Attached files
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| 8-K - HOT TOPIC, INC. 8-K - HOT TOPIC INC /CA/ | a50076361.htm |
Exhibit 99.1
Hot Topic, Inc. Reports 3rd Quarter Financial Results
CITY OF INDUSTRY, Calif.--(BUSINESS WIRE)--November 16, 2011--Hot Topic, Inc. (Nasdaq: HOTT), reported results for its third quarter of fiscal 2011 (13 weeks) ended October 29, 2011.
The company reported net income in the third fiscal quarter of $3.1 million, or $0.07 per share, compared to net income of $0.4 million, or $0.01 per share, for the comparable period last year. The results for the third quarter ended October 30, 2010 include a non-cash asset impairment charge of $3.0 million, or $0.04 per diluted share, related to the impairment of ShockHound assets. On a non-GAAP basis, which excludes the ShockHound impairment, the third quarter 2010 results were net income of $0.05 per share. (Refer to GAAP to non-GAAP reconciliation).
Total sales for the third quarter of fiscal 2011 decreased 4.0% to $175.8 million compared to $183.2 million for the third quarter last year. Total company comparable store sales decreased 1.6% for the third quarter of fiscal 2011. A summary of the sales results by division was included in the third quarter sales release.
A conference call to discuss third quarter results, business trends, guidance and other matters is scheduled for November 16, 2011 at 4:30 PM (ET). The live conference call number is 800-299-9630, pass code “Hot Topic,” and will be accessible to all interested parties. It will also be webcast on the company’s Investor Relations website located at http://investorrelations.hottopic.com. A replay of the conference call will be available at 888-286-8010, pass code 29979044, for approximately two weeks. In addition, a webcast replay of the conference call will be available on the company’s Investor Relations website for approximately two weeks.
Hot Topic, Inc. is a mall and web based specialty retailer operating the Hot Topic and Torrid concepts. Hot Topic offers music/pop culture-licensed and music/pop culture-influenced apparel, accessories, music and gift items for young men and women principally between the ages of 12 and 22. Torrid offers apparel, lingerie, shoes and accessories designed for various lifestyles for plus-size females principally between the ages of 15 and 29. As of October 29, 2011, the company operated 634 Hot Topic stores in all 50 states, Puerto Rico and Canada, 146 Torrid stores, and Internet stores hottopic.com and torrid.com. During the third quarter of fiscal 2011, the company opened one Torrid store and closed two Hot Topic stores. The company also remodeled or relocated ten Hot Topic stores and one Torrid store during the quarter.
This news release and the aforementioned conference call contain forward-looking statements, which may include statements relating to financial results, guidance, store and online operations (including closures, remodels and relocations), projections, financial performance including cost reductions and changes in business operations, and related matters. These statements involve risks and uncertainties, including risks and uncertainties associated with meeting expected financial results, fluctuations in sales and comparable store sales results, music, license and fashion trends, competition from other retailers, uncertainties generally associated with specialty retailing, technology and other risks associated with Internet sales, the effect of negative conditions in the economic environment (including global capital and credit markets), the effect of severe weather or natural disasters, political and/or social changes or events that could negatively impact shopping patterns and/or mall traffic, relationships with mall developers and operators, relationships with our vendors, litigation proceedings and contingent liabilities, as well as other risks detailed in the company’s SEC reports including its Annual Report on Form 10-K for the year ended January 29, 2011, and its Quarterly Reports on Form 10-Q. Historical results achieved are not necessarily indicative of the future prospects of the company, and actual results or circumstances could differ materially from the forward-looking statements.
