August 18 - Teen apparel retailer Hot Topic Inc posted a second-quarter loss in line with market expectations, and forecast a return to full-year same-store sales growth as its efforts to turnaround its business bear fruit.

LoveSick collection by Hot Topic

The company also expects full-year earnings largely above analysts' expectations.

Shares of the company, which received a nod to buy back up to $25 million of its stock, rose 4 percent to $7.23 in trading after the bell. They had closed at $6.95 on Wednesday on Nasdaq.

Hot Topic sees full-year adjusted earnings of $0.17-$0.23 a share on a low single-digit same-store sales increase, ahead of expectations for earnings of 17 cents a share, according to Thomson Reuters I/B/E/S.

The company had been underperforming peers for at least two years as its merchandise failed to attract shoppers and has responded by cutting costs and revamping its stores to boost sales.

It also shut its underperforming music website ShockHound.com, changed its logo and has been making changes to its merchandise -- mixing its goth and punk look with friendly cartoon T-shirts.

For the second quarter, Hot Topic posted a loss of $6.2 million, or 14 cents a share, compared with $6.3 million, or 14 cents a share, a year ago.

Excluding items, it posted a loss of 8 cents a share, in line with analysts' expectations.

Sales at the San Jose, California-based company, which sells licensed band and movie T-shirts, rose marginally to $150.9 million.

Analysts, on average, were expecting sales of $147.6 million.

(Reporting by Ranjita Ganesan; Editing by Sriraj Kalluvila)