2008 Retrospective: Specialty Chains: Hot Topic, Aeacute;ropostale
It’s been a tough season for most retailers serving teen-fashion consumers, but Hot Topic Inc., the mall-based retailer focusing on music and pop culture, ended the year with a surprising comeback story.
The City of Industry, Calif.–based retailer runs 690 Hot Topic stores and 151 Torrid boutiques. Before the third quarter of 2008, the retailer had not reported positive comparable-store sales for 17 fiscal quarters. However, its third-quarter results for 2008, released on Nov. 19, showed a comparable-store sales increase of 1 percent. Hot Topic’s luck held into the beginning of the holiday season, when it reported a same-store sales increase of 6.5 percent for November.
According to retail analyst Adrienne Tennant of FBR Capital Markets, the release of the wildly popular film “Twilight” helped push Hot Topic’s sales into the black. The film commanded fervent attention from fans, and Hot Topic directed some fan devotion its way by producing a 13-city promotional tour for “Twilight,” which included in-store appearances by many of the film’s actors.
The retailer kept its finger on the pulse of music fans this year, as well. On Oct. 28, it debuted ShockHound, a Web site offering MP3s and band merchandise.
The good year-end news ended a tumultuous year for Hot Topic. On July 2, Michael Crooke resigned as Hot Topic president after one month on the job. On July 31, Maria Comfort resigned as general merchandise manager. Hot Topic Chief Executive Betsy McLaughlin continues to fill both positions.
Another 2008 success story was New York–based retailer Aeacute;ropostale Inc., which runs 850 Aeacute;ropostale and 14 Jimmy’Z stores. It reported positive comparable-store sales for every month of the past year, a track record that included a stellar performance in April, when it reported a 25 percent increase in same-store sales. Needham & Co. LLC analyst Christine Chen forecast the good times would continue rolling. “We continue to think [Aeacute;ropostale] is on the right track. [It’s] offering more fashion-forward merchandise to an increasingly sophisticated teen customer.” —Andrew Asch
