Hot Topic Inc. (HOTT), a shopping mall-based specialty retailer, reported a consolidated 2.1% decrease in June 2010 same-store sales, on top of a 7.9% decrease in the year-ago period. This was the 14th consecutive month of negative comparable store sales.

The company had last reported positive trends in April 2009, when the same-store sales increased 3.1%. Total sales for the month plummeted 0.8% to $59 million. Hot Topic 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: After a decline in same-store sales of 7.5%, 12.5% and 9.6% in the months of March, April and May, the Hot Topic segment showed some sign of improvement by declining 1.6% versus a decline of 7.2% in the corresponding five-week period last year.

A modest increase in transactions and solid licensed category results partially, offset by a low-single-digit decline in average ticket, led to somewhat better figures. The licensed category benefited from “Twilight”-related sales from the movie Eclipse and delivered same-store sales gain of 18% for the month.

Comparables also declined for other major categories such as fashion accessories, which fell 9%, while fashion apparel dropped 29% for the month. However, music cited upward movement and jumped 3.0% for the month. The division impacted total sales by declining 0.6% in the month to $44.9 million.

Torrid: Torrid recorded a 3.8% drop in comparable store sales for June against a drop of 10.3% in the year-ago period. Combination of low-single-digit decrease in transactions and average ticket put downward pressure on June comparable sales. Apparel same-store sales decline of 3% and accessories fall of 8% pulled down the overall same-store sales of the division. Total sales plunged 1.8% to $14.1 million.

Same-store Sales

Same-store sales of the company have been continuously reporting negative results attributable to the sluggish economic condition. However, now that the economy is on the verge of recovery, Hot Topic should benefit from a much-improved consumer discretionary spending pattern.

The global fashion apparel industry is one of the most important sectors of the economy in terms of investment, revenue and trade and employment generation all over the world. The industry is all set for a quick recovery in 2010, making up for the losses of recession. In keeping with a general revival, industry owners have an optimistic outlook for the company.
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