It's been a long three years for Hot Topic (NASDAQ:HOTT), but it looks like investors will have to suffer for a while longer. The company has a long way to go toward making differentiation work in its favor.

The Goth-flavored retailer's fourth-quarter net income dropped 16% to $8.9 million, or $0.20 per share. Sales increased 4% to $240.5 million in the quarter, with same-store sales dropping 5.3%. (You've got to love a retailer that announces positive comps in body jewelry; alas, other segments endured gloomier performance.) Hot Topic's results included an asset impairment charge of $2.8 million, or $0.04 per share, as well as a penny per share in stock-based compensation expense.

Net income for the year dropped 40% to $13.6 million, or $0.30 per share. Investors should also note that this year included an extra week compared with last, adding a penny or two to Hot Topic's per-share earnings.

Hot Topic has long struggled with its paradoxical status as a mass-market mall chain that serves a subculture that supposedly prizes its ability to stand out from the crowd. Maybe, as South Park famously put it, Hot Topic's been "Goth-served":

Stan attempts to recruit his school's Goth clique for an upcoming dance contest:
Red Goth: I'm not doin' it. Being in a dance group is totally conformist.
Henrietta: Yeah. I'm not conforming to some dance-off regulations.
Little Goth: I'm not doin' it either. I'm the biggest nonconformist of all.
Tall Goth: I'm such a nonconformist that I'm not going to conform with the rest of you. OK, I'll do it.
Stan: Great!
Henrietta: Whoa. I think we just got put in our place.
Red Goth: Yeah. We just got Goth-served.

In hopes of avoiding such a horrible fate, Hot Topic's conference call unveiled plans to better address the music side of its business, including a search for a chief music officer. Hot Topic said that when there's a lack of blockbuster releases, stores suffer, since they can't peddle related merchandise. Hot Topic also acknowledged that the music business is changing, and it plans to wean itself off its current focus on large bands and integrate some medium-sized and small ones, too.

While that may sound a bit risky to investors, flogging merchandise from the biggest bands might have hurt Hot Topic's credibility among the iconoclastic shoppers it covets. As disruptive influences attack the traditional music industry from all sides, there must be some way Hot Topic can capitalize.

The company said it's working on its music strategy, including digital services, and will communicate it more fully in the future. For now, CEO Betsy McLaughlin said the company knows it must play into the tendency toward individualism that's currently at work in popular culture. That's logical enough, and easily said, but it may prove much harder to carry out.

It's always intriguing to see mass-market retailers attempt to embrace customers who pride themselves on individualism. Volcom (NASDAQ:VLCM) has raised doubts about its ability to continue its torrid growth, given its emphasis on rebellion and "youth against establishment," although I suspect its board-sports market isn't nearly as niche as the one Hot Topic targets.

Investors need to ponder these questions when considering companies' growth. Hot Topic is always an interesting story, but as a long-suffering retailer with shares trading at 19 times forward earnings, its prospects for a quick turnaround look as bleak as the average Goth's tortured soul.

It's Friday, I'm in love (with further Foolishness):

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Alyce Lomax does not own shares of any of the companies mentioned. The Fool disclosure policy is here to serve you.