Aug 5, 2009
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Hot Topic July comp sales beat Street, second quarter sales miss

Aug 5, 2009

Hot Topic
Pull-on denim pants at Hot Topic - Photo: www.hottopic.com

BANGALORE, Aug 5 (Reuters) - Hot Topic Inc (HOTT.O) posted a slightly narrower-than-expected 8.5 percent drop in July sales at stores open at least a year, while second-quarter net sales trailed market estimates.

Analysts on average expected July same-store sales to fall 8.9 percent, according to Thomson Reuters Estimates.

Second-quarter net sales fell 5 percent to $157.9 million -- short of analysts' average estimate of $158.9 million.

"It was encouraging to see the slight upside on the comp line," analyst Brian Sozzi of Wall Street Strategies Inc said in an e-mail.

Same-store sales at the company -- which sells merchandise from popular Hollywood flicks, and Goth and rock 'n' roll-inspired apparel and accessories -- fell 8.8 percent at its namesake brand, and 7.6 percent at its Torrid plus-size chain for young women.

The company said in a pre-recorded call that Hot Topic was hurt mainly by weak sales at its music and women's segments, and by fewer promotions.

Analyst Sozzi said the quarterly net sales were positive as it was roughly in line with the consensus view, and since summer has traditionally been a weak season for the company.

"Inventory remains in line to management's plan. Excluding inventory for online, total inventory per square foot was flat, suggesting not much in the way of overhang moving into the back-to-school season," he added.

Shares of the company closed at $7.82 Wednesday 5 August on Nasdaq. (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Anne Pallivathuckal)

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