Hot Topic, Inc. Reports Second Quarter EPS Decreases 17% to $0.10 Per Diluted Share.CITY OF INDUSTRY, Calif. -- Hot Topic, Inc. (Nasdaq:HOTT HOTT - (Hot Off The Tree) An Internet-based electronic magazine edited by David Scott Lewis <d.s.lewis@ieee.org> and distributed by electronic mail. ), reported net income for the quarter ended July July: see month. 31, 2004 decreased to $4.6 million or $0.10 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, from $5.9 million or $0.12 per diluted share for the same period last fiscal year. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the second quarter increased 18% to $136.3 million, from $115.7 million for the second quarter of fiscal 2003. As previously reported, comparable store sales decreased 2.1% for the quarter compared to the second quarter of fiscal 2003. At the end of the quarter, the company operated 613 stores, including 59 Torrid stores, compared to 497 stores, including 40 Torrid stores, at the end of the second quarter of fiscal 2003. For the first 26 weeks of fiscal 2004, net income was $10.0 million or $0.20 per diluted share, compared to $10.3 million or $0.21 per diluted share for the comparable period last year, an earnings per share decrease of 5%. The Company previously reported its net sales for the 26 weeks ended July 31, 2004 were $264.4 million, an increase of 22% over net sales of $216.4 million for the first 26 weeks of fiscal 2003, and comparable-store sales increased 0.8%. The Company also announced that it expects to open 90 new Hot Topic stores in 2004, ten more than the previously announced 80 new Hot Topic stores. The Company expects to end the year operating 77 Torrid stores and 591 Hot Topic stores. A conference call to discuss second quarter results, business trends, and other matters will be conducted today at 4:30 PM Eastern time. The conference call number is 800-370-0869, and will be accessible to all interested parties. The conference call will also be webcast at www.companyboardroom.com. A replay will be available at 877-519-4471, pass code 5019549, for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 10 days. Hot Topic, Inc. is a national mall-based specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. retailer. Hot Topic offers apparel, accessories and gifts to young men and women principally between the ages of 12 and 22. Torrid, the company's second concept, provides plus-size plus-size n. 1. An extra large or oversize clothing size, especially one for women's or children's clothing. 2. A garment of such a size. plus fashion-forward apparel and accessories that target young women principally between the ages of 15 and 29. The company currently operates 562 Hot Topic stores in 50 states and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , 62 Torrid stores, and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the stores www.hottopic.com and www.torrid.com. In addition to the historical information contained herein, this news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which include statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc financial results, guidance, projections and other financial performance, and managing growth. These statements involve risks and uncertainties, including risks and uncertainties associated with meeting expected financial results, management of growth, relationships with mall mall: see shopping center. (World-Wide Web) mall - A collection of World-Wide Web documents featuring commercial products and services, usually served by one particualr Internet access provider. developers and operators, the risk that available cash or mall space will not be adequate for planned expansion, fluctuations in sales and comparable store sales results, risks and uncertainties with respect to new store openings including risks associated with the company's new store concepts and Internet stores, music and fashion trends, competition from other retailers, uncertainties generally associated with specialty retailing, the effect of economic conditions, the effect of severe weather or natural disasters, political and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. social changes or events that could negatively impact shopping patterns and/or mall traffic as well as other risks detailed in the company's SEC reports, including its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended May 1, 2004 and the Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended January January: see month. 31, 2004. The historical results achieved are not necessarily indicative indicative: see mood. of the future prospects of the company.
HOT TOPIC, INC.
SUMMARY STATEMENTS OF INCOME
(Unaudited)
Second Quarter Ended
July 31, 2004 Aug. 2, 2003
(In thousands, except per share amounts)
Net sales $136,263 $115,728
Cost of goods sold, including buying,
distribution and occupancy costs 89,420 74,087
Gross margin 46,843 41,641
Selling, general and administrative expenses 39,515 32,307
Operating income 7,328 9,334
Interest income-net 204 247
Income before income taxes 7,532 9,581
Provision for income taxes 2,885 3,691
Net income $4,647 $5,890
Earnings per share
Basic $0.10 $0.12
Diluted $0.10 $0.12
Weighted average shares outstanding
Basic 46,565 47,360
Diluted 48,023 49,127
Six Months Ended
July 31, 2004 Aug. 2, 2003
(In thousands, except per share)
Net sales $264,406 $216,386
Cost of goods sold, including buying,
distribution and occupancy costs 173,246 139,132
Gross margin 91,160 77,254
Selling, general and administrative expenses 75,500 61,165
Operating income 15,660 16,089
Interest income-net 556 606
Income before income taxes 16,216 16,695
Provision for income taxes 6,211 6,394
Net income $10,005 $10,301
Earnings per share
Basic $0.21 $0.22
Diluted $0.20 $0.21
Weighted average shares outstanding
Basic 47,242 47,164
Diluted 49,055 48,833
HOT TOPIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
July 31, Aug. 2,
2004 2003
Current Assets:
Cash, cash equivalents and short-term investments $71,635 $70,257
Inventory 80,906 63,985
Prepaid expenses and other 11,704 9,636
Deferred tax assets 2,259 2,093
Total current assets 166,504 145,971
Leaseholds, fixtures and equipment - net 103,044 80,949
Deposits and other 204 182
Deferred tax assets - 683
Total assets $269,752 $227,785
Current Liabilities:
Accounts payable $47,060 $28,547
Accrued liabilities 22,966 18,478
Income taxes payable 1,094 -
Total current liabilities 71,120 47,025
Deferred rent 3,597 2,708
Deferred tax liability 3,316 -
Total liabilities 78,033 49,733
Shareholders' equity 191,719 178,052
Total liabilities and shareholders' equity $269,752 $227,785
HOT TOPIC, INC.
OTHER DATA
(Dollars in thousands)
(Unaudited)
Six Months Ended
July 31, 2004 Aug. 2, 2003
Depreciation and amortization $10,440 $8,946
Capital expenditures $25,338 $17,943
Number of stores open at end of period:
Hot Topic 554 457
Torrid 59 40
Total store square footage 1,107,000 888,000
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