EARNINGS: Hot Topic Swings to a LOSS, But Stock POPS

Hot Topic Inc. ‘s (NASDAQ:HOTT) second quarter loss narrowed, beating estimates. Hot Topic is a mall- and web-based specialty retailer.

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Hot Topic Inc. Earnings Cheat Sheet

Results: Loss narrowed to $768,000 (loss of 2 cents per diluted share) from $6.2 million (loss of 14 cents per share) in the same quarter a year earlier.

Revenue: Rose 4.6% to $157.8 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Hot Topic Inc. beat the mean analyst estimate of a loss of 5 cents per share. Analysts were expecting revenue of $160.3 million.

Quoting Management: “This was a strong quarter, with improved merchandising, markdown optimization, and other productivity initiatives showing great results at Hot Topic and Torrid,” said Lisa Harper, Chairman and CEO of Hot Topic, Inc. “We’re also pleased with the progress at Torrid, where we’ve rolled out a comprehensive, well-differentiated rebrand over the last couple of weeks. We believe our sexy, fashion-forward point of view will help drive continued improvement for the brand and the company overall.”

Key Stats:

The company has now topped analyst estimates for the last three quarters. It beat the mark by one cent in the first quarter and by one cent in the fourth quarter of the last fiscal year.

The company’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $3.8 million in the first quarter, a profit of $8.9 million in the fourth quarter of the last fiscal year and $3.1 million in the third of the last fiscal year.

The company’s revenue has now risen for two straight quarters. In the first quarter, revenue increased 6.4% to $171.5 million from the year-earlier quarter.

Looking Forward: Over the past ninety days, the average estimate for the third quarter has fallen from 11 cents per share to 10 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. The average estimate for the fiscal year is 39 cents per share, a rise from 36 cents ninety days ago.

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

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