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Reuters
Published
Aug 20, 2008
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Hot Topic Q2 loss narrows; shares fall on weak outlook

By
Reuters
Published
Aug 20, 2008

Aug 20 (Reuters) - Hot Topic Inc, a teen-clothing retailer, posted a narrower-than-expected loss for the second quarter, helped mainly by strong sales at its Torrid stores, and forecast weaker-than-estimated earnings for the rest of the year, sending its shares down more than 6 percent.


The company, which sells rock n' roll-inspired apparel and accessories as well as music, expects third-quarter earnings of 12 cents to 15 cents per share and fourth-quarter earnings of 25 cents to 28 cents per share.

The forecast includes expenses of about 2 cents and 1 cent per share for the third and fourth quarter respectively, related to the launch of the company's online music initiative, it said in a statement.

Excluding items, analysts on average were expecting the company to earn 16 cents per share for the third quarter and 27 cents a share for the fourth quarter, according to Reuters Estimates.

For the second quarter ended Aug. 2, Hot Topic reported a loss of $0.4 million, or 1 cent a share, compared with $1.7 million, or 4 cents a share, a year earlier.

The results include a 1 cent per share charge in expenses related to the company's online music initiative.

Analysts on average had expected the mall-based retailer to post a loss of 2 cents a share, before special items, on revenue of $166.2 million.

Total sales rose about 3 percent to $166.8 million.

Sales at the company's Torrid stores, a plus-size chain for young women, rose 16 percent to $39.6 million, while sales at its Hot Topic stores fell marginally to $127.2 million.

Hot Topic, whose rivals include Abercrombie & Fitch , American Eagle Outfitters Inc and Wet Seal , said sales at its stores open at least a year fell 0.9 percent for the quarter.

Shares of the California-based company fell 42 cents to $6.45 in after-hours trading. They closed at $6.87 in regular trading Wednesday on Nasdaq. (Reporting by Divya Nair in Bangalore; Editing by Gopakumar Warrier)

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