Hot Topic Earnings Cheat Sheet: Swings to a Profit as Revenues Tick Up

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Hot Topic Inc. (NASDAQ:HOTT) reversed to a profit in the first quarter but still missed analysts’ estimates. Hot Topic is a mall- and web-based specialty retailer.

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Hot Topic Earnings Cheat Sheet for the First Quarter

Results: Reported a profit of $3.8 million (9 cents per diluted share) in the quarter. Hot Topic Inc. had a net loss of $7.7 million or a loss 17 cents per share in the year-earlier quarter.

Revenue: Rose 6.4% to $171.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Hot Topic Inc. reported 0 cents per share. By that measure, the company fell short of mean estimate of 8 cents per share. Analysts were expecting revenue of $171.6 million.

Quoting Management: “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 Lisa Harper, Hot Topic, Inc. Chairman, and Chief Executive Officer.

Key Stats:

Last quarter’s year-over-year revenue increase follows two quarters of revenue declines. Revenue fell 1.2% in the fourth quarter of the last fiscal year and fell 4% in the third quarter of the last fiscal year.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 21 cents versus a mean estimate of net income of 20 cents per share.

Gross margins grew 4.7 percentage points to 36%. The growth seemed to be driven by increased revenue, as the figure rose 6.4% from the year-earlier quarter while costs fell 0.9%.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. The average estimate for the second quarter is now at a loss of 5 cents per share, up from a loss of 6 cents. For the fiscal year, the average estimate has moved up from 27 cents a share to 37 cents over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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