SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2011

OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR l5(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number:  0-28784

HOT TOPIC, INC.

(Exact name of registrant as specified in its charter)

CALIFORNIA	77-0198182
(State of incorporation)	(IRS Employer Identification No.)
18305 EAST SAN JOSE AVE., CITY OF INDUSTRY, CA	91748
(Address of principal executive offices)	(Zip Code)

(626) 839-4681

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 Yes oNo o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o	Accelerated filer  x
Non-accelerated filer    o   (Do not check if a smaller reporting company)	Smaller reporting company  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 Yes o    No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  May 18, 2011 – 44,747,906 shares of common stock, no par value.

1

HOT TOPIC, INC.

INDEX TO FORM 10-Q

		Page No.
PART I.  FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
Consolidated Statements of Operations for the three months ended April 30, 2011 and May 1, 2010		3
Consolidated Balance Sheets – April 30, 2011 and January 29, 2011		4
Consolidated Statements of Cash Flows for the three months ended April 30, 2011 and May 1, 2010		5
Notes to Condensed Consolidated Financial Statements		6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	30
PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	31
Item 6.	Exhibits	40
SIGNATURES		41

2

PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Hot Topic, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
	Three Months Ended
	April 30, 2011			May 1, 2010
Net sales	$	161,273		$	162,648
Cost of goods sold, including buying,
distribution and occupancy costs		110,863			108,185
Gross margin		50,410			54,463
Selling, general and administrative expenses		62,799			57,456
Loss from operations		(12,389	)		(2,993	)
Interest income, net		52			74
Loss before benefit for income taxes		(12,337	)		(2,919	)
Benefit for income taxes		(4,676	)		(1,141	)
Net loss	$	(7,661	)	$	(1,778	)
Loss per share:
Basic and diluted	$	(0.17	)	$	(0.04	)
Cash dividends declared and paid per share	$	0.07		$	1.07
Shares used in computing loss per share:
Basic and diluted		44,713			44,398
See accompanying Notes to Condensed Consolidated Financial Statements.

3

Hot Topic, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share amounts)
	April 30, 2011			January 29, 2011
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	43,738		$	51,316
Short-term investments		29,987			25,240
Inventory		62,564			70,267
Prepaid expenses and other		27,655			21,714
Deferred tax assets		4,488			6,050
Total current assets		168,432			174,587
Property and equipment, net		116,100			123,219
Deposits and other		4,810			4,550
Long-term investments		3,044			2,983
Deferred tax assets		5,704			5,268
Total assets	$	298,090		$	310,607
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	27,218		$	22,024
Accrued liabilities		32,941			37,963
Income taxes payable		665			668
Total current liabilities		60,824			60,655
Deferred rent and other		24,116			26,255
Income taxes payable		1,911			1,911
Deferred compensation		4,738			4,289
Commitments and contingencies
Shareholders’ equity:
Preferred shares, no par value; 10,000,000 shares
authorized; no shares issued and outstanding		-			-
Common shares, no par value; 150,000,000 shares authorized;
44,724,031 and 44,629,656 shares issued and
outstanding at April 30, 2011 and January 29, 2011, respectively		127,801			128,062
Retained earnings		78,852			89,653
Accumulated other comprehensive loss		(152	)		(218	)
Total shareholders’ equity		206,501			217,497
Total liabilities and shareholders’ equity	$	298,090		$	310,607
See accompanying Notes to Condensed Consolidated Financial Statements.

4

Hot Topic, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Three Months Ended
	April 30, 2011			May 1, 2010
OPERATING ACTIVITIES
Net loss	$	(7,661	)	$	(1,778	)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization		9,007			9,885
Stock-based compensation		861			1,133
Loss on disposal of property and equipment		2,405			26
Impairment of long-lived assets		1,130			17
Deferred taxes		(491	)		(592	)
Gift card breakage		(118	)		(200	)
Changes in operating assets and liabilities:
Inventory		7,724			(2,208	)
Prepaid expenses and other current assets		(5,941	)		(3,363	)
Deposits and other assets		(261	)		(280	)
Accounts payable		5,194			4,133
Accrued liabilities		(4,297	)		(7,665	)
Deferred rent and other		(2,139	)		(1,185	)
Income taxes payable		(12	)		(7	)
Net cash provided by (used in) operating activities		5,401			(2,084	)
INVESTING ACTIVITIES
Purchases of property and equipment		(5,437	)		(5,734	)
(Purchases) proceeds from sale of short- and long-term investments, net		(4,664	)		31
Net cash used in investing activities		(10,101	)		(5,703	)
FINANCING ACTIVITIES
Excess tax benefit from stock-based compensation		44			202
Proceeds from employee stock purchases and exercise
of stock options		448			900
Payment of capital lease obligation		(191	)		-
Payment of cash dividends		(3,134	)		(47,643	)
Net cash used in financing activities		(2,833	)		(46,541	)
Decrease in cash and cash equivalents		(7,533	)		(54,328	)
Effect of foreign currency exchange rate changes on cash		(45	)		-
Cash and cash equivalents at beginning of period		51,316			117,764
Cash and cash equivalents at end of period	$	43,738		$	63,436
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest	$	8		$	10
Cash (received) paid during the period for income taxes	$	(924	)	$	1,935
See accompanying Notes to Condensed Consolidated Financial Statements.

5

HOT TOPIC, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1.  Organization and Basis of Presentation

Description of Business  We are a mall and web-based specialty retailer of apparel, accessories, music and gift items for young men and women whose lifestyles reflect a passion for music, fashion and pop culture.  We operate under two concepts: Hot Topic and Torrid.  Music and pop culture are the overriding inspirations at Hot Topic and Torrid is focused on providing the best in fashion to young plus-size women.  At our Hot Topic stores and our website hottopic.com, we sell a selection of licensed and non-licensed apparel, accessories and gift items that are influenced by popular music artists and pop culture trends, designed to appeal to young men and women primarily between the ages of 12 and 22.  We also sell a limited assortment of music CDs and DVDs at Hot Topic.  At our Torrid stores and on our website torrid.com, we sell fashion forward apparel, lingerie, shoes and accessories for plus-size young women primarily between the ages of 15 and 29.  We generate revenues primarily through our retail stores in the United States of America, Puerto Rico and Canada, and online through our websites.  We were incorporated in California in 1988 and opened our first Hot Topic store the following year in fiscal 1989.  We opened our first Torrid store in fiscal 2001.  During the first quarter of fiscal 2011, we announced that the operations of ShockHound, our online digital music website launched in fiscal 2008, were to be discontinued.  Refer to “NOTE 2 – Recent Business Events” for more information concerning the discontinuation of ShockHound’s operations.

References to Hot Topic, Inc.  Throughout this report, the terms “we,” “us,” “our,” “company” and similar references refer to Hot Topic, Inc. and its wholly-owned subsidiaries.

Fiscal Year  Our fiscal year ends on the Saturday nearest to January 31.  References to the first quarter of fiscal 2011 and 2010 refer to the thirteen week periods ended April 30, 2011 and May 1, 2010, respectively.  References to fiscal 2011, 2010, 2009 and 2008 refer to the 52-week periods ending January 28, 2012, January 29, 2011, January 30, 2010 and January 31, 2009, respectively.  Fiscal 2012 refers to the 53-week period ending February 2, 2013.

Segment Information We currently have one reportable segment given the similarities of the economic characteristics among the Hot Topic and Torrid concepts, and the relatively insubstantial business operations of our now discontinued ShockHound concept.

Interim Financial Information  The information set forth in these condensed consolidated financial statements is unaudited except for the January 29, 2011 consolidated balance sheet data.  These statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Form 10-Q, and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K filed on April 6, 2011.

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In the opinion of management, all adjustments, consisting only of normal recurring entries, necessary for a fair presentation have been included.

NOTE 2.  Recent Business Events

Strategic Business Changes  In March 2011, the Board approved certain strategic business changes to better position the company for growth.  The business changes involve discontinuing the operations of ShockHound; writing down inventory due to a change in management’s inventory strategy; writing down property and equipment that are no longer critical to our strategic direction; and implementing other strategic business and operational initiatives.

Cost Reduction Plan  In November 2010, our Board approved a cost reduction plan, designed to meet the challenges of the current environment, which involves closing approximately 50 underperforming stores, a majority of which closed by the end of the first quarter of fiscal 2011.  These closures occurred as a result of natural lease expirations, exercising lease kick out clauses and other negotiations.  The cost reduction plan also includes reducing our home office and field management positions, reducing planned capital expenditures in fiscal 2011 relative to fiscal 2010 and implementing other non-payroll overhead expense reduction initiatives.  As of the end of the first quarter of fiscal 2011, we had incurred substantially all charges related to the cost reduction plan.  In addition, we had completed the reduction of our home office and field management positions, closed 32 Hot Topic stores and five Torrid stores and substantially completed the implementation of certain non-payroll overhead expense reduction initiatives as part of the cost reduction plan.

The following table details charges related to the strategic business changes and cost reduction plan recorded since their implementation in the first quarter of fiscal 2011 and the fourth quarter of fiscal 2010, respectively, (in thousands).

				Non-Store Related
				Severance and			Inventory and
	Store Related			Outplacement			Asset-Related			Consulting
	Closure Costs 1			Costs			Costs 2			Fees			Total
Balance at October 30, 2010	$	-		$	-		$	-		$	-		$	-
Cost Reduction Plan charges		(7,077	)		(1,850	)		(830	)		-			(9,757	)
Cash payments		93			985			-			-			1,078
Non-cash adjustments		6,497			-			830			-			7,327
Balance at January 29, 2011	$	(487	)	$	(865	)	$	-		$	-		$	(1,352	)
Cost Reduction Plan recovery		365			-			-			-			365
Strategic Business Changes charges		-			(1,583	)		(9,605	)		(1,606	)		(12,794	)
Cash payments		699			889			-			1,645			3,233
Non-cash adjustments		(659	)		-			4,891			-			4,232
Balance at April 30, 2011	$	(82	)	$	(1,559	)	$	(4,714	)	$	39		$	(6,316	)

1 Store related closure costs represent charges for the closure of approximately 50 underperforming stores.  Such charges include the write down and accelerated depreciation of store assets, the write down of inventory, early lease terminations and store severance, partially offset by certain credits and allowances.

2 Inventory and asset-related costs represent charges related to the write down and impairment of inventory and non-critical property and equipment.

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We recorded charges related to store closures, write down of assets; store severance; non-store related severance and outplacement; and consulting fees in selling, general and administrative expenses in our consolidated statements of operations.  Charges related to the write down of store inventory; accelerated depreciation of store assets; and early lease terminations were recorded in cost of goods sold in our consolidated statements of operations.

Subsequent to the first quarter of fiscal 2011, we expect to incur approximately $3 million, net of certain credits and allowances, of additional charges primarily related to the strategic business changes and minimally to the cost reduction plan.

Third Quarter Fiscal 2010 Non-Cash Impairment Charge and Fiscal 2011 Discontinued Operations  During the third quarter of fiscal 2010, we concluded that ShockHound’s assets had become impaired due to its slower than expected revenue growth.  Revenues from partnerships entered into in the earlier part of fiscal 2010, as well as other revenues, did not build as much as we had anticipated.  In the third quarter of fiscal 2010, we recorded an impairment charge of $3 million to selling, general and administrative expenses in our consolidated statements of operations.  The assessment of our long-lived assets for impairment is discussed in more detail in “NOTE 11 – Valuation of Long-Lived Assets”.  In addition, as part of the business changes approved by the Board in March 2011 to better position the company for growth, we announced that ShockHound’s operations will be discontinued.

