On March 15, clothing retailer Hot Topic (NASDAQ:HOTT) released fourth-quarter earnings for the period ended Jan. 28.

  • Comparable-store sales declined 3.8% in the fourth quarter.
  • The company saw a 9% increase in average ticket size offset by a 14% decline in the average number of transactions.
  • Sales in the men's category were particularly weak.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q4 2005

Q4 2004

% Change

Sales

$229

$230

$211

+9.1%

Net Profit

--

$11

$17

(39.2%)

EPS

$0.23

$0.23

$0.38

(39.5%)

Note: EPS includes a $0.02 asset impairment and a $0.04 benefit from gift card breakage.

Get back to basics with a look at the income statement.

Margin Checkup

Q4 2005

Q4 2004

Change

Gross Margin

32.09%

37.10%

(5.01%)

Op. Margin

6.02%

13.28%

(7.25%)

Net Margin

4.60%

8.25%

(3.65%)

Note: Actual merchandise margins declined 380 basis points.

Margins are the earnings engine. See how they work..

Balance Sheet Highlights

Assets

Q4 2005

Q4 2004

% Change

Cash+ ST Invest.

$38

$66

(43.2%)

Inventory

$71

$60

+17.7%



Liabilities

Q4 2005

Q4 2004

% Change

Long-Term Debt

--

--

N/A

Accounts Pay.

$18

$18

+1.4%

Note: Inventory was down 1.6% on a per-square-foot basis.

Related Companies:

  • American Eagle Outfitters (NASDAQ:AEOS)
  • Aeropostale (NYSE:ARO)
  • Urban Outfitters (NASDAQ:URBN)
  • Citi Trends (NASDAQ:CTRN)

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Fool contributor Stephen Simpson owns shares of American Eagle Outfitters but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares). The Motley Fool has a disclosure policy.