Cold Quarter for Hot Topic

The company slashes earnings guidance.
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Hot Topic


slashed second-quarter earnings guidance, citing weak July sales of almost all of its goods.

The City of Industry, Calif., teen retailer said it expects to make 2 cents to 4 cents a share for the second quarter ending this month, down from the year-ago dime a share and well short of the 8-cent Thomson First Call estimate. The company expects same-store sales to drop 5% for July.

"Our Hot Topic sales trends in July have been very disappointing," said CEO Betsy McLaughlin. "While the music related categories have remained strong and are producing positive comps, the comp sales trends in men's apparel, women's apparel and accessories have remained negative and are below our expectations. Even with increased promotional activity versus last year, we are seeing comparable store decreases in our early back-to-school markets.

"Our previous sales and earnings guidance for the second quarter assumed continued strength in music along with improvement in two of the three negative comp categories," the CEO added. "Given the early results, we are revising our earnings guidance for the quarter to reflect the current trends. We will not have a true understanding of our back-to-school business until late August."

In late June, the retailer lowered its earnings guidance to a range of 7 to 9 cents a share for the quarter, citing weakness in men's and women's clothes and fashion accessories.