NOTE 3.  Stock-Based Compensation

Stock Plan Activity   Under our 1996 Equity Incentive Plan, or the 1996 Plan, we granted stock options, stock bonuses and other awards to our employees, directors and consultants as deemed appropriate by the Board of Directors, or the Board.  On June 14, 2006, the 1996 Plan expired and was replaced with the 2006 Equity Incentive Plan, or the 2006 Plan.  The 2006 Plan was approved by the Board on March 17, 2006 and by our shareholders on June 13, 2006.  Upon expiration of the 1996 Plan, no shares had been granted to consultants and 732,456 shares out of an aggregate of 18,300,000 shares of common stock were authorized and available for grant.

The 2006 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of equity compensation to our employees, consultants and directors as deemed appropriate by the Board.  Both incentive and non-statutory stock options granted by us under the 2006 Plan must carry an exercise price of at least 100% of the fair market value of our common stock on the date of grant or 110% of the fair market value of our common stock on the date of grant for persons possessing 10% or more of the total combined voting power of all classes of stock.  Options granted may be subject to different vesting terms as determined by the Board and the maximum term of options granted is 10 years.  In addition, the maximum number of shares of common stock available for future issuance may not exceed the sum of (a) the 732,456 shares of common stock remaining available for issuance under the 1996 Plan as of June 13, 2006, (b) an additional 2,350,000 shares and (c) the number of shares subject to stock awards as of June 13, 2006 under the 1996 Plan pursuant to the terms of the 1996 Plan.  As of the end of the first quarter of fiscal 2011, 1,408,959 shares were available for future grants under the 2006 Plan.  Except for a grant to Lisa Harper in her capacity as a consultant, as further discussed below in this Note, all awards to date under the 2006 Plan have been granted to our employees and none have been granted to consultants.

8

In March 2008, we granted performance stock awards under the 2006 plan to certain members of our management.  These 2008 awards provided for the issuance of up to 158,000 shares of our common stock, net of forfeitures, with vesting and issuance contingent upon achieving a performance goal for fiscal 2010, based upon our operating income for that fiscal year; and prior to vesting (or termination without vesting), the awards constituted an agreement by us to issue shares to the extent this performance goal was ultimately met.  The market value of our common stock as of the 2008 grant date of these performance stock awards was $4.75.  Compensation expense for these awards was required to be recorded over the three-year terms of the awards, based on the market values as of the grant dates, with actual amounts expensed dependent upon the likelihood from period to period of vesting of these awards at the end of fiscal 2010.  In March 2011, the Board confirmed that the target performance goal for fiscal 2010 had not been met, and therefore all such awards terminated without vesting or issuance of the underlying shares.

In March 2009, we granted performance stock awards under the 2006 Plan to certain members of our management.  These grants were substantially similar to the performance stock awards granted in March 2008.  None of these awards have vested and no shares have been issued pursuant to the grants.  The 2009 awards provide for the issuance of up to 100,000 shares of our common stock, net of forfeitures, with vesting and issuance contingent upon achieving performance goals for fiscal 2011, based upon our operating income for that fiscal year; and prior to vesting (or termination without vesting), the awards constitute an agreement by us to issue shares to the extent this performance goal is ultimately met.  The market value of our common stock as of the 2009 grant date of these performance stock awards was $9.56.  Compensation expense for these awards is required to be recorded over the three-year term of the awards, based on the market values as of the grant dates, with actual amounts expensed dependent upon the likelihood from period to period of vesting of these awards at the end of fiscal 2011.  As of the end of the first quarter of fiscal 2011, it is our best estimate that none of the 2009 performance stock awards will be earned at the end of the three-year term.  In aggregate, we have not recognized any compensation expense for these 2009 awards.

Under our 1996 Non-Employee Directors’ Stock Option Plan, or the 1996 NEDSOP, we may grant and have granted stock options to non-employee directors.  The exercise price of options granted under the 1996 NEDSOP shall be determined by the Board at the date of grant and shall be 100% of the fair market value of our common stock on the date of grant.  Unless the Board determines otherwise, options vest over four years and generally expire ten years from the date of grant.  The total share reserve under the 1996 NEDSOP is 720,000 shares, of which as of the end of the first quarter of fiscal 2011, 1,226 shares were available for future grants.  No options under the 1996 NEDSOP have been granted to anyone for their role as a consultant to the company.

In October 2010, June 2010 and June 2009, we granted non-employee directors an aggregate of 5,638, 31,763 and 20,559 shares of restricted common stock, respectively, under the 2006 Plan.  Restricted shares generally vest in one installment in the year subsequent to the grant year.  All awarded common shares remain restricted (i.e., not transferable by the holders) until such time as the recipient is no longer a member of our Board.  The value of these grants is expensed over the vesting period.  During the first quarter of fiscal 2011 and 2010, $52,000 and $39,000, respectively, was expensed.

In February 2011, prior to her appointment as Chief Executive Officer, we granted Lisa Harper, in her capacity as an independent consultant, 17,568 shares of restricted common stock under the 2006 Plan.  This grant was substantially similar to the restricted common stock granted to non-employee directors in October 2010, June 2010 and June 2009.  During the first quarter of fiscal 2011, $98,000 was expensed for this grant.

9

In March 2011, in connection with her appointment as Chief Executive Officer, we granted Lisa Harper an option to purchase 500,000 shares of our common stock under the 2006 Plan.  This 500,000 share option vests only upon a vesting determination by the Compensation Committee of the Board.  The option will terminate on the day following the third anniversary of the date of grant if the vesting determination has not been made.   The vesting determination shall be made at any time on or before the third anniversary of the date of grant when the Compensation Committee of the Board certifies that the weighted average per share closing price of the company’s common stock for any trailing 90 trading days equals or exceeds twice the closing price per share on the date of grant.

In March 2011, we granted certain employees the option to purchase an aggregate of 535,000 shares of our common stock, net of forfeitures, under the 2006 Plan.  These share options are subject to four-year vesting, but vesting will occur in full upon the occurrence of the vesting determination described above.

The following table summarizes stock options outstanding under all of our plans as of the end of the first quarter of fiscal 2011:

	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 30, 2011		7,050,417		$	11.75
Granted		1,940,000		$	5.77
Exercised		(94,375	)	$	4.75
Forfeited or expired		(2,005,464	)	$	13.04
Outstanding at April 30, 2011		6,890,578		$	9.79		6.55	$	3,734,942
Exercisable at April 30, 2011		3,673,876		$	12.93		4.19	$	998,970

The total fair value of shares vested during the first quarter of fiscal 2011 and 2010 is $1.3 million and $1.8 million, respectively.

Cash proceeds, tax benefits and intrinsic values related to total stock options exercised during the first quarter of fiscal 2011 and 2010 are provided in the following table (in thousands):

	Three Months Ended
	April 30, 2011		May 1, 2010
Proceeds from stock options exercised	$	448	$	900
Tax benefit related to stock options exercised	$	44	$	202
Intrinsic value of stock options exercised	$	110	$	506

10

In June 1996, the Board adopted the Employee Stock Purchase Plan, or the Stock Purchase Plan.   The Stock Purchase Plan provides for the issuance of up to 1,350,000 shares of common stock to our employees.  All eligible employees are granted identical rights to purchase common stock for each Board authorized offering under the Stock Purchase Plan.  Rights granted pursuant to any offering under the Stock Purchase Plan terminate immediately upon cessation of an employee’s employment for any reason.  In general, an employee may reduce their contribution or withdraw from participation in an offering at any time during the purchase period for such offering.  Employees receive a 15% discount on shares purchased under the Stock Purchase Plan.  Rights granted under the Stock Purchase Plan are not transferable and may be exercised only by the person to whom such rights are granted.  The initial offering under the Stock Purchase Plan commenced October 24, 1996 and terminated December 31, 1996.  Subsequent offerings have occurred every six months commencing January 1, 1997.  As of the end of the first quarter of fiscal 2011, 801,404 shares could still be sold to employees under the Stock Purchase Plan.  Compensation expense for the first quarter of fiscal 2011 and 2010 was $39,000 and $46,000, respectively, related to the fair value of the rights granted to participants under the plan.

Accounting for Stock-Based Compensation Expense

We account for stock-based compensation expense by estimating the fair value of stock options granted, except for certain stock options granted in March 2011 that are subject to the vesting determination described above, using the Black-Scholes option-pricing formula and a single option award approach.  The fair value is then amortized over the requisite vesting periods of the awards.  As stock-based compensation expense is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.

We estimate the fair values of the share options granted in March 2011, that are subject to the vesting determination, using a Monte Carlo simulation valuation model.  The fair values are amortized over the vesting periods determined by this model.

The effect of recording stock-based compensation for the first quarter of fiscal 2011 and 2010 was as follows (in thousands, except per share amounts):

	Three Months Ended
	April 30, 2011			May 1, 2010
Stock-based compensation by type of award:
Employee and director stock options and awards	$	822		$	1,087
Employee stock purchase plan		39			46
Total stock-based compensation expense	$	861		$	1,133
Tax effect on stock-based compensation expense		(308	)		(419	)
Net effect on net loss	$	553		$	714
Effect on loss per share:
Basic and diluted	$	0.01		$	0.02

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For the first quarter of fiscal 2011 and 2010, $113,000 and $191,000, respectively, of stock-based compensation expense was recorded as a component of cost of goods sold and the remainder, $0.7 million and $0.9 million, respectively, was charged to selling, general and administrative expense.

As of the end of the first quarter of fiscal 2011 and 2010, we had $5.7 million and $7.5 million, respectively, of unrecognized expense related to non-vested stock option grants (with the exception of certain stock options granted in March 2011 that are subject to the vesting determination), which are each expected to be recognized over a weighted average period of 2.79 years.

As of the end of the first quarter of fiscal 2011, we had $2.1 million of unrecognized expense related to  the stock options granted in March 2011 that are subject to the vesting determination, which is expected to be recognized over a weighted average period of 2.22 years.

As of the end of the first quarter of fiscal 2011 and 2010, we had $17,000 and $13,000, respectively of unrecognized expense related to restricted stock grants, which are expected to be recognized over weighted average periods of 0.33 and 0.10 years, respectively.

Calculation of Fair Value of Options

The Black-Scholes option valuation model used to determine the fair value of stock-based compensation for all options except for those granted in March 2011 that are subject to the vesting determination, incorporates various assumptions including the expected term of awards, volatility of stock price, risk-free rates of return and dividend yield.  The expected term of an award is generally no less than the option vesting period and is based on our historical experience.  Expected volatility is based upon the historical volatility of our stock price.  The risk-free interest rate is approximated using rates available on U.S. Treasury securities with a remaining term equal to the option’s expected life.  The dividend yield is based on the expected dividend yield as of the date of option grant.  We began to pay dividends during the first quarter of fiscal 2010.

The following weighted average assumptions were used in the Black-Scholes option valuation model for stock options granted:

	Three Months Ended
	April 30, 2011	May 1, 2010
Risk free interest rate	2%	2%
Expected life	5 years	5 years
Expected volatility	58%	57%
Expected dividend yield	5%	0%
Weighted average fair value at grant date	$1.96	$3.21

 A Monte Carlo simulation was used to determine the fair value of stock-based compensation for the stock options granted in March 2011 that are subject to the vesting determination.  This risk neutral model is based on projections of stock price paths and incorporates various assumptions including the early exercise behavior, volatility of stock price, risk-free rates of return and dividend yield.  Expected volatility is based upon the historical volatility of our stock price.  The risk-free interest rate is approximated using rates available on U.S. Treasury securities with a remaining term equal to the option’s contractual life.  The dividend yield is based on the expected dividend yield as of the date of option grant.

