Hot Topic Inc. (HOTT), a shopping mall-based specialty retailer, remains in the red with same-store sales sliding 2.6% in September 2010, witnessing the 17th consecutive month of falling same-store sales. However, the drop in same-store sales narrowed from a decline of 4.0% witnessed in the prior-year month.
It is to be noted that the company had last registered same-store sales growth of 3.1% in April 2009.
Hot Topic hinted that total sales for the month dropped 0.5% to $59 million. The company operates the Hot Topic and Torrid store concepts across the U.S. as well as the e-space music discovery concept ShockHound.
Segment Results
Hot Topic: Segment same-store sales had declined 7.5%, 12.5% and 9.6% in the months of March, April and May, respectively. However, numbers improved somewhat in June with a decline of 1.6%, but again plunged 9.4% in July. After experiencing a fall of 3.3% in August, same-store sales portrayed a marginal improvement declining 3.1%. Segment sales declined 1.5% to $44.5 million.
Torrid: Torrid registered a fall of 3.4% in same-store sales in September with total sales of $14.5 million, a rise of 2.3% year-over-year.
Same-store sales of the company have been continuously reporting negative results attributable to sluggish economic conditions. However, now that the economy is on the verge of recovery, Hot Topic should benefit from a much-improved consumer discretionary spending pattern.
Hot Topic’s shares maintain a Zacks #5 Rank, which translates into a short-term ‘Strong Sell’ recommendation. Our long-term recommendation for the stock remains ‘Neutral’.
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