| HOT TOPIC, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (In thousands, except per share amounts) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| Oct. 29, 2011 | Oct. 30, 2010 | |||||||
| Net sales | $ | 175,822 | $ | 183,219 | ||||
|
Cost of goods sold, including buying, distribution and occupancy costs |
116,238 | 118,669 | ||||||
| Gross margin | 59,584 | 64,550 | ||||||
| Selling, general & administrative expenses | 55,361 | 64,229 | ||||||
| Income from operations | 4,223 | 321 | ||||||
| Interest and other income, net | 88 | 114 | ||||||
| Income before provision for income taxes | 4,311 | 435 | ||||||
| Provision for income taxes | 1,198 | 45 | ||||||
| Net income | $ | 3,113 | $ | 390 | ||||
| Earnings per share: | ||||||||
| Basic and Diluted | $ | 0.07 | $ | 0.01 | ||||
| Shares used in computing earnings per share: | ||||||||
| Basic | 43,942 | 44,616 | ||||||
| Diluted | 44,481 | 44,662 | ||||||
| Nine Months Ended | ||||||||
| Oct. 29, 2011 | Oct. 30, 2010 | |||||||
| Net sales | $ | 488,045 | $ | 495,873 | ||||
|
Cost of goods sold, including buying, distribution and occupancy costs |
329,389 | 330,838 | ||||||
| Gross margin | 158,656 | 165,035 | ||||||
| Selling, general & administrative expenses | 176,919 | 178,066 | ||||||
| Loss from operations |
(18,263 |
) |
(13,031 |
) |
||||
| Interest and other income, net | 222 | 246 | ||||||
| Loss before benefit for income taxes |
(18,041 |
) |
(12,785 |
) |
||||
| Benefit for income taxes |
(7,274 |
) |
(5,128 |
) |
||||
| Net loss |
$ |
(10,767 |
) |
$ |
(7,657 |
) |
||
| Loss per share: |
|
|||||||
| Basic and Diluted |
$ |
(0.24 |
) |
$ |
(0.17 |
) |
||
| Shares used in computing loss per share: |
|
|||||||
| Basic and Diluted | 44,492 | 44,526 | ||||||
| HOT TOPIC, INC. | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| Oct. 29, 2011 | Oct. 30, 2010 | |||||
| Current Assets: | ||||||
|
Cash, cash equivalents and short-term
investments |
$ | 41,776 | $ | 57,952 | ||
| Inventory | 84,911 | 90,743 | ||||
| Prepaid expenses and other | 25,859 | 22,421 | ||||
| Deferred tax assets | 2,832 | 6,036 | ||||
| Total current assets | 155,378 | 177,152 | ||||
| Property and equipment, net | 108,413 | 130,522 | ||||
| Deposits and other | 4,743 | 4,258 | ||||
| Long-term investments | 1,737 | 2,480 | ||||
| Deferred tax assets | 6,395 | 6,113 | ||||
| Total assets | $ | 276,666 | $ | 320,525 | ||
| Current Liabilities: | ||||||
| Accounts payable | $ | 33,896 | $ | 29,785 | ||
| Accrued liabilities | 36,637 | 35,023 | ||||
| Income taxes payable | 665 | 538 | ||||
| Total current liabilities | 71,198 | 65,346 | ||||
| Deferred rent | 21,559 | 28,594 | ||||
| Deferred compensation liability | 4,587 | 4,094 | ||||
| Income taxes payable | 1,224 | 2,380 | ||||
| Total liabilities | 98,568 | 100,414 | ||||
| Total shareholders’ equity | 178,098 | 220,111 | ||||
| Total liabilities and shareholders’ equity | $ | 276,666 | $ | 320,525 | ||
| OTHER DATA | ||||||
| (Dollars in thousands) | ||||||
| (Unaudited) | ||||||
| Nine Months Ended | ||||||
| Oct. 29, 2011 | Oct. 30, 2010 | |||||
| Depreciation and amortization | $ | 27,070 | $ | 29,397 | ||
| Capital expenditures | $ | 17,112 | $ | 23,739 | ||
| Total company store square footage | 1,486,000 | 1,585,000 | ||||
| Hot Topic average store size | 1,770 | 1,762 | ||||
| Torrid average store size | 2,497 | 2,496 | ||||
| HOT TOPIC, INC. | ||||||||||||||||||
| RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES | ||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | ||||||||||||||||||
| October 29, 2011 | October 30, 2010 | |||||||||||||||||
| Reported | Charges | Non-GAAP | Reported | Charges | Non-GAAP | |||||||||||||
| Net sales | $ | 175,822 | $ | - | $ | 175,822 | $ | 183,219 | $ | - | $ | 183,219 | ||||||
|
Cost of goods sold, including buying, distribution and occupancy costs |
116,238 | - | 116,238 | 118,669 | - | 118,669 | ||||||||||||
| Gross margin | 59,584 | - | 59,584 | 64,550 | - | 64,550 | ||||||||||||
|
Selling, general and administrative expenses |
55,361 | - | 55,361 | 64,229 | 2,976 | 61,253 | ||||||||||||
