If I would have been born 20 years later, I'm guessing that I would be a loyal Hot Topic
That's fine. A new generation of young 'uns ready to take a battering ram to commercial radio, conventional wisdom, and boy bands will take my generation's place, right? Right?
Well, if that counterculture throng is rising somewhere, it apparently isn't happening at a Hot Topic near you. Once again the specialty retailer is suffering at the cash register, with same-store sales for the month of November down a disappointing 8%.
It shouldn't come as much of a surprise.
Earlier this month, the struggling chain posted an 18% dip in third-quarter profits, and it's been putting up miserable comps for months now. And because chains that tend to have popular summers tend to continue with strong back-to-school and holiday shopping seasons, it's no wonder that Hot Topic is now warning that it will earn only between $0.37 and $0.43 a share this seasonally potent quarter. Earlier it had guided investors to expect profits to come in between $0.49 and $0.52 a share.
That's why it's deceptive to consider the company's 17% spike in sales so far this year as a positive without considering the 2% decline in sales at the store level. The company is wasting its time -- and money -- by expanding the concept instead of fixing it.
When you see specialty retailers such as Aeropostale
Hot Topic claims that the shortcoming is stemming mostly from its accessory lines, but it's hard to blame the fate of an entree on the appeal of the garnish. Rather than tack on another 115 stores to its 592 namesake units like it did this year, why not take some time to notice the blemishes in the mirror? The company needs to hit the brakes on store expansion and right itself. Anything less may be too antiestablishment for its shareholders' taste.
Why do some specialty retailers get it while others don't? Is location inside a mall that important? Do I match? All this and more -- in the What to Wear? discussion board. Only on Fool.com.
Longtime Fool contributor Rick Munarriz enjoys the mall -- even the food court. He does not own shares in any companies mentioned in this story. He is a member of the Rule Breakers analytical team, seeking out tomorrow's great growth stocks today.