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The following weighted average assumptions were used in the Monte Carlo simulation valuation model for the stock options granted in March 2011 that are subject to the vesting determination:

	Three Months Ended
	April 30, 2011	May 1, 2010
Risk free interest rate	4%	n/a
Contractual life	10 years	n/a
Expected volatility	58%	n/a
Expected dividend yield	5%	n/a
Weighted average fair value at grant date	$2.06	n/a

NOTE 4. Cash Dividends

In April 2010, the Board authorized a $1.00 per share special one-time cash dividend that was paid to shareholders of record at the close of business on April 19, 2010 and a $0.07 per share regular quarterly cash dividend that was also paid to shareholders of record at the close of business on April 19, 2010.  Subsequent payments of the $0.07 per share regular quarterly cash dividend have occurred every quarter since then, the most recent being in May 2011 to shareholders of record at the close of business on April 18, 2011.  We released the funds used to pay for this regular quarterly cash dividend during the first quarter of fiscal 2011.  Our Board will determine future regular quarterly cash dividends after giving consideration to our then existing levels of profit, capital requirements, current and forecasted liquidity, as well as financial and other business conditions existing at the time.  As of the end of the first quarter of fiscal 2011, total dividends paid in fiscal 2011 amounted to $3.1 million consisting of the $0.07 per share regular quarterly cash dividend.  As of the end of the first quarter of fiscal 2010, total dividends paid in fiscal 2010 amounted to $47.6 million, consisting of $44.5 million for the $1.00 per share special one-time cash dividend and $3.1 million for the $0.07 per share regular quarterly cash dividend.

NOTE 5. Loss Per Share

Basic earnings or loss per share is computed by dividing net income or net loss, respectively, by the weighted average number of common shares outstanding for the period.  Diluted earnings per share is applicable only in periods of net income and is computed by dividing net income by the weighted average number of common shares outstanding for the period and potentially dilutive common stock equivalents outstanding for the period.  Periods of net loss require the diluted computation to be the same as the basic computation.  As of the end of the first quarter of fiscal 2011 and 2010, options to purchase 6,043,300 and 6,097,401 shares, respectively, of potentially anti-dilutive common stock equivalents were outstanding.    The calculation of dilutive shares also excludes the portion of the performance stock awards granted to certain members of our management in March 2009 and March 2008 that are not expected to be earned or vest as the issuance of the underlying shares is contingent upon achieving certain performance goals in fiscal 2011 and 2010, respectively.

A reconciliation of the numerator and denominator of basic and diluted loss per share is as follows (in thousands, except per share amounts):

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	Three Months Ended
	April 30, 2011			May 1, 2010
Basic and diluted loss per share computation:
Numerator	$	(7,661	)	$	(1,778	)
Denominator:
Weighted average common shares outstanding		44,713			44,398
Incremental shares from assumed exercise/issuance of options and awards		-			-
Total shares		44,713			44,398
Basic and diluted loss per share	$	(0.17	)	$	(0.04	)

NOTE 6.  Short- and Long-Term Investments

Our short-term investments consist of highly-rated interest-bearing municipal bonds that have maturities that are less than one year and are accounted for as available for sale and certificates of deposit that are guaranteed by the Federal Deposit Insurance Corporation, classified as held to maturity and have maturities that are less than one year.  As of the end of the first quarter of fiscal 2011, short-term investments consisted of certificates of deposit of $4.8 million and municipal bonds of $25.2 million.  As of the end of fiscal 2010, short-term investments consisted of certificates of deposit of $5.0 million and municipal bonds of $20.2 million.  (Refer to “NOTE 9 – Fair Value Measurements” for further discussion on how we determined the fair value of our short-term investments).  The associated unrealized gains in the first quarter of fiscal 2011 and in the full year of fiscal 2010 were immaterial and have been recorded in accumulated other comprehensive loss, or OCL, reflected in the shareholders’ equity section of the consolidated balance sheet.

As of the end of the first quarter of fiscal 2011 and as of the end of fiscal 2010, our long-term investments comprised of auction rate securities and highly-rated interest-bearing municipal bonds that have maturities that are more than one year and are accounted for as available for sale.  As of the end of the first quarter of fiscal 2011 and as of the end of fiscal 2010, the fair value of our long-term municipal bonds remained the same at $0.5 million, respectively.  The associated unrealized losses were immaterial and recorded in OCL reflected in the shareholders’ equity section of the consolidated balance sheet.

Our auction rate securities are AAA/Aaa/A3-rated debt instruments with maturities that range from 22 to 29 years.  They are accounted for as available for sale and backed by pools of student loans guaranteed by the U.S. Department of Education.  Their interest rates are reset through an auction process, most commonly at intervals of 7, 28 and 35 days.  This same auction process is designed to provide a means by which these securities can be sold and prior to 2008 had provided a liquid market for them.  There continues to be uncertainty in the global credit and capital markets, which has resulted in the failure of auctions representing the auction rate securities we hold as the amount of securities submitted for sale in those auctions exceed the amount of bids.  While we have continued to earn and receive interest on our auction rate securities through the date of this report, we concluded that their estimated fair value no longer approximates par value.  Due to the lack of availability of observable market quotes on our auction rate securities, the fair market value of these securities has been based on a valuation model using current assumptions.  (Refer to “NOTE 9 – Fair Value Measurements” for further discussion on how we determined the fair value of our investment in auction rate securities).

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As of the end of the first quarter of fiscal 2011 and as of the end of fiscal 2010, the fair value of our auction rate securities remained the same at $2.5 million.  During the first quarter of fiscal 2011, a $0.1 million redemption of certain auction rate securities at par was offset by a $0.1 million recovery in fair value of auction rate securities that were previously temporarily impaired.  The fair value of our remaining auction rate securities as of the end of the first quarter of fiscal 2011 reflects a cumulative decline of $0.4 million from the par value.  This cumulative $0.4 million decline ($0.3 million net of tax) is deemed temporary as we do not have the intent to sell these securities and it is not likely that we will be required to sell the securities before the recovery of their amortized cost basis.  If uncertainties in the credit and capital markets continue, we may incur additional losses, some of which may be other-than-temporary, which could negatively affect our financial condition or results of operations.  In addition, in the event that we decide to sell these securities and it becomes likely that we will be required to sell the securities before the recovery of their amortized cost basis, we may be required to recognize impairment charges against income.  We have classified all auction rate securities as non-current assets on our consolidated balance sheet, as we do not expect them to successfully auction and recover their full or par value within the next 12 months.

As of the end of the first quarter of fiscal 2011, we have recorded immaterial unrealized losses for our auction rate securities in OCL reflected in the shareholders’ equity section of the consolidated balance sheets.  As of the end of fiscal 2010, we recorded unrealized gains of $0.2 million ($0.1 million net of tax).

NOTE 7.  Comprehensive Loss

Comprehensive loss for the first quarter of fiscal 2011 and 2010 is as follows (in thousands):

	Three Months Ended
	April 30, 2011			May 1, 2010
Comprehensive loss
Net loss	$	(7,661	)	$	(1,778	)
Foreign currency translation adjustment		(24	)		-
Unrealized gain on short- and long-term
investments, net		90			2
Total comprehensive loss	$	(7,595	)	$	(1,776	)

NOTE 8.  Impact of Recently Issued Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board, or FASB, issued guidance titled “Improving Disclosures About Fair Value Measurements” that amends existing disclosure requirements by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation.  Except for the separate level 3 disclosures, this guidance was effective for financial statements issued for interim or fiscal years beginning after December 15, 2009, and our adoption of it on January 31, 2010 did not have a material impact on our financial condition or results of operations.  The rest of the guidance became effective for financial statements issued for interim or fiscal years beginning after December 15, 2010 and our adoption of it on January 30, 2011 did not have a material impact on our financial condition or results of operations.

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NOTE 9.  Fair Value Measurements

Our financial assets and liabilities are valued at the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.  We determine fair value based on assumptions that market participants would use in pricing an asset or liability.  As a basis for considering such assumptions, we prioritize the inputs used in measuring fair value into a three-tier fair value hierarchy, which are as follows:

Level 1: Observable inputs such as quoted prices in active markets (the fair value hierarchy gives the highest priority to Level 1 inputs);

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data and require the reporting entity to develop its own assumptions (the fair value hierarchy gives the lowest priority to Level 3 inputs).

Financial assets and liabilities measured at fair value on a recurring basis as of the end of the first quarter of fiscal 2011 consisted of the following (in thousands):

	Balance at April 30, 2011		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Marketable securities (current)	$	25,214	$	25,214	$	-	$	-
Certificates of deposit (current)		4,773		4,773		-		-
Marketable securities (non-current)		508		508		-		-
Auction rate securities (non-current)		2,536		-		-		2,536
Total assets	$	33,031	$	30,495	$	-	$	2,536
Liabilities:
Deferred compensation plan (non-current)	$	4,738	$	4,738	$	-	$	-

The fair value of our short-term marketable securities, certificates of deposit and deferred compensation plan liability is determined based on quoted prices of identical assets that are trading in active markets as of the end of the period for which the values are determined.  The deferred compensation plan liability represents the amount that would be earned by participants if the funds were invested in securities traded in active markets.  Due to the lack of availability of observable market quotes on our auction rate securities, the fair market value of these securities has been determined based on a valuation model using current assumptions.  The model values the securities by estimating the present value of future principal and interest payments discounted at rates considered to reflect current market conditions.  Assumptions used in the valuation include those made about the liquidity horizon, or period of time expected, before the securities are successfully auctioned; coupon rates; weighted average cost of capital; and holding spreads and yields.  Other factors that impact our valuation include changes to credit ratings of our auction rate securities as well as to the underlying assets supporting these securities and the ongoing strength and quality of the credit markets.  Our valuation is subject to uncertainties that are difficult to predict and could change significantly based on future market conditions.

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The activity of our auction rate securities through the first quarter of fiscal 2011, whose fair value was measured using Level 3 inputs, is summarized below (in thousands):

	Non-current
Carrying value as of  January 29, 2011	$	2,475
Redemptions1		(100	)
Total gains
Included in earnings		-
Included in other comprehensive loss2		161
Carrying value as of  April 30, 2011	$	2,536

1 Redemptions of $0.1 million occurred during the first quarter of fiscal 2011.

2 Unrealized gains of $21,000 occurred during the first quarter of fiscal 2011.  In addition, the recovery in fair value of $140,000 which was previously temporarily impaired occurred during the first quarter of fiscal 2011.

NOTE 10.  Deferred Compensation Plan

In August 2006, we adopted the Hot Topic Inc. Management Deferred Compensation Plan, or the Deferred Compensation Plan, for the purpose of providing highly compensated employees and members of our Board a program to meet their financial planning needs.  The Deferred Compensation Plan provides participants with the opportunity to defer up to 80% of their base salary and up to 100% of their annual earned bonus, or, in the case of members of our Board, 100% of their earned cash fees, all of which, together with the associated investment returns, are 100% vested from the outset.  The Deferred Compensation Plan, which is designed to be exempt from most provisions of the Employee Retirement Security Act of 1974, is informally funded by us in order to preserve the tax-deferred savings advantages of a non-qualified plan.  As such, all deferrals and associated earnings are general unsecured obligations of Hot Topic, Inc. held within a “rabbi trust” on our consolidated balance sheet.  We may at our discretion contribute certain amounts to eligible employees’ accounts.  In January 2009, to the extent participants were ineligible to receive such contributions from participation in our 401(k) Plan, we began to contribute 50% of the first 4% of participants’ eligible contributions into their Deferred Compensation Plan accounts.  As of the end of the first quarter of fiscal 2011, assets and associated liabilities of the Deferred Compensation Plan were $4.6 million and $4.7 million, respectively, and are included in other non-current assets and non-current liabilities, respectively, in our consolidated balance sheets.  As of the end of fiscal 2010, assets and associated liabilities of the Deferred Compensation plan were each $4.3 million.