| Income from operations | 4,223 | - | 4,223 | 321 | 2,976 | 3,297 | ||||||||||||
| Interest and other income, net | 88 | - | 88 | 114 | - | 114 | ||||||||||||
|
Income before provision for income taxes |
4,311 | - | 4,311 | 435 | 2,976 | 3,411 | ||||||||||||
| Provision for income taxes | 1,198 | - | 1,198 | 45 | 1,193 | 1,238 | ||||||||||||
| Net income | $ | 3,113 | $ | - | $ | 3,113 | $ | 390 | $ | 1,783 | $ | 2,173 | ||||||
| Loss per share: | ||||||||||||||||||
| Basic | $ | 0.07 | $ | 0.07 | $ | 0.01 | $ | 0.05 | ||||||||||
| Diluted | $ | 0.07 | $ | 0.07 | $ | 0.01 | $ | 0.05 | ||||||||||
|
Shares used in computing loss per share: |
||||||||||||||||||
| Basic | 43,942 | 43,942 | 44,616 | 44,616 | ||||||||||||||
| Diluted | 44,481 | 44,481 | 44,662 | 44,662 | ||||||||||||||
| Nine Months Ended | ||||||||||||||||||||||
| October 29, 2011 | October 30, 2010 | |||||||||||||||||||||
| Reported | Charges | Non-GAAP | Reported | Charges | Non-GAAP | |||||||||||||||||
| Net sales | $ | 488,045 | $ | - | $ | 488,045 | $ | 495,873 | $ | - | $ | 495,873 | ||||||||||
|
Cost of goods sold, including buying, distribution and occupancy costs |
329,389 | 5,401 | 323,988 | 330,838 | - | 330,838 | ||||||||||||||||
| Gross margin | 158,656 | 5,401 | 164,057 | 165,035 | - | 165,035 | ||||||||||||||||
|
Selling, general and administrative expenses |
176,919 | 11,176 | 165,743 | 178,066 | 2,976 | 175,090 | ||||||||||||||||
| Loss from operations | (18,263 | ) | 16,577 | (1,686 | ) | (13,031 | ) | 2,976 | (10,055 | ) | ||||||||||||
| Interest and other income, net | 222 | - | 222 | 246 | - | 246 | ||||||||||||||||
|
Loss before benefit for income taxes |
(18,041 | ) | 16,577 | (1,464 | ) | (12,785 | ) | 2,976 | (9,809 | ) | ||||||||||||
| Benefit for income taxes | (7,274 | ) | 6,283 | (991 | ) | (5,128 | ) | 1,193 | (3,935 | ) | ||||||||||||
| Net loss | ($10,767 | ) | $ | 10,294 | ($473 | ) | ($7,657 | ) | $ | 1,783 | ($5,874 | ) | ||||||||||
| Loss per share: | ||||||||||||||||||||||
| Basic | $ | (0.24 | ) | $ | (0.01 | ) | $ | (0.17 | ) | $ | (0.13 | ) | ||||||||||
| Diluted | $ | (0.24 | ) | $ | (0.01 | ) | $ | (0.17 | ) | $ | (0.13 | ) | ||||||||||
|
Shares used in computing loss per share: |
||||||||||||||||||||||
| Basic | 44,492 | 44,492 | 44,526 | 44,526 | ||||||||||||||||||
| Diluted | 44,492 | 44,492 | 44,526 | 44,526 | ||||||||||||||||||
NON-GAAP PERFORMANCE MEASURES – Hot Topic, Inc. reports its financial results in accordance with generally accepted accounting principles (GAAP). However, management believes that non-GAAP performance measures, which exclude certain items that the Company does not consider part of its ongoing operating results when assessing the performance of the Company, present the operating results of the Company on a basis consistent with those used in managing the Company's business and provide users of the Company's financial information with a more meaningful report on the condition of the Company's business. Non-GAAP performance measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.
Within this release, the Company has excluded the following items for its non-GAAP performance measures:
Year-To-Date (nine months ended October 29, 2011) - $16.6 million of charges consist of the following items:
- $17.2 million of charges, comprising of $6.2 million in cost of goods sold and $11.0 million in selling, general and administrative expenses, related to the strategic business changes previously announced on March 28, 2011.
- ($0.6) million net recovery of charges, comprising of $0.8 million recovery in cost of goods sold and $0.2 million charge in selling, general and administrative expenses, related to the implementation of the cost reduction plan previously announced on November 16, 2010.
Third quarter of fiscal 2010 and Year-To-Date (three and nine months ended October 30, 2010) - $3.0 million of charges consist of the following items:
- $3.0 million non-cash asset impairment charge relating to the impairment of ShockHound assets in selling, general and administrative expenses.
CONTACT:
Hot Topic, Inc., City of Industry, CA
Jim McGinty, CFO,
626-839-4681 x2675