EX-99.1 2 hottopic_8kex99-1.txt EXHIBIT 99.1 ** NEWS RELEASE ** HOT TOPIC, INC. REPORTS FIRST QUARTER EPS INCREASES 22% TO A RECORD $0.11 PER DILUTED SHARE CITY of INDUSTRY, CA, May 19, 2004 -- Hot Topic, Inc. (Nasdaq National Market: HOTT), reported company-record results for the first quarter (13 weeks) ended May 1, 2004. Net income in the first quarter increased to $5.4 million or $0.11 per diluted share, from $4.4 million or $0.09 per diluted share for the first quarter of the last fiscal year. Net sales for the first quarter increased 27% to $128.1 million, from $100.7 million for the first quarter of fiscal 2003. As previously reported, comparable store sales increased 4.0% for the quarter compared to the first quarter of fiscal 2003. At the end of the quarter, the company operated 581 stores, including 52 Torrid stores, compared to 468 stores, including 34 Torrid stores, at the end of the first quarter of fiscal 2003. A conference call to discuss first quarter results, business trends, and other matters will be conducted today at 4:30 PM Eastern time. The conference call number is 800-370-0869, and will be accessible to all interested parties. The conference call will also be webcast at www.companyboardroom.com. A replay will be available at 877-519-4471, pass code 4735750, for approximately 10 days. Hot Topic, Inc. is a national mall-based specialty retailer. Hot Topic offers apparel, accessories and gifts to young men and women principally between the ages of 12 and 22. Torrid, the company's second concept, provides plus-size fashion-forward apparel and accessories that target young women principally between the ages of 15 and 29. The company currently operates 534 Hot Topic stores in 49 states and Puerto Rico, 53 Torrid stores, and Internet stores www.hottopic.com and www.torrid.com. In addition to the historical information contained herein, this news release may contain forward-looking statements, including statements relating to financial results, guidance, projections and other financial performance, and managing growth. These statements involve risks and uncertainties, including risks and uncertainties associated with meeting expected financial results, management of growth, relationships with mall developers and operators, the risk that available cash or mall space will not be adequate for planned expansion, fluctuations in sales and comparable store sales results, risks and uncertainties with respect to new store openings including risks associated with the company's new store concepts and Internet stores, music and fashion trends, competition from other retailers, uncertainties generally associated with specialty retailing, the effect of economic conditions, the effect of severe weather or natural disasters, political and/or social changes or events that could negatively impact shopping patterns and/or mall traffic as well as other risks detailed in the company's SEC reports, including its Annual Report on Form 10-K for the year ended January 31, 2004. The historical results achieved are not necessarily indicative of the future prospects of the company. Contact: Hot Topic, Inc., City of Industry, CA Mr. Jim McGinty, CFO (626) 839-4681 x2675 Mr. Marc Campbell, Director of IR (626) 839-4681 x2419 HOT TOPIC, INC. SUMMARY STATEMENTS OF INCOME (Unaudited) First Quarter Ended ------------------- May 1, 2004 May 3, 2003 ----------- ----------- (In thousands, except per share amounts) Net sales $ 128,143 $ 100,657 Cost of goods sold, including buying, distribution and occupancy costs 83,826 65,043 Gross margin 44,317 35,614 Selling, general and administrative expenses 35,985 28,859 Operating income 8,332 6,755 Interest income-net 352 358 Income before income taxes 8,684 7,113 Provision for income taxes 3,326 2,703 Net income $ 5,358 $ 4,410 Earnings per share Basic $ 0.11 $ 0.09 Diluted $ 0.11 $ 0.09 Weighted average shares outstanding Basic 48,019 46,968 Diluted 50,131 48,567 HOT TOPIC, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) May 1, 2004 May 3, 2003 ----------- ----------- Current Assets: Cash, cash equivalents and short-term investments $ 86,271 $ 71,520 Inventory 57,623 43,945 Prepaid expenses and other 11,089 8,950 Deferred tax assets 2,259 2,093 Total current assets 157,242 126,508 Leaseholds, fixtures and equipment - net 96,236 76,547 Deposits and other 193 171 Deferred tax assets -- 683 Total assets $ 253,671 $ 203,909 Current Liabilities: Accounts payable $ 22,042 $ 15,922 Accrued liabilities 22,913 17,378 Income taxes payable 2,269 290 Total current liabilities 47,224 33,590 Deferred rent 3,368 2,528 Deferred tax liability 3,316 -- Total liabilities 53,908 36,118 Shareholders' equity 199,763 167,791 Total liabilities and shareholders' equity $ 253,671 $ 203,909 HOT TOPIC, INC. OTHER DATA (Dollars in thousands) (Unaudited) First Quarter Ended ------------------- May 1, 2004 May 3, 2003 ----------- ----------- Depreciation and amortization $ 5,018 $ 4,359 Capital expenditures $ 12,978 $ 8,773 Number of stores open at end of period: Hot Topic 529 434 Torrid 52 34 Total store square footage 1,044,700 833,600