Hot Topic Announces Declines and a Promotion
On Nov. 15, Hot Topic Inc. reported that comparable sales for its third quarter decreased 6.8 percent. On the same day, Chris Daniels was promoted to president of Hot Topic’s Torrid chain of stores.
The City of Industry, Calif.–based retailer announced that it expected to open 20 Torrid stores and 15 Hot Topic stores in fiscal 2007. Daniel had joined the company in October 2004 as general merchandise manager of Torrid. In August 2006 he was named chief merchandising manager.
Hot Topic’s third-quarter decrease of 6.8 percent has followed a series of setbacks in its comparable sales. The same-store sales for the third quarter of fiscal year 2005 was 6.2 percent.
The retailer should brace for another rough couple of quarters before finding increases in same-store sales, said retail analyst Liz Pierce of Newport Beach, Calif.–based Roth Capital Partners.
In a research note published Nov. 16, she partially blamed a light music-release calendar at the end of 2006 for Hot Topic’s woes. Upcoming releases of rock bands have failed to pique the interest of the retailer’s core—music-loving consumers. Consequently, they have not visited Hot Topic to purchase music-inspired fashions.
However, Pierce said she believes the long-term forecast for Hot Topic is solid. Once the music releases excite more consumers, the retailer will sell more T-shirts and other music-related licensed products. —Andrew Asch
