• Q3 profit tumbles 93% to $0.4m
  • Sales fell 3.4% to $183.2m
  • To close up to 50 stores, axe jobs 

Teen retailer Hot Topic Inc is to close up to 50 stores and axe 14% of its head office and field management jobs after third quarter profit plunged 93%.

The City Of Industry, California based retailer said its cost-cutting efforts are designed "to meet the challenges of the current environment," and should lead to annual pre-tax savings of around $13m.

The closure of 40 to 50 underperforming stores by the end of the first quarter of 2011 will incur costs of $6m, while a further $2m will go on severance and outplacement expenses linked to the job losses.

Capital expenditures in 2011 are also set to fall to $20m, down from an estimated $30-32m in 2010.

The plans were revealed as Hot Topic said net income in the three months to 30 October tumbled to $0.4m or $0.01 per share, from $5.8m or $0.13 per share, in the same period last year. Results were hit by a write-down, weaker sales and lower margins.

Sales fell 3.4% to $183.2m, down from $189.6m a year ago. And same-store sales were down 5.0%.

Looking ahead, the company, which operates 680 Hot Topic stores and 155 Torrid stores, expects fourth quarter earnings in the range of $0.11 to $0.14 per share, excluding costs associated with its cost reduction plan.