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Hot Topic profit estimates down

INDUSTRY - Hot Topic Inc. shares fell Thursday after the California-based teen-oriented clothing chain lowered its estimates because of declining sales.

Analysts said the chain has struggled to participate in recent fashion trends, which have focused on preppy clothes and denim, both a far cry from Hot Topic's ``gothic'' look.

Sales at stores open at least a year - also known as same-store sales - fell 3.5 percent in the second quarter, led by a 5 percent drop in accessories, a 10 percent drop in women's clothes and a 9 percent decline in men's apparel.

The decrease was slightly offset by a 4 percent increase in music revenue.

Hot Topic shares closed at $14.14, down $1.67, or 10.5 percent, on the Nasdaq Stock Market.

Disney accused of worker abuse

NEW YORK - A labor watchdog organization accused the Walt Disney Co. on Thursday of condoning sweatshop conditions and worker abuse at the Chinese factories it uses to produce some of its children's books.

Disney denied the accusations.

Charles Kernaghan, executive director of the National Labor Committee, shouted over street traffic to voice the organization's grievances at a news conference held in front of a Disney store on Manhattan's Fifth Avenue.

The committee used the occasion to hand out videos and research papers made along with Chinese activists who, it said, had documented forced 15-hour shifts, the violation of minimum-wage laws and dangerous conditions resulting in widespread worker injuries at Chinese factories that are Disney suppliers.

``Would the American people ever associate this book with crushed fingers?'' Kernaghan asked, brandishing a pink Little Mermaid sticker book while flanked by three picketing activists dressed as Mickey Mouse, Minnie Mouse and Winnie the Pooh.

In a statement, Disney responded that it ``conducts regular social compliance audits of the independently run factories that produce Disney branded merchandise.'' The company said that none of the 20 such audits at its Chinese supplier factories since 1998 exhibited ``the severity of the violations reported by the NLC today.''

Economy expands at modest rate

NEW YORK - An important gauge of future economic activity rose a modest 0.1 percent in July, suggesting that higher oil prices and rising interest rates are tempering the nation's economic growth prospects.

In Washington, meanwhile, the Labor Department said applications for unemployment benefits rose by 6,000 to 316,000 last week, but were still at a level that indicates a strong job market.

The figures released Thursday indicate that the U.S. economy is expanding and is likely to continue doing so. Still, fears are increasing that higher oil prices - on top of the Federal Reserve's interest rate increases - could dampen all-important consumer spending as the year progresses.

Gap earnings up; forecast lowered

SAN FRANCISCO - Gap Inc. on Thursday said earnings for the second quarter rose 39 percent, but the retailer warned of a weak sales performance so far this month and lowered its profit forecast for the year.

Net income increased to $272 million, or 30 cents per share, from $195 million, or 21 cents per share, a year earlier. The result was 2 cents above the mean estimate of analysts surveyed by Thomson Financial.

Sales were essentially flat at $3.72 billion. Same-store sales, or sales at stores open at least one year, were down 3 percent. Such sales were flat in the year-ago period.

Fraud allegations leveled in Chicago

CHICAGO - Former Chicago Sun-Times publisher David Radler, a lawyer for the newspaper's parent company and a media holding company controlled by Conrad Black were indicted on federal fraud charges Thursday for allegedly diverting $32 million through a series of bogus deals.

The indictment alleged the three diverted the money through a series of secret deals by disguising it as noncompete fees connected to the sale of newspaper publishing groups.

Radler, Mark S. Kipnis, the former top in-house lawyer for Chicago-based Hollinger International, and Toronto-based Ravelston Corp., a private company controlled by Black, were accused of cheating shareholders in the United States and Canada, as well as Canadian tax authorities.

All three were charged with five counts of mail fraud and two counts of wire fraud. They will be arraigned at a later date.
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Aug 19, 2005
Words:703
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