Hot Topic has not so Hot Revenue

by Dagmark Garcia | Friday, Feb 3, 2012 | 454 views

 Teen retail chain Hot Topic declared its results for the quarter ending December 2011. Results were flat over the period. Top line for the forth quarter fourth quarter dipped 1.2% year. Net income stood at $209 million, on account of sales decline at both namesake and torrid concepts. Quarterly sales, however, fared better than the Zacks Consensus Estimate of $207 million. Fiscal year sales also declined 1.5% from last year to $697.9 million. Revenue at stores open at least a year compares revenue in a certain period with revenue during the same period a year earlier.


The company has also projected a robust earning guidance for the year. Hot Topic lifted its earnings guidance for the fourth quarter to 19 cents – 20 cents per share, compared with its prior guidance range of 17 cents -19 cents per share and above last year’s earnings per share of $0.12.


The company has to face concerns over decreased consumer spending which could hurt the future guidance for the company. The company currently competes with popular brands such as Abercrombie & Fitch and Wal Mart stores. The company has not set an aggressive plan for the current financial year. The retailer operates 628 namesake stores in the U.S., Puerto Rico and Canada and 148 Torrid stores.

Shares added 3 cents to $7.69 in after-hours trading. The stock closed up 34 cents, or 4.6 percent, to $7.66 before Hot Topic reported its revenue.  We maintain a neutral outlook on the stock as the company is heavily reliant on consumer spending over the long run. The company is not presently focusing on working on ensuring profitability of the stores over the long run. This could play a crucial role in top line growth for the company.


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