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NOTE 11.  Valuation of Long-Lived Assets

We assess the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable.  For our Hot Topic and Torrid concepts, we group and evaluate long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified.  Factors we consider important that could trigger an impairment review of our stores or online operations include a significant underperformance relative to expected historical or projected future operating results, a significant change in the manner of the use of the asset or a significant negative industry or economic trend.  When we determine that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the aforementioned factors, impairment is measured based on a projected discounted cash flow method using a discount rate determined by management.  These cash flows are calculated by netting future estimated sales against associated merchandise costs and other related expenses such as payroll, occupancy and marketing.  The estimated sales, net of the aforementioned costs and expenses, used for this nonrecurring fair value measurement is considered a Level 3 input as defined in “NOTE 9 – Fair Value Measurements.”  In the event future performance is lower than forecasted results, future cash flows may be lower than expected, which could result in future impairment charges.  While we believe recently opened stores will provide sufficient cash flow, material changes in results could result in future store impairment charges.

For the first quarter of fiscal 2011, we recorded store impairment charges of $1.1 million, of which $0.9 million relates to the strategic business changes, and are included in selling, general and administrative expenses in our consolidated statements of operations.  For the first quarter of fiscal 2010, store impairment charges were immaterial.

NOTE 12.  Bank Credit Agreement

We maintain an unsecured bank credit agreement of $5.0 million that will expire on September 1, 2011.  Letters of credit, which are primarily used for inventory purchases, are issued under the credit agreement.  There were letters of credit for $0 and $3,000 outstanding as of the end of the first quarter of fiscal 2011 and as of the end of fiscal 2010, respectively.

NOTE 13.  Income Taxes

As ofthe end of the first quarter of fiscal 2011 and as of the end of fiscal 2010, the total liability for income tax associated with unrecognized tax benefits was $2.6 million ($2.2 million net of federal benefit), of which $0.4 million ($0.2 million net of federal benefit) related to interest and $0.2 million related to penalties.

We believe that it is reasonably possible that $0.6 million ($0.2 million net of federal benefit) of our liability for unrecognized tax benefits of which $0.2 million ($0.1 million net of federal benefit) of associated interest, may be recognized in the next 12 months due to the settlement of audits and the expiration of statutes of limitations.  As such, we have classified this amount as a current liability.

Our continuing practice is to recognize interest and penalties related to unrecognized tax benefits as a tax expense.  Tax expense during the first quarter of fiscal 2011 and 2010 related to interest and penalties was not material.  As of the end of the first quarter of fiscal 2011 and as of the end of fiscal 2010, we had accrued $0.6 million of interest and penalties related to uncertain tax positions.

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We operate stores throughout the United States, Canada and Puerto Rico, and as a result, we file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions.  In the normal course of business, we are subject to examination by taxing authorities.  With few exceptions, we are no longer subject to U.S. federal, state, local or foreign income tax examinations for years before fiscal 2004.  While it is often difficult to predict the final outcome or the timing or resolution of any particular uncertain tax position, we believe our reserves for income taxes represent the most probable outcome.  We adjust these reserves, as well as the related interest and penalties, in light of changing facts and circumstances.  The adjustment of these reserves could impact our effective tax rate for a particular future period.

NOTE 14.  Commitments and Contingencies

On July 14, 2010, an employee filed a lawsuit against us in the Superior Court of California, County of Los Angeles, on behalf of herself and a putative class.  The lawsuit asserts claims for failure to provide adequate meal or rest breaks, failure to pay regular and overtime wages, failure to timely pay wages at end of employment, failure to indemnify employees for necessary expenditures and unfair business practices.  The lawsuit seeks compensatory damages, restitution, special damages, statutory penalties, punitive damages, attorneys' fees and injunctive relief.  We intend to vigorously defend ourselves against the various claims, though at the present time we are unable to predict the outcome of this matter.

From time to time, we are involved in other matters of litigation that arise in the ordinary course of business.  Though significant litigation or awards against us could seriously harm our business and financial results, we do not at this time expect any of our other matters of litigation to have a material adverse effect on our overall financial condition.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

From time to time, in both written reports (such as this report) and oral statements, we make “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.  We intend that such forward-looking statements be subject to the “safe harbors” created by these sections.  Generally, the words “believes,” “anticipates,” “expects,” “continue,” “intends,” “will,” “may,” “plans” and similar expressions identify such forward-looking statements, although not all forward-looking statements contain these identifying words.  These statements include, for example, statements regarding our expectations, beliefs, intentions or strategies regarding the future, such as the extent and timing of future revenues and expenses, economic conditions affecting consumer demand, ability to realize anticipated benefits of cost reduction plans and business changes, ability to grow or maintain comparable store sales, response to new concepts and other expected financial results and information.  All forward-looking statements included in this report are based on information available to us as of the date of this report and we assume no obligation to update or revise any forward-looking statements to reflect events or circumstances that occur after such statements are made.  Readers are cautioned not to place undue reliance on these forward-looking statements as they involve risks and uncertainties which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements.  These risks, as well as other risks and uncertainties, are located, among other places, in this Part I, Item 2 and in Part II, Item 1A under the caption “Risk Factors.”

OVERVIEW

Business   We are a mall and web-based specialty retailer of apparel, accessories, music and gift items for young men and women whose lifestyles reflect a passion for music, fashion and pop culture.  We operate under two primary concepts: Hot Topic and Torrid.  Our business is discussed in more detail in “NOTE 1 – Organization and Basis of Presentation” contained in the accompanying financial statements.

Strategic Business Changes  We are in the process of implementing certain strategic business changes approved by the Board in March 2011 to better position us for growth.  The business changes involve discontinuing the operations of ShockHound; writing down inventory; writing down property and equipment that are no longer critical to our strategic direction; and implementing other strategic business and operational initiatives.  In connection with the business changes, along with the severance costs related to recent changes in management and remaining amounts from the cost reduction plan, we estimate that we will incur a total pre-tax charge of approximately $15 million, a portion of which will be a non-cash charge of approximately $8 million.  Of the $15 million charge, approximately $7 million was incurred for the write down of inventory due to a change in management’s inventory strategy; we expect that $3 million will be incurred for severance and discontinuing ShockHound’s operations; $3 million will be incurred for consulting fees for the review of our business and operations, including implementation of initiatives resulting from the review; and $3 million will be incurred for the write down of certain property and equipment.  The $15 million charge includes a net recovery of $0.6 million that we expect to recognize in fiscal 2011 related to the cost reduction plan implemented in fiscal 2010.

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Cost Reduction Plan  We have substantially completed the implementation of a cost reduction plan that, beginning in fiscal 2011, is expected to result in an estimated annual income improvement of approximately $13 million, pre-tax.  The cost reduction plan, which is designed to meet the challenges of the current environment, involves closing approximately 50 underperforming stores, a majority of which closed at the end of the first quarter of fiscal 2011.  These closures occurred as a result of natural lease expirations, exercising lease kick out clauses and other negotiations.  The cost reduction plan also includes reducing our home office and field management positions, reducing planned capital expenditures in fiscal 2011 to approximately $25 million from $31 million in fiscal 2010 and implementing other non-payroll overhead expense reduction initiatives.  As of the end of the first quarter of fiscal 2011, we had incurred substantially all charges related to the cost reduction plan.  In addition, we had completed the reduction of our home office and field management positions, closed 32 Hot Topic stores and five Torrid stores and substantially completed the implementation of certain non-payroll overhead expense reduction initiatives as part of the cost reduction plan.

The following table details charges related to the strategic business changes and the cost reduction plan recorded since their implementation in the first quarter of fiscal 2011 and the fourth quarter of fiscal 2010, respectively, (in thousands).

				Non-Store Related
				Severance and			Inventory and
	Store Related			Outplacement			Asset-Related			Consulting
	Closure Costs 1			Costs			Costs 2			Fees			Total
Balance at October 30, 2010	$	-		$	-		$	-		$	-		$	-
Cost Reduction Plan charges		(7,077	)		(1,850	)		(830	)		-			(9,757	)
Cash payments		93			985			-			-			1,078
Non-cash adjustments		6,497			-			830			-			7,327
Balance at January 29, 2011	$	(487	)	$	(865	)	$	-		$	-		$	(1,352	)
Cost Reduction Plan recovery		365			-			-			-			365
Strategic Business Changes charges		-			(1,583	)		(9,605	)		(1,606	)		(12,794	)
Cash payments		699			889			-			1,645			3,233
Non-cash adjustments		(659	)		-			4,891			-			4,232
Balance at April 30, 2011	$	(82	)	$	(1,559	)	$	(4,714	)	$	39		$	(6,316	)

1 Store related closure costs represent charges for the closure of approximately 50 underperforming stores.  Such charges include the write down and accelerated depreciation of store assets, the write down of inventory, early lease terminations and store severance, partially offset by certain credits and allowances.

2 Inventory and asset-related costs represent charges related to the write down and impairment of inventory and non-critical property and equipment.

We recorded charges related to store closures, write down of assets; store severance; non-store related severance and outplacement; and consulting fees in selling, general and administrative expenses in our consolidated statements of operations.  Charges related to the write down of store inventory; accelerated depreciation of store assets; and early lease terminations were recorded in cost of goods sold in our consolidated statements of operations.

Non-Cash Impairment Charge and Discontinued Operations  During the third quarter of fiscal 2010, we concluded that ShockHound’s assets had become impaired due to its slower than expected revenue growth.  Revenues from partnerships entered into in the earlier part of fiscal 2010, as well as other revenues, did not build as much as we had anticipated.  In the third quarter of fiscal 2010, we recorded an impairment charge of $3 million to selling, general and administrative expenses in our consolidated statements of operations.  The assessment of our long-lived assets for impairment is discussed in more detail in “NOTE 11 – Valuation of Long-Lived Assets” contained in the accompanying financial statements.  In addition, during the first quarter of fiscal 2011, we announced that ShockHound’s operations were to be discontinued.  See “Strategic Business Changes” above for more information concerning the discontinuation of ShockHound’s operations.

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Comparable Store Sales and Store Count  We consider a store comparable after it has been open for 15 full months.  If a store is closed during a period, it is included in the computation of comparable store sales for that fiscal month, quarter and year-to-date period, only for the days in which the store was operating as compared to the full month in the comparable period.  The following table shows our comparable store sales results by division for the first quarter of fiscal 2011 and 2010.

	Sales % Change
First Quarter	2011		2010
Hot Topic		(1.3)%	(12.3)%
Torrid		4.8%	4.8%
Total Company		0.2%	(8.7)%

During the first quarter of fiscal 2011, the comparable store sales decline in the Hot Topic division resulted primarily from a decrease in fashion apparel and license categories, partially offset by an increase in the music category.  During the same period, the comparable store sales increase at our Torrid division was due to an increase in apparel, primarily tops, and an increase in accessories.

