basis points in the fourth quarter, though decreasing merchandise margin, which the company said it had already predicted, was offset by cost reductions.
Further, in Hot Topic's conference call (transcript courtesy of CCBN StreetEvents), discussion turned to some problems with high-margin accessories at the Torrid stores. In fact, management said that there, the "accessory category was disappointing and not able to keep pace with apparel," though it's working on accessories going forward.
Investors may be spooked at the idea that Hot Topic is losing some steam, after reporting what it touts as its eighth consecutive year of positive same-store sales growth. While some aspects of the concept certainly bode watching -- profit margins, continued growth through new stores, and the success of the Torrid concept -- considering Hot Topic's popularity and niche, it may be a bit too soon for such an icy reception.
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