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Hot Topic (HOTT) Holiday Comps Up 2.2 Pct, Issues Upbeat Earnings View

 January 02, 2013 04:21 PM

(By Balaseshan) Hot Topic Inc. (NASDAQ: HOTT), a mall and web based specialty retailer, said its comparable store sales for the combined November/December "Holiday" period increased 2.2% on top of last year's 1.8% gain.

Comparable store sales from Hot Topic segment rose 1.6%, while store sales from Torrid grew 5.5%.

Hot Topic also forecast 2013 earnings to increase 30% to 35% over fiscal 2012 based upon a comp sales increase in the low-single-digit range, while Street predicts a 21.40% earnings growth.

Hot Topic reported net sales of $177.3 million for the combined November/December "Holiday" period (nine weeks ended December 29, 2012), up 4% from last year.

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The company reiterated its previously announced fourth quarter earnings guidance in the range of $0.23 to $0.27 per share, as compared to earnings per share of $0.21 last year, while Street predicts $0.25 per share. This guidance is based upon a comp sales increase in the low to mid-single-digit percentage range.

"At Hot Topic, we continue to see strong results in the fashion apparel and tee businesses, which offset the challenges in accessories. We are excited about the prospects of our businesses in 2013. Based upon our progress and positive outlook, we continue to plan to open about 40 new Torrid stores, 15 new Hot Topic outlets and an additional 5 to 10 Blackheart stores in 2013," said Lisa Harper, Chairman and CEO of Hot Topic.

The company also announced the repurchase of 2.535 million shares of its common stock in fiscal December at an average cost of $9.86 for a total of $25 million. The repurchase was pursuant to its Board of Directors' authorization of the repurchase of up to $25 million of the company's common stock.

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The company estimates that diluted shares outstanding for the fourth quarter of 2012 to be about 42.5 million shares and 41.5 million shares in the first quarter of fiscal 2013.

As of December 29, 2012, the company operated 619 Hot Topic stores in all 50 states, Puerto Rico and Canada, 190 Torrid stores, 5 Blackheart stores, and Internet stores.

HOTT closed Wednesday's regular session up 0.93% at $9.72. The stock has been trading between $6.44 and $10.73 for the past 52 weeks.



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