The poor results weren't completely unexpected, though, given that same-store-sales trends have been negative for quite a while. For the quarter, comps were down 3.5%, but August has shown further deterioration -- comps have fallen 8% this month.
Hot Topic runs two store concepts -- its namesake store, with 628 locations, and a smaller chain of 100 stores called Torrid, which caters to plus-sized women 15 to 29 years old. The Hot Topic chain is where most of the current woes reside, and you might say the woes reside in the "bottom" line -- specifically, pants, shorts, and skirts.
It seems that fewer people want to adorn their lower halves with clothes from Hot Topic. Sales of men's pants and shorts have declined by around 20%, and sales of bottom-half apparel for women's clothes have fallen by a similarly alarming amount. Management says this year's fashion trend toward denim -- which doesn't play a big part in Hot Topic's goth-flavored clothing -- has hurt the company's results. I find this comment odd. When the sun is baking the earth, as it has for much of the summer, just about the last thing a person is going to wear is a pair of blue jeans. As a result, denim sales in July were poor all over, even at red-hot Abercrombie & Fitch
On a positive note, at least management didn't blame the company's poor performance on external factors. Wal-Mart
One hopeful development is the hiring of a chief merchandise officer, who might be able to improve on the company's merchandise assortment. If not, Hot Topic's stock price will probably continue to wilt.
Dan Bloom does not own shares of any company mentioned in this article.