Yesterday, perennial loser Wilsons The Leather Experts
Comparable same-store sales got called for roughing the passer by dropping 5.8% from the same period a year ago. In the company's quarterly earnings conference call, management revealed that comps reflect roughly a 6% decline in transactions, which was partially offset by a 1% increase in value per transaction. The increase in value per transaction makes sense, as one of the retailer's aims this year was to shift from a strategy that was heavily promotional to one that emphasizes full prices on merchandise. But these numbers also tell us that customers aren't exactly digging the new full-price strategy, and have decided to take their dollars elsewhere.
Another yellow towel gets thrown on Hot Topic's margin performance. While management remarked in the call that merchandise margin showed some improvement, it was not enough to offset declines in other areas. By the time we make our way down to the operating line, we find the company lost $3.4 million, compared to a $1.7 million operating loss during last year's quarter. Like the Raiders, as the company tries to move forward, it keeps falling back.
In addition to its full-price merchandise strategy, the company is taking other steps to try and improve performance, including broadening its appeal by offering more music variety and undergoing a store remodeling initiative. So far, these steps have gained it little traction -- comps in the month of August are also down, according to statements made by management in the call.
If you want your portfolio to have some exposure to youth retail, my recommendation is to keep your sights on franchises that know how to win, like Abercrombie & Fitch