Cool April at Hot Topic

Same-store sales rise a worse-than-expected 0.7%.
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Hot Topic

(HOTT)

slid in late trading Wednesday after the teen-retail success story reported disappointing April sales that could foreshadow a tough month for the sector. The company reiterated first-quarter guidance for earnings of 11 cents a share.

The City of Industry, Calif., goth clothes and gear purveyor said comparable-store sales rose 0.7% in the four weeks ended May 1 from a year ago, while total sales jumped 22% to $39.4 million. For the first quarter, same-store sales rose 4% from a year ago, while overall sales jumped 27% to $128.1 million. Analysts surveyed by Thomson First Call had been expecting April same-store sales to rise 3.2%.

Hot Topic is one of several formerly red-hot specialty chains that have seen their share prices clipped because of concerns about how

Federal Reserve

rate hikes will affect discretionary income. The stock, which was trading near $30 in early February, closed at $22.91 on Wednesday, up 38 cents, or 1.7%. The shares gave up more ground in the after-hours session, falling to a recent $21.50 on Instinet.

The slide has come as the company has been in the market, buying back its own shares. Hot Topic said late Wednesday that between March 23 and April 16, it repurchased 1.28 million of its own shares at an average price of $24.41. The company has another 700,000 or so shares to buy back before January 2005 under an existing authorization.

Company officials also reiterated that they are comfortable with the first quarter earnings guidance of $0.11 per diluted share, as compared to $0.09 last year, an increase of approximately 22%.