We continue to evaluate the need to close, remodel, relocate or open new stores.  The following table shows our store expansion and closure activity, as well as the number of stores included in the comparable store base, during the first quarter of fiscal 2011 and 2010.   Our planned store expansion and closure activity in fiscal 2011 is also reflected in the table.

	Number of Stores
	Actual						Estimate
	Three Months Ended			Three Months Ended
	April 30, 2011			May 1, 2010			Fiscal 2011
Hot Topic
Beginning of Period		657			680			657
Open		-			1			3
Close		(15	)		-			(27	)
End of Period		642			681			633
Remodeled/relocated		11			5			30
Comparable store base		610			653
Torrid
Beginning of Period		153			156			153
Open		1			1			5
Close		(3	)		(1	)		(9	)
End of Period		151			156			149
Remodeled/relocated		-			-			4
Comparable store base		146			154

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Cash Dividends  We began to pay cash dividends during the first quarter of fiscal 2010.  Cash dividends are discussed in more detail in “NOTE 4 – Cash Dividends” contained in the accompanying financial statements.

Segment Information  We currently have one reportable segment given the similarities of the economic characteristics among the Hot Topic and Torrid concepts, and the relatively insubstantial business operations of our now discontinued ShockHound concept.

Seasonality  Our business, particularly at Hot Topic, is subject to seasonal influences.  Refer to “Item 1 – Business” included in our annual report on Form 10-K filed on April 6, 2011, for further discussion about the seasonality of our business.

Key Performance Indicators  There are several key indicators that we use to help us evaluate the financial condition and operating performance of our business, including:

Store Sales Productivity is used to assess the operational performance of each of our stores.  Store productivity metrics include year over year store sales comparisons (or comparable store sales results), net store sales per average square foot, number of transactions per store, dollars per transaction, number of units sold per store and number of units per transaction.

Merchandise Margin is used to allocate a variety of resources to each of our concepts, determine initial mark-ups, mark-downs, inventory reserves, freight costs, etc. for each of the concepts and to measure the general performance of each of our stores.  We consider merchandise margin to be the difference between net sales and certain costs associated with our merchandise, such as product costs, markdowns, freight, vendor allowances and employee discounts.

Gross Margin is considered to be the difference between merchandise margin and buying, distribution and store occupancy costs.

Income from Operations is primarily driven by net sales, gross margin, our ability to control selling, general and administrative expenses, and our level of capital expenditures that affect depreciation expense.

RESULTS OF OPERATIONS

The following discussion of our results of operations, financial condition and liquidity and other matters should be read in conjunction with our condensed consolidated financial statements and the Notes related thereto.

Three Months Ended April 30, 2011 Compared to the Three Months Ended May 1, 2010

The following table shows, for the periods indicated, certain selected statement of operations data expressed as a percentage of net sales.  The discussion that follows should be read in conjunction with this table:

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For the three months ended:	April 30, 2011			May 1, 2010
Net sales		100.0	%		100.0	%
Cost of goods sold, including buying, distribution and occupancy costs		68.7			66.5
Gross margin		31.3			33.5
Selling, general and administrative expenses		38.9			35.3
Loss from operations before benefit for income taxes		(7.6	)		(1.8	)
Benefit for income taxes		(2.8	)		(0.7	)
Net loss		(4.8	) %		(1.1	) %

Net sales decreased $1.3 million, or 0.8%, to $161.3 million during the first quarter of fiscal 2011 from $162.6 million during the first quarter of fiscal 2010.  The components of this $1.3 million decrease in net sales are as follows:

Amount
(in millions)			Description
$	(4.5	)	Decrease in net sales due to the closure of 44 Hot Topic stores and eight Torrid stores since the first quarter of the prior year.
	(1.4	)	Decrease in comparable net sales from Hot Topic stores in the first quarter of fiscal 2011 compared to the corresponding period from the prior fiscal year.
	0.6		Increase in net sales from Torrid stores not yet qualifying as comparable stores (includes three new stores opened since the first quarter of the prior year).
	0.8		Increase in net sales from Hot Topic stores not yet qualifying as comparable stores (includes five new stores opened since the first quarter of the prior year).
	1.6		Increase in comparable net sales from Torrid stores in the first quarter of 2011 compared to the corresponding period from the prior fiscal year.
	1.6		Increase in internet sales.
$	(1.3	)	Total

Gross margin decreased $4.1 million, or 7.5%, to $50.4 million during the first quarter of fiscal 2011 from $54.5 million during the first quarter of fiscal 2010.  As a percentage of net sales, gross margin decreased to 31.3% during the first quarter of fiscal 2011 from 33.5% in the first quarter of fiscal 2010.  The significant components of this 2.2 percentage point decrease in gross margin as a percentage of net sales are as follows:

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%			Description
	(3.3	)	Decrease in merchandise margin due to additional markdowns as a result of strategic business changes charge, partially offset by certain rent credits and allowances recognized as part of our cost reduction plan.
	0.1		Decrease in distribution expenses primarily due to lower freight expenses.
	0.1		Decrease in buying payroll expenses.
	0.2		Decrease in store occupancy expenses primarily due to lower common area maintenance costs and mall marketing expenses.
	0.7		Decrease in store depreciation related to store closures and ShockHound closure.
	(2.2	)	Total

Selling, general and administrative expenses increased $5.3 million, or 9.2%, to $62.8 million during the first quarter of fiscal 2011 compared to $57.5 million during the first quarter of fiscal 2010.  As a percentage of net sales, selling, general and administrative expenses increased to 38.9% in the first quarter of fiscal 2011 compared to 35.3% in the first quarter of fiscal 2010.  The significant components of the 3.6 percentage point increase in selling, general and administrative expenses as a percentage of net sales are as follows:

%			Description
	4.4		Costs associated with the write-down of non-critical property and equipment, severance payments, consulting fees and other costs related to the strategic business changes.
	0.1		Increase in depreciation of computer hardware and software.
	(0.1	)	Decrease in other store expenses primarily due to lower repair and maintenance expenses.
	(0.2	)	Decrease in general and administrative payroll and related costs and stock option expenses, partially offset by an increase in performance based bonus.
	(0.3	)	Decrease in marketing expenses due to decreased spending on marketing events, in-store signage and consulting services.
	(0.3	)	Decrease in store payroll expense primarily due to the decrease in store payroll and related benefits.
	3.6		Total

Loss from operations increased $9.4 million to $12.4 million during the first quarter of fiscal 2011 from $3.0 million loss during the first quarter of fiscal 2010.  As a percentage of net sales, loss from operations was 7.6% in the first quarter of fiscal 2011 compared to 1.8% in the first quarter of fiscal 2010.

Benefit for income taxes was $4.7 million in the first quarter of fiscal 2011 compared to $1.1 million for the first quarter of fiscal 2010.  The effective tax rate was 37.9% for the first quarter of fiscal 2011 compared to 39.1% for the first quarter of 2010.  The decrease was primarily due to lower effective state income tax rates, partially offset by increases in various items that are not deductible for tax purposes.

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LIQUIDITY AND CAPITAL RESOURCES

Historically and during the first quarter of fiscal 2011, uses of cash have been to purchase merchandise inventories, improve our information technology infrastructure and fund store remodels, relocations and to a lesser extent, new store openings.  We also funded cash dividend payments totaling $3.1 million during the first quarter of fiscal 2011 and $57 million in fiscal 2010.  Our cash dividends are discussed in more detail in “NOTE 4 – Cash Dividends” contained in the accompanying financial statements.  During the first quarter of fiscal 2011, we made a total cash outlay of $3.2 million related to the strategic business changes and cost reduction plan, which are discussed in more detail in “NOTE 2 – Recent Business Events” contained in the accompanying financial statements.  We have typically satisfied our cash requirements principally from cash flows from operations and we also maintain a $5 million unsecured credit agreement (discussed in more detail in “NOTE 12 – Bank Credit Agreement” contained in the accompanying financial statements).

Cash, cash equivalents and short- and long-term investments, including auction rate securities, held by us were $76.8 million and $79.5 million as of the end of the first quarter of fiscal 2011 and as of the end of fiscal 2010, respectively, and are discussed in more detail in “NOTE 6 – Short- and Long-Term Investments” contained in the accompanying financial statements.  We believe our current cash balances and cash generated from operations will be sufficient to fund our operations through at least the next 12 months.  Auctions representing the auction rate securities we hold have continued to fail and will limit our ability to liquidate these investments for some period of time.  However, we do not believe the auction failures will impact our ability to fund our working capital needs, capital expenditures or other business requirements.

Net cash flows provided by operating activities were $5.4 million in the first quarter of fiscal 2011 compared to $2.1 million used in the first quarter of fiscal 2010.  The $7.5 million increase in net cash provided by operating activities in the first quarter of fiscal 2011 as compared to the first quarter of fiscal 2010 was primarily attributable to a decrease in inventory and an increase in accrued liabilities, partially offset by an operating loss increase and increases in prepaid expenses and other current assets.

Net cash flows used in investing activities were $10.1 million and $5.7 in the first quarter of fiscal 2011 and 2010, respectively.  The $4.4 million increase in net cash used in investing activities in the first quarter of fiscal 2011 as compared to the first quarter of fiscal 2010 was primarily attributable to a $4.7 million increase in purchases of short- and long-term investments, net of proceeds, partially offset by a $0.3 million decrease in purchases of property and equipment.

Net cash flows used in financing activities were $2.8 million and $46.5 million in the first quarter of fiscal 2011 and 2010, respectively.  The decrease in cash flows used in financing activities was primarily attributable to the $44.5 million in $1.00 per share special one-time cash dividends paid in the first quarter of fiscal 2010.

The following table summarizes our contractual obligations as of the end of the first quarter of fiscal 2011 and the timing and effect that such commitments are expected to have on our liquidity and capital requirements in future periods:

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	Payments due by period (in thousands)
Contractual obligations	Total		Less Than  1 Year		1-3 Years		3-5 Years		More than 5 Years
Operating leases	$	242,434	$	56,559	$	90,475	$	56,033	$	39,367
Purchase obligations		102,657		102,223		434		-		-
Letters of credit and other obligations		11,005		7,132		3,025		848		-
Income tax audit settlements¹		430		430		-		-		-
Total contractual obligations	$	356,526	$	166,344	$	93,934	$	56,881	$	39,367

(1) The $0.4 million of income tax audit settlements relate to certain open audits we expect to be fully settled in fiscal 2011 and to gross unrecognized tax benefits for which the statutes of limitations are expected to expire in fiscal 2011.  Due to the uncertainty regarding the timing of future cash outflows associated with other noncurrent unrecognized tax benefits of $1.6 million, we are unable to make a reliable estimate of the periods of cash settlement with the respective tax authorities and have not included such amount in the contractual obligations table above.

We anticipate we will spend approximately $25 million on capital expenditures in fiscal 2011.  Of the $25 million, we plan to spend approximately $17 million for store construction and other improvements to existing stores, including remodeling, relocating and technological improvements.  We plan to spend the remaining capital expenditures on various improvements in our information technology infrastructure, including new computer hardware and software and the further development and improvement of our Internet sites.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.  On an ongoing basis, we evaluate estimates, including those related primarily to inventories, long-lived assets and contingencies.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our condensed consolidated financial statements.  For a further discussion about the application of these and other accounting policies, refer to the notes included in our Annual Report on Form 10-K filed on April 6, 2011.

