US apparel retailer Hot Topic has seen its third-quarter comparable sales edge up 0.2%, with gains of 0.1% and 0.5% at the Hot Topic and Torrid divisions respectively.

Meanwhile, net sales rose 2% to US$179.3m during the 13 weeks ended 27 October. The retailer's Hot Topic division saw sales fall 1.6% to $134.9m, while sales at Torrid jumped 14.9% to $44.4m.

CEO and chairman Lisa Harper said: "At Hot Topic, we are pleased with the progress in the fashion apparel and tee businesses while still having challenges in the accessory categories.

"However, the combination of gross margin improvements in both brands has positioned us to achieve a strong earnings increase over last year and maintain our guidance on what was essentially a flat comp."

Year-to-date net sales were up 4.2% to $508.7m, while comparable sales increased 3.8%. The company, which operates 620 Hot Topic and 186 Torrid stores, reaffirmed its third-quarter earnings guidance of between $0.08 to $0.10.

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Hot Topic, Inc. Reports Third Quarter Comp Sales Up 0.2%

Reiterates 3rd and 4th quarter guidance; Increases Stock Repurchase and Announces test of new Blackheart Concept

CITY OF INDUSTRY, Calif.--(BUSINESS WIRE)--Hot Topic, Inc. (NASDAQ Global Select Market: HOTT) today announced the sales results for its third fiscal quarter (13 weeks ended October 27, 2012). A summary of the sales results by division (including Internet) is as follows:

 
    Comparable    
    Sales % Change *   Net Sales
                % Change
    This   Last   $   To Last
    Year   Year   Millions   Year
THIRD QUARTER:                
Hot Topic   0.1 %   -1.5 %   $ 134.9   -1.6 %
                 
Torrid   0.5 %   3.3 %   $ 44.4   14.9 %
                 
Total Co.   0.2 %   -0.5 %   $ 179.3   2.0 %
                 

YEAR TO DATE:

               
Hot Topic   4.2 %   -0.3 %   $ 373.1   2.1 %
                 
Torrid   2.4 %   5.7 %   $ 135.6   10.6 %
                 
Total Co.   3.8 %   1.2 %   $ 508.7   4.2 %
 

* During the first quarter of fiscal 2012, Hot Topic, Inc. began including Internet sales in the computation of comparable sales.

All prior year comparable sales results have been adjusted to reflect this change.

The company reiterated its third quarter earnings guidance of earnings per share in the range of $0.08 to $0.10. The company also stated the previously announced fourth quarter earnings guidance (14 weeks ending February 2, 2013) remains the same, in the range of $0.23 to $0.27 per share, as compared to earnings per share of $0.21 last year. This guidance is based upon a comp sales increase in the low to mid-single-digit percentage range.

Lisa Harper, Chairman of the Board and CEO, said, “We are happy to report our strategy of moving to a vertical sourcing model at Torrid has resulted in very strong gross margins and regular price selling, which validates our continued investment in the brand’s growth. At Hot Topic, we are pleased with the progress in the fashion apparel and tee businesses while still having challenges in the accessory categories. However, the combination of gross margin improvements in both brands has positioned us to achieve a strong earnings increase over last year and maintain our guidance on what was essentially a flat comp.”

The company announced its board of directors authorized an increase to the company’s stock repurchase program, up to $25 million of the company’s common stock. Repurchases will be made in accordance with applicable securities laws from time to time in open market or private transactions, depending on market conditions, and may be discontinued at any time. There can be no assurances as to the number of shares the company will repurchase, if any.

Hot Topic, Inc. also announced it will launch a test retail concept – Blackheart. The concept will test the viability of leveraging the existing Hot Topic customer base by offering an expanded collection of dark, edgy, sexy lingerie. Blackheart lingerie, accessories and beauty products will be available at www.blackheartlingerie.com starting on November 15th. Five stores will open in Southern California and Texas malls by mid November. You can also find Blackheart onFacebookTwitterYouTube and Instagram (@Blackheart).

Ms. Harper continued, “The Blackheart lingerie concept is a test that allows us to leverage the Hot Topic customer and offer her product categories that will not cannibalize the core Hot Topic brand. We have a great opportunity to aggressively cross-promote Blackheart to our 5 million active database customers, nearly 5 million Facebook fans and in our 620 Hot Topic stores.”

Hot Topic, Inc. is a mall and web based specialty retailer operating the Hot Topic and Torrid concepts. Hot Topic offers music/pop culture-licensed and music/pop culture-influenced apparel, accessories, music and gift items for young men and women. Torrid retails on-trend fashion apparel, lingerie and accessories inspired by and designed to fit the young, voluptuous woman who wears size 12 and up. As of October 27, 2012, the company operated 620 Hot Topic stores in all 50 states, Puerto Rico and Canada, 186 Torrid stores, and Internet stores hottopic.com and torrid.com.

Original source: http://www.businesswire.com/portal/site/topix/index.jsp?ndmViewId=news_view&newsId=20121031006381&newsLang=en&ndmConfigId=1000639&vnsId=41