Specialty retailer Hot Topic Inc. (HOTT), Wednesday reported a turn around to profit for the first quarter, helped mostly by improved revenues and the absence of one-time charges recorded last year. Earnings for the quarter topped Street estimates by a penny, while revenues came in line with expectations.
Nevertheless, investors were not overtly impressed with the news, and sent Hot Topic shares plunging 11 percent in after-hours trade on the Nasdaq. Subsequently, the stock made a substantial recovery and is now trading flat with its regular closing price of $9.88.
Hot Topic, which offers music-related apparel and accessories, said revenue for the quarter rose 6.4 percent from last year. On a same-store basis, sales were up 7.5 percent.
"Our first quarter sales and earnings increases at both the Hot Topic and Torrid brands exceeded our early expectations. The quarterly results demonstrate the success of our key strategies of returning the Hot Topic brand to its edgy, dark and sexy core, as well as bringing true fashion to the Torrid brand," said Hot Topic CEO Lisa Harper.
Hot Topic reported first-quarter net income of $3.8 million or $0.09 per share, compared to a net loss of $7.7 million or $0.17 per share last year.
On average, five analysts polled by Thomson Reuters expected earnings of $0.08 per share for the quarter. Analysts' estimates typically exclude special items.
Results for the prior-year quarter included $12.4 million of expenses, or $0.17 per share, for the implementation of the strategic business changes and cost reduction plans.
Revenues for the quarter were $171.55 million, compared to $161.3 million last year. Analysts expected revenue of $171.60 million for the quarter.
At the quarter end, Hot Topic operated 624 namesake stores and 164 Torrid stores, compared to 642 namesake stores and 151 Torrid stores last year.
HOTT closed Wednesday at $9.88, down $0.01 or 0.10%.
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