Ah, nostalgia.
I spent parts of the weekend ordering tickets for the upcoming Cure concert, digging up my old VHS tape of Siouxsie & the Banshees' Nocturne (with Robert Smith on guitar), and wondering where my autographed program from when I saw Siouxsie & the Banshees in the '80s is now. Goth nostalgia is fun sometimes. Of course, Hot Topic
Unfortunately, my blast from the past watching Nocturne was probably more exciting (if grainy and dated in its low-tech effects) than Hot Topic's June comps. (I still get goose bumps at the open, which uses Stravinsky's The Rite of Spring -- you could argue that was the first punk song, since according to legend the ballet sparked riots when it was first played in the early 20th century.) Hot Topic's June same-store sales decreased by 4%, and total sales slid 1% to $60.9 million.
Granted, Hot Topic's decrease in June comps was significantly better than analysts expected (they had anticipated a 7.2% drop). Of course, that's not really that heartening. After all, some teen retailers really sizzled in June -- take Zumiez's
Siouxsie & the Banshees' "Eve White/Eve Black," one of the most intense performances on Nocturne, reminded me of something Rich Duprey observed recently about Hot Topic -- a bit of a brightening in its stores, to be exact.
In fact, management said last quarter that it was aiming to make its stores appear less intimidating to people who are not familiar with the concept and might have been "afraid" before, stating that people "thought of Hot Topic as a dark Goth store and are now interested in this new lighter version." If I recall, the inspiration for the song (The Three Faces of Eve) could be applied in Hot Topic's case: Eve White was just as incomplete and dysfunctional as her counterpart Eve Black. For Hot Topic's purposes, the less off-putting alternative may be a real departure from the retailer's roots, and I guess we'll have to see if that turns out to be the appropriate strategy for the retailer to take.
As you can probably tell, I always enjoy writing about Hot Topic. Its punk/goth theme always generates some good nostalgia (and I might have outdone myself this time). However, I can't say I've been psyched about the stock. I'm still awaiting more solid signs that the retailer's getting back on track. Although last quarter, the company did report better luck with selling full-priced merchandise, I've still got to see the results. Plus, it's trading at 34 times earnings, which sounds like an awfully high price to pay for a company that still has work to do. We should know more when Hot Topic presents its latest quarterly results, but for now it's not on my stock wish list.
Zumiez is a Motley Fool Hidden Gems recommendation. American Eagle Outfitters has been recommended by Motley Fool Stock Advisor.
Alyce Lomax does not own shares of any of the companies mentioned. The Fool's disclosure policy asks, "Why Can't I Be You?"