Inventories Inventories are valued at the lower of average cost or market, on a weighted average cost basis, using the retail method.  Under the retail method, inventory is stated at its current retail selling value and then is converted to a cost basis by applying an average cost factor that represents the average cost-to-retail ratio based on beginning inventory and the purchase activity for the month.  Throughout the year, we review our inventory levels in order to identify slow-moving merchandise and use permanent markdowns to sell through selected merchandise.  We record a charge to cost of goods sold for permanent markdowns.  Inherent in the retail method are certain significant management judgments and estimates including initial merchandise markup, future sales, markdowns and shrinkage, which significantly impact the ending inventory valuation at cost and the resulting gross margins.  To the extent our estimated markdowns at period-end prove to be insufficient, additional future markdowns will need to be recorded.  Physical inventories are conducted during the year to determine actual inventory on hand and shrinkage.  We accrue our estimated inventory shrinkage for the period between the last physical count and current balance sheet date.  Thus, the difference between actual and estimated shrink amounts may cause fluctuations in quarterly results, but not for the full fiscal year results.

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Valuation of Long-Lived Assets We assess the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable.  For our Hot Topic and Torrid concepts, we group and evaluate long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified.  Factors we consider important that could trigger an impairment review of our stores or online operations include a significant underperformance relative to expected historical or projected future operating results, a significant change in the manner of the use of the asset or a significant negative industry or economic trend.  When we determine that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the aforementioned factors, impairment is measured based on a projected discounted cash flow method using a discount rate determined by management.  These cash flows are calculated by netting future estimated sales against associated merchandise costs and other related expenses such as payroll, occupancy and marketing.  The estimated sales, net of the aforementioned costs and expenses, used for this nonrecurring fair value measurement is considered a Level 3 input as defined in “NOTE 8 – Fair Value Measurements” contained in the accompanying financial statements.   In the event future store performance is lower than forecasted results, future cash flows may be lower than expected, which could result in future impairment charges.  While we believe recently opened stores will provide sufficient cash flow, material changes in results could result in future impairment charges.

Revenue Recognition Revenue is generally recognized at our retail store locations at the point at which the customer receives and pays for the merchandise at the register.  For online sales, revenue is recognized upon delivery to the customer.  Sales are recognized net of merchandise returns, which are reserved for based on historical experience.  Revenue from gift cards, gift certificates and store merchandise credits is recognized at the time of redemption.  Shipping and handling revenues from our websites are included as a component of net sales.

We recognize estimated gift card breakage as a component of net sales in proportion to actual gift card redemptions over the period that remaining gift card values are redeemed.  Gift card breakage is income recognized due to the non-redemption of a portion of gift cards sold by us for which liability was recorded in prior periods.  While customer redemption patterns result in estimated gift card breakage, which approximates 5 to 6%, changes in our customers’ behavior could impact the amount that ultimately is unused and could affect the amount recognized as a component of net sales.

Vendor Allowances We receive certain allowances from our vendors primarily related to damaged merchandise, markdowns and pricing.  Allowances received from vendors related to damaged merchandise and pricing are reflected as a reduction of inventory in the period they are received and allocated to cost of sales during the period in which the items are sold.  Markdown allowances received from vendors are reflected as reductions to cost of sales in the period they are received as these allowances are received after goods have been sold or marked down.

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Stock-Based Payments We account for stock-based compensation expense by estimating the fair value of stock options granted, except for certain stock options granted in March 2011 that are subject to the vesting determination described in “NOTE 3 – Stock-Based Compensation” contained in the accompanying financial statements, using the Black-Scholes option-pricing formula and a single option award approach.  We estimated the fair value of the stock options granted in March 2011 that are subject to the vesting determination using a Monte Carlo simulation valuation model.  The fair values are then amortized over the requisite service periods of the awards.  Both of the option-pricing models used require the input of highly subjective assumptions, including the option’s expected life, price volatility of the underlying stock, risk free interest rate, early exercise behavior and expected dividend rate.  As stock-based compensation expense is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.  Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.  Forfeitures are estimated based on historical experience.

Self-Insurance We are self-insured for certain losses related to medical and workers compensation claims although we maintain stop loss coverage with third party insurers to limit our total liability exposure.  The estimate of our self-insurance liability involves uncertainty since we must use judgment to estimate the ultimate cost that will be incurred to settle reported claims and unreported claims for incidents incurred but not reported as of the balance sheet date.  When estimating our self-insurance liability, we consider a number of factors, which include historical claim experience and valuations provided by independent third party actuaries.  As claims develop, the actual ultimate losses may differ from actuarial estimates.  Therefore, an analysis is performed quarterly to determine if modifications to the accrual are required.

Rent Expense Rent expense under our operating leases typically provides for fixed non-contingent rent escalations.  We recognize rent expense on a straight-line basis over the non-cancelable term of each lease, commencing when we take possession of the property.  Construction allowances are recorded as a deferred rent liability, which we amortize as a reduction of rent expense over the non-cancelable term of each lease.

Income Taxes We account for income taxes using the liability method.  Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled.  Deferred tax assets are reduced by valuation allowances if we believe it is more likely than not that some portion or the entire asset will not be realized.

We prescribe a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.  For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.  The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.  We include interest and penalties related to uncertain tax positions in income tax expense.

INFLATION

We do not believe that inflation has had a material adverse effect on our net sales or results of operations in the past.  However, we cannot assure that our business will not be affected by inflation in the future.

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Item 3.  Quantitative and Qualitative Disclosures about Market Risk

We are not a party to any derivative financial instruments.  Our exposure to market risk primarily relates to changes in interest rates on our investments with maturities of less than three months (which are considered to be cash and cash equivalents) and short- and long-term investments with maturities in excess of three months.  A 100 basis point change in interest rates over a three-month period would not have a material impact on the fair value of our investment portfolio as of the end of the first quarter of fiscal 2011.  Cash, cash equivalents and short- and long-term investments, including auction rate securities, are discussed in more detail in “NOTE 6 – Short- and Long-Term Investments” contained in the accompanying financial statements.

Item 4.  Controls and Procedures

Our management maintains disclosure controls and procedures that are designed to ensure that the information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, as appropriate, to allow timely decisions regarding required disclosure.

We have carried out an evaluation, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of our most recent fiscal quarter.  Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are effective as of the end of our most recent fiscal quarter.  There has been no change in our internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

Our legal proceedings are discussed in more detail in “NOTE 14 – Commitments and Contingencies” contained in the accompanying financial statements.

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Item 1A.  Risk Factors

CERTAIN RISKS RELATED TO OUR BUSINESS

Before deciding to invest in Hot Topic, Inc. or to maintain or increase an investment in Hot Topic, Inc., readers should carefully consider the risks described below, in addition to the other information contained in this Quarterly Report on Form 10-Q and in our other filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.  The risks described below are not the only risks we face.  Additional risks that are not presently known to us or that we currently deem immaterial may also affect our business.  If any of these known or unknown risks actually occur, our business, financial condition and results of operations could be seriously harmed, and our stock price could decline.  The risks described below include certain changes to the “Risk Factors” set forth in our Annual Report on Form 10-K filed on April 6, 2011.

Our success relies on popularity of music, pop culture and fashion trends, and our ability to react to them

Our financial performance is largely dependent upon the continued popularity of apparel, accessories and other merchandise inspired by music, film, television, pop culture, and fashion trends, particularly among teenagers and college-age adults.  The popularity of such products is influenced by the Internet; music videos and music television networks; the emergence of new artists; the success of music releases, movies and television shows; and music/pop culture-related products.  The popularity of particular types of music, movies, television shows, artists, actors, styles, trends and brands is constantly changing.  Our failure to anticipate, identify and react appropriately to changing trends and preferences of our customers could lead to, among other things, excess inventories and higher markdowns.  There can be no assurance that the products we sell will be accepted by our customers.

We depend on a small number of key licensed products for a portion of our earnings and lower than expected sales of those products or the inability to obtain new licensed products could adversely affect our revenues

We license from others the rights to produce and/or sell certain products that contain a third party’s trademarks, designs and other intellectual property.  If the popularity of those licensed products diminishes or if we are unable to obtain new licensed products with comparable consumer demand, our sales could decline.  Furthermore, we may not be able to prevent a licensor from choosing not to renew a license with us and/or from licensing a product to one of our competitors.

Our recently announced cost reduction plan and strategic business changes may not achieve their anticipated benefits and could adversely affect our operations and revenues and our ability to respond to future growth opportunities

We are currently implementing strategic business changes to improve our overall operations and a plan to reduce costs, including closing underperforming stores, discontinuing our ShockHound operations, writing down inventory and writing down property and equipment that are no longer critical to the strategic direction of the company.  The estimated costs and charges associated with these initiatives may vary materially based upon a variety of factors, including the timing of the execution of the initiatives, the outcome of negotiations with landlords and other third parties and unexpected costs.  Any such factor could result in our not realizing the anticipated benefits from the initiatives.  Even if we are successful in implementing these initiatives, the loss of personnel and reduction in the number of stores we operate, among other things, may result in decreased operational efficiencies, unanticipated operational challenges and decreased revenues, or leave us unprepared to take advantage of growth opportunities in the future.

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Our access to merchandise could be hurt by changes in vendors’ business condition

Our financial performance depends on our ability to obtain our merchandise in sufficient quantities at competitive prices.  We depend on independent contractors and vendors to manufacture our merchandise.  Substantially all of our music/pop culture-licensed products are available from vendors that have exclusive license rights.  In addition, we rely on small, specialized vendors who generally have limited resources, production capacities and operating histories.  Lack of access to capital, as a result of the current economic conditions or otherwise and changes in vendors’ compliance and certification procedures may cause our vendors to delay, reduce or eliminate shipment of products we otherwise would sell in our stores.  We generally do not have long-term purchase contracts or other contractual assurances of continued supply, pricing or access to new products.  There can be no assurance that we will be able to acquire desired merchandise in sufficient quantities on acceptable terms in the future.

Remodeling, relocating, closing and opening stores may not achieve the anticipated benefits and could create challenges we may not be able to adequately meet

We depend on our ability to manage our existing store base, ensure that the performance of our remodeled and relocated stores is at acceptable levels, open new stores, and close underperforming stores.  In order to open, remodel and relocate stores, among other things, we need to locate suitable store sites, negotiate acceptable lease terms, obtain or maintain adequate capital resources on acceptable terms, source sufficient levels of inventory, hire and train store managers and sales associates, integrate new or relocated stores into our existing operations and maintain adequate distribution center space and information technology systems.  Moving or expanding store locations and operating stores in new markets, especially markets outside the continental United States, may present competitive, merchandising and regulatory challenges we do not have experience in or know how to face.  There can be no assurance that moving or expanding store locations and operating stores in new markets will not adversely affect the individual financial performance of our existing stores or our overall results of operations.  In the event that the number of our stores increases, we may face risks associated with market saturation of our products and concepts.  Similarly, there can be no assurance that remodeling or relocating existing stores will not adversely affect either the individual financial performance of the store prior to the change or our overall results of operations.  Furthermore, there can be no assurance that we will successfully achieve our remodel or expansion targets or, if achieved, that planned remodel or expansion will result in profitable operations.

Our business strategy requires innovating and improving our operations, and we may not be able to do this sufficiently to effectively prevent a negative impact on our business and financial results

To be successful we must innovate our products, our stores, and the shopping experience for our customers.  Such innovation involves risks, including that we will not properly anticipate the need for or rate of change, that we are not able to successfully bring about such change, that we will not be able to produce anticipated results, and that our customers will not be receptive to the change.  Such innovation also involves significant capital expenditures and other costs that we may not be able to recover if the innovation is not favorably received by our customers.

Failure of our vendors to use acceptable ethical business practices could negatively impact our business

We expect our vendors to operate in compliance with applicable laws, rules and regulations regarding working conditions, employment practices, the environment and intellectual property.  However, we do not control their labor and other business practices.  Further, we do not inspect our manufacturers’ operations and would not be immediately aware of any noncompliance by our vendors with applicable domestic or international laws and standards, including our internal standards.  If one of our vendors violates labor or other laws or implements labor or other business practices that are regarded as unethical, the shipment of merchandise to us could be interrupted, orders could be canceled, relationships could be terminated and our reputation could be damaged.

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Technology and other risks associated with our Internet sales could hinder our overall financial performance

We sell merchandise over the Internet through websites we control and affiliated websites controlled by others.  Our Internet sales generate a significant portion of our total sales and are dependent on our ability to drive Internet traffic to our websites.  Our Internet operations are subject to numerous risks and pose risks to our overall business, including the inability to successfully establish partnerships that are instrumental in driving traffic to our websites; diversion of sales from our stores; liability for online content; computer and consumer privacy concerns; rapid technological changes; the need to invest in additional computer hardware and software to support sales; hiring, retention and training of personnel; failure of computer hardware and software, including computer viruses, telecommunication failures, online security breaches and similar disruptions; governmental regulations; and credit card fraud.  There can be no assurance that our Internet operations will achieve sales and profitability levels that justify our investment in them.

System security risk issues and system failures could disrupt our internal operations or information technology services provided to customers

Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate our confidential information or that of third parties, create system disruptions or cause shutdowns.  As a result, we could incur significant expenses addressing problems created by security breaches of our network.  Moreover, we could incur significant expenses in connection with system failures.  In addition, hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of the system.  The costs to us to eliminate or alleviate security problems, viruses and bugs could be significant, and the efforts to address these problems could result in interruptions, delays or cessation of service that may impede our sales, distribution or other critical functions.  In addition, our systems are not fully redundant and could be subject to failure.  Our disaster recovery planning may not be sufficient, and we may not have adequate insurance coverage to compensate us for any significant casualty loss.

Loss of key people or an inability to hire necessary and significant personnel could hurt our business

Our ability to achieve and maintain operating efficiency and to anticipate and effectively respond to changing trends and consumer preferences depends in part on our ability to retain and attract senior management and other key personnel in our operations, merchandising, music and other departments.  Competition for these personnel is intense, and we cannot be sure that we will be able to retain or attract qualified personnel as needed.  The sudden loss of the services of key people could have a material adverse effect on our business, results of operations and financial condition.

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Our supply chain has risks and uncertainties that could affect our sales and business

The merchandise we sell is obtained from vendors and manufacturers in the United States and outside of the country.  Generally, this product is shipped to our distribution centers in California and Tennessee, and from our distribution centers to our stores or directly to our customers using Federal Express and the United States Postal Service.  Certain products we sell are imported and subject to delivery delays based on availability and port capacity.  Our reliance on Federal Express and the United States Postal Service for shipments is subject to risks associated with their ability to provide delivery services that meet our shipping needs and our ability to obtain such services at an affordable cost.  We are also dependent upon the ability to hire temporary associates to adequately staff our distribution centers, particularly during busy periods such as the holiday season.  We may not be able to achieve or maintain operating efficiencies using two distribution centers that are located approximately 2,000 miles apart.

Risks associated with contracting directly with manufacturers for merchandise could hinder our financial performance

Over time, we expect to source an increasingly greater percentage of our merchandise directly from manufacturers.  We have limited experience in sourcing and importing merchandise directly from manufacturers.  We may encounter administrative challenges and operational difficulties with the manufacturers from which we may source our merchandise.  Operational difficulties could include reductions in the availability of production capacity, error in complying with merchandise specifications, insufficient quality control and failures to meet production deadlines.  A manufacturer’s failure to ship merchandise to us on a timely basis or to meet the required quality standards could cause supply shortages that could result in lost sales.

We could acquire merchandise without full rights to sell it, which could inhibit sales and lead to disputes or litigation

We purchase licensed merchandise from vendors who represent that they hold manufacturing and distribution rights to such merchandise.  We also contract directly with licensors to obtain the manufacturing and distribution rights.  We do not independently verify whether these vendors legally hold adequate rights to the licensed properties they are manufacturing, distributing or licensing.  If we license merchandise that we have not legally obtained the rights to sell, we could be obligated to remove such merchandise from our stores, incur costs associated with destruction of merchandise and be subject to liability under various civil and criminal causes of action, including actions to recover unpaid royalties and other damages.  As we expand our efforts to contract directly with manufacturers and licensors for licensed merchandise, we may incur difficulties securing the necessary manufacturing and distribution rights.  Even when we have secured the rights needed to sell such products in the United States, we may not be able to secure the rights to sell the products outside of the United States.

There are litigation and other claims against us from time to time, which could distract management from our business activities and could lead to adverse consequences to our business and financial condition

We are involved from time to time with litigation and other claims against us.  Often these cases can raise complex factual and legal issues, which are subject to risks and uncertainties and which could require significant management time.  Although we do not currently believe that the outcome of any current matter of litigation or claim against us will have a material adverse effect on our overall financial condition, we have, in the past, incurred unexpected expense in connection with litigation matters.  In the future, adverse settlements, judgments or resolutions may negatively impact earnings.  Injunctions against us could have an adverse effect on our business by requiring us to do or prohibiting us from doing certain things.  We may in the future be the target of material litigation, including class-action and securities litigation, which could result in substantial costs and divert our management’s attention and resources.

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We materially rely on ecommerce, information and other technology systems, including such technology provided by third parties

We believe our dependence on ecommerce, information and other technology systems, including technology provided by third parties will increase in the future, and it is possible we may not be able to obtain, maintain or use such systems as quickly or as effectively as needed.  Implementing new systems, modifying existing systems, and restoring such systems and technology following a shut-down could present technological and operational challenges which we are unprepared for.  We continue to evaluate the adequacy of the commerce, information and other technology systems we use to operate our business.  Our failure to adapt to changing technological needs could have a material adverse effect on our results of operations and financial condition.  We have agreements with third-party providers to maintain ecommerce and information technology systems, including content.  We would be negatively impacted if such third parties fail to provide such services, including by way of malfunction of third-party sites, hardware, software and other equipment; service outages of third-party sites; third-party claims of data privacy, security breaches and intellectual property infringement; and poor integration of our technology into their software and services.

Uncertainty in the global capital and credit markets may materially impair the liquidity of a portion our cash and investment portfolio

We hold cash, cash equivalents and short-and long-term investments, including auction rate securities (discussed in more detail in “NOTE 6 – Short- and Long-Term Investments” contained in the accompanying financial statements).  Continued failures of auctions for the auction rate securities we hold limit our ability to liquidate these investments and are expected to continue failing for some period of time.  Although the money market funds and municipal bonds we hold are highly rated and are comprised of high-quality, liquid instruments, if the financial markets trading the underlying assets experience a disruption, we may need to temporarily rely on other forms of liquidity.  In addition, a risk exists that our cash and investments may not always be optimally managed and this may affect our profitability and results of operations.

Our charter documents and other circumstances could prevent a takeover or cause dilution of our existing shareholders, which could be detrimental to existing shareholders

Our Articles of Incorporation and Bylaws contain provisions that may have the effect of delaying, deterring or preventing a takeover of Hot Topic, Inc.  For instance, our Articles of Incorporation include certain “fair price provisions” generally prohibiting business combinations with controlling or significant shareholders unless certain minimum price or procedural requirements are satisfied, and our Bylaws prohibit shareholder action by written consent.  Additionally, our Board of Directors, or Board, has the authority to issue, without shareholder approval, up to 10,000,000 shares of “blank check” preferred stock having such rights, preferences and privileges as designated by the Board.  The issuance of these shares could have a dilutive effect on shareholders and potentially prohibit a takeover of Hot Topic, Inc. by requiring the preferred shareholders to approve such a transaction.  We also have a significant number of authorized and unissued shares of our common stock available under our Articles of Incorporation.  These shares provide us with the flexibility to issue our common stock for future business and financial purposes including stock splits, raising capital and providing equity incentives to employees, officers and directors.  The issuance of these shares could result in dilution to our shareholders.

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We are dependent upon malls remaining popular as shopping destinations, the ability of shopping mall anchor tenants and other attractions to generate customer traffic and maintaining good relationships with shopping mall operators

The global economic downturn and other factors have diminished the ability of shopping mall operators to operate profitably and, in some cases, forced them to declare bankruptcy or cease operations entirely.  The ongoing slowdown in the United States economy, uncertain economic outlook, and other factors could continue to curtail shopping mall development, decrease shopping mall traffic, reduce the number of hours shopping mall operators keep their shopping malls open, cause shopping mall operators to lower their operational standards and negatively impact our lease contracts.  Consolidation of ownership of shopping malls may give landlords more leverage in negotiations and adversely affect our ability to negotiate favorable lease terms.  Such consolidation may result in increased lease costs.  We believe we have favorable relationships with shopping mall operators and developers, however if this changes it could inhibit our ability to negotiate with them and may make it more difficult for us to manage our leases, including for us to expand, remodel or relocate to certain sites.  If our relations with shopping mall operators or developers become strained, or we otherwise encounter difficulties in leasing store sites, we may not be able to open stores in malls we would otherwise be interested in maintaining stores; we may not be able to negotiate lease terms favorable to the company; and we may be inhibited in our ability to close underperforming stores.

We face intense competition

The apparel, music and accessory categories within the retail industry in which we operate are highly competitive.  Increased competition could have a material adverse effect on our business, results of operations and financial condition.  Our competitors, particularly big-box retailers, may have the ability to sell merchandise at substantially lower prices than we are able to sell such merchandise.  This may cause us to incur greater than anticipated price reductions and unanticipated increases in our inventories for such products.  It may also cause us to elect not to sell such products, despite the fact the products would otherwise attract customers and sell well in our stores.

We are responsible for maintaining the privacy of personally identifiable information of our customers

We are highly dependent on the use of credit cards to complete sale transactions in our stores and through our websites.  If we fail to comply with Payment Card Industry (PCI) Data Security Standards, we may become subject to fines or limitations on our ability to accept credit cards.  Through our sale transactions, loyalty programs and other methods, we obtain information about our customers which is subject to federal and state privacy laws.  These laws are constantly changing.  If we fail to comply with these laws, we may be subject to fines or penalties.

Timing, seasonal issues and other fluctuations outside of our control could negatively impact our financial performance for given periods

Our business, particularly our Hot Topic division, is subject to seasonal influences that affect our comparable store sales.  There are heavier concentrations of sales during the back-to-school, Halloween and holiday (defined as the week of Thanksgiving through the first few days of January) seasons and other periods when schools are not in session.  Our results of operations may fluctuate materially depending on, among other things, the timing of store openings and related pre-opening and other startup expenses; net sales contributed by new stores; increases or decreases in comparable store sales; timing, popularity and our ability to obtain, certain pop culture-related licenses, including on an exclusive basis; releases of new music, film and television; releases of new music/pop culture-related products; our ability to efficiently source and distribute products; changes in our merchandise mix and the challenges involved in getting the right mix into stores at the right time; shifts in timing of certain holidays; weather conditions; and overall economic conditions.

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Our profitability could be adversely affected by volatile commodity prices, including petroleum and cotton

The profitability of our business depends to a certain degree upon the price of certain commodities, including petroleum and cotton products.  We are affected by changes in such prices to the extent that such commodities are part of the costs of delivery of merchandise to our stores and to the extent that the commodities are used in the production of our merchandise.  Higher gasoline prices may also affect the willingness of consumers to drive to our stores.

Significant fluctuation in the value of the U.S. dollar or foreign exchange rates may affect our profitability

Substantially all of our foreign purchases of merchandise have been negotiated and paid for in U.S. dollars.  As a result, our sourcing operations may be adversely affected by significant fluctuation in the value of the U.S. dollar against foreign currencies, restrictions on the transfer of funds and other trade disruptions.  A portion of our revenues come from foreign markets.  Changes in foreign exchange rates applicable to these markets may adversely affect our revenues, even if the volume of sales remains the same.  We may not be able to repatriate revenues earned in foreign markets.

Recording impairment charges for certain underperforming stores may negatively impact our future financial condition or results of operations, and closing stores might not have a positive impact on our operating results

We are required to assess, and where appropriate, record a charge for, the impairment of underperforming assets.  This may negatively impact our reported and future financial condition and results of operations.  In addition, we continue to close stores that do not meet our expectations of profitability which may cause us to impair or accelerate the depreciation of certain store assets and incur additional amounts for lease termination, severance and other closing costs.  There can be no assurance that we will not incur future impairment charges and store closure expenses for underperforming assets or that store closures will have a significant positive impact on our operating results.

Changes in laws, including employment laws and laws related to our merchandise, could make conducting our business more expensive or change the way we do business

Changes in laws and any future changes could make our operations more expensive or require us to change the way we do business.  Changes in federal and state minimum wage laws could require us to change our entire wage structure for stores.  Other laws related to treatment of employees, including laws related to employee benefits and privacy, could also negatively impact us, such as by increasing medical insurance costs and related expenses.  Changes in product safety or other consumer protection laws could lead to increased costs to us for certain merchandise, additional labor costs associated with readying merchandise for sale or serve as the basis for litigation.

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A disruption of imports may increase our costs and reduce our supply of merchandise

We receive apparel and other merchandise from foreign sources, both purchased directly in foreign markets and indirectly through domestic vendors with foreign sources.  As a result of our reliance on international vendors and manufacturers, we are subject to the risks generally associated with global trade and doing business abroad, which include foreign laws and regulations, political unrest, disruptions or delays in cross-border shipments and changes in economic conditions in countries in which our merchandise is manufactured.  In addition, disease outbreaks, terrorist acts or military conflicts could increase the risks of doing business with suppliers who rely on foreign markets.  Trade restrictions in the form of tariffs or quotas, or both, that are applicable to the merchandise we sell also could affect the importation of the merchandise and increase the cost and reduce the supply of products available to us.  Further, changes in tariffs or quotas for merchandise imported from individual foreign countries could lead us to shift our sources of supply among various countries.  Any shift we might undertake in the future could result in a disruption of our sources of supply and lead to a reduction in our revenues and earnings.  Supply chain security initiatives undertaken by the United States or foreign governments that impede the normal flow of product could also negatively impact our business.

We incur costs associated with regulatory compliance, and this cost could be significant

There are numerous regulatory requirements for public companies that we comply with or may be required to comply with in the future associated with our business operations and compliance with these rules could result in the diversion of management’s time and attention, which could be disruptive to normal business operations.  These regulations may include more stringent accounting standards, taxation requirements (including changes in applicable income tax rate, new tax laws and revised tax law interpretations), trade restrictions, regulations regarding financial matters, privacy and data security, environmental regulations, advertising, safety and product liability.  We may in the future be required to adopt International Financial Reporting Standards, and doing so could be time-consuming and causes us to incur significant expense.  If we do not satisfactorily or timely comply with these requirements, possible consequences could include sanction or investigation by regulatory authorities such as the SEC or the Nasdaq Stock Market; fines and penalties; incomplete or late filing of our periodic reports, including our annual report on Form 10-K or quarterly reports on Form 10-Q or civil or criminal liability.

Government or consumer concerns about product safety could result in regulatory actions, recalls or changes to laws, which could harm our reputation, increase costs or reduce sales

We are subject to regulation by the Consumer Product Safety Commission and similar state and international regulatory authorities, and our products could be subject to involuntary recalls and other actions by these authorities.  We purchase merchandise from suppliers domestically as well as outside the United States.  One or more of our suppliers might not adhere to product safety requirements or our quality control standards, and we might not identify the deficiency before such merchandise is received by our customers.  Issues of product safety could result in a recall of products we sell.  Additionally, regulatory authorities, including the Consumer Product Safety Commission, have undertaken reviews of product safety and are in the process of enacting or are considering various proposals for more stringent laws and regulations.  In particular, the U.S. Congress has enacted the Consumer Product Safety Improvement Act of 2008, which imposes significant new requirements on the sale of consumer products and enhanced penalties for noncompliance.  Such regulations contain provisions which have uncertain applicability to products we sell, and such lack of certainty may inhibit our willingness carry products or cause us to carry product we otherwise would not.  These regulations could result in delays in getting products to our stores, lost sales, the rejection of our products by consumers, damage to our reputation or material increases in our costs, and may have a material adverse effect on our business.  Moreover, individuals and organization may assert legal claims for our non-compliance with consumer product rules and regulations, and we may be subject to lawsuits relating to these claims.  There is a risk that these claims or liabilities may exceed or fall outside the scope of indemnities provided by third parties or outside the coverages of our insurance policies.

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Economic conditions could decrease consumer spending and reduce our sales

Certain economic conditions could affect the level of consumer spending on merchandise we offer, including, among others, employment levels; salary and wage levels, particularly of teens and college-age adults; interest rates; availability of consumer credit; taxation; and consumer confidence in future economic conditions.  For example, the global economic downturn has significantly reduced consumer spending levels and mall customer traffic in general.  The ongoing slowdown in the United States economy and uncertain economic outlook could continue to cause lower consumer spending levels and mall customer traffic which could adversely affect our sales results and financial performance.  In addition, we are highly dependent on a significant level of teenage and college-age spending on music/pop culture-licensed and music/pop culture-influenced products, and we likely would be adversely affected if economic conditions limited such spending.

War, terrorism and other catastrophes could negatively impact our customers, places where we do business and our expenses

The continued threat of terrorism, heightened security and military action in response to this threat, any future acts of terrorism, and significant natural disasters or other catastrophic events may cause disruptions and create uncertainties that affect our business.  To the extent that such disruptions or uncertainties negatively impact shopping patterns and/or shopping mall traffic, or adversely affect consumer confidence or the economy in general, our business, operating results and financial condition could be materially and adversely affected.  A significant natural disaster or other catastrophic event affecting our facilities could materially affect our supply chain, our information system and other aspects of our operations.

Our stock price could fluctuate substantially for reasons outside of our control

Our common stock is quoted on the Nasdaq Stock Market, which has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect our stock price without regard to our financial performance.  In addition, we believe that factors such as quarterly fluctuations in our financial results and comparable store sales; announcements by other apparel, accessory, music and gift item retailers; the trading volume of our stock; changes in estimates of our performance by securities analysts; litigation; overall economic and political conditions, including the global economic downturn; the condition of the financial markets, including the credit crisis; and other events or factors outside of our control could cause our stock price to fluctuate substantially.

Environmental risks associated with the retail industry may result in significant costs and decreased sales

We are exposed to risks arising out of environmental matters and existing and potential laws relating to the protection of the environment.  Adverse and unexpected weather conditions, including such conditions caused by the global climate change phenomena, could affect our supply chain, mall traffic and customer interest in our products.  We receive apparel and other merchandise from foreign sources, both purchased directly in foreign markets and indirectly through domestic vendors with foreign sources.  Stricter global and domestic greenhouse gas emission requirements may cause our vendors to incur higher costs, including increased transportation costs.  There is a risk that we may occupy retail space that may require remediation to comply with environmental laws.  In addition to potential liability for remediation costs, the cleanup process may cause our stores to be closed for an extended period of time, resulting in loss of sales.

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Item 6.  Exhibits

Exhibit Number	Description of Document
3.1	Amended and Restated Articles of Incorporation.  (Filed as an exhibit to Registrant’s Registration Statement on Form SB-2 (333-5054-LA) and incorporated herein by reference.)
3.2	Certificate of Amendment of Amended and Restated Articles of Incorporation.  (Filed as Exhibit 3.2 to Registrant’s Annual Report on Form 10-K for the year ended January 29, 2005 and incorporated herein by reference.)
3.3	Amended and Restated Bylaws, as amended.  (Filed as Exhibit 3.3 to Registrant’s Annual Report on Form 10-K for the year ended January 29, 2005 and incorporated herein by reference.)
4.1	Reference is made to Exhibits 3.1, 3.2 and 3.3.
4.2	Specimen stock certificate.  (Filed as an exhibit to Registrant’s Registration Statement on Form SB-2 (333-5054-LA) and incorporated herein by reference.)
10.2	Amendment dated March 21, 2011 to Amended and Restated Employment Letter Agreement dated November 24, 2008 between the Registrant and Gerald Cook. (Filed as Exhibit 10.14a to Registrant’s Annual Report on Form 10-K for the year ended January 29, 2011 and incorporated herein by reference.)
10.3	Amendment dated March 21, 2011 to Amended and Restated Employment Letter Agreement dated November 24, 2008 between the Registrant and James McGinty. (Filed as Exhibit 10.16a to Registrant’s Annual Report on Form 10-K for the year ended January 29, 2011 and incorporated herein by reference.)
10.4	Employment Agreement, dated as of March 21, 2011, by and between Registrant and Lisa Harper. (Filed as Exhibit 10.21a to Registrant’s Annual Report on Form 10-K for the year ended January 29, 2011 and incorporated herein by reference.)
10.5	Mutual Separation Agreement, dated as of March 21, 2011, by and between Registrant and Elizabeth McLaughlin. (Filed as Exhibit 10.22a to Registrant’s Annual Report on Form 10-K for the year ended January 29, 2011 and incorporated herein by reference.)
10.6	Mutual Separation Agreement, dated as of April 6, 2011, by and between Registrant and Amy Kocourek.
31.1	Certification, dated May 20, 2011 of Registrant’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification, dated May 20, 2011, of Registrant’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications, dated May 20,  2011, of Registrant’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Hot Topic, Inc.
	(Registrant)
Date:           May 20, 2011	/s/ Lisa Harper
	Lisa Harper
	Chief Executive Officer
	(Principal Executive Officer)
Date:           May 20, 2011	/s/ James McGinty
	James McGinty
	Chief Financial Officer
	(Principal Financial
	And Accounting Officer)

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Exhibit Index

Exhibit Number	Description of Document
3.1	Amended and Restated Articles of Incorporation.  (Filed as an exhibit to Registrant’s Registration Statement on Form SB-2 (333-5054-LA) and incorporated herein by reference.)
3.2	Certificate of Amendment of Amended and Restated Articles of Incorporation.  (Filed as Exhibit 3.2 to Registrant’s Annual Report on Form 10-K for the year ended January 29, 2005 and incorporated herein by reference.)
3.3	Amended and Restated Bylaws, as amended.  (Filed as Exhibit 3.3 to Registrant’s Annual Report on Form 10-K for the year ended January 29, 2005 and incorporated herein by reference.)
4.1	Reference is made to Exhibits 3.1, 3.2 and 3.3.
4.2	Specimen stock certificate.  (Filed as an exhibit to Registrant’s Registration Statement on Form SB-2 (333-5054-LA) and incorporated herein by reference.)
10.2	Amendment dated March 21, 2011 to Amended and Restated Employment Letter Agreement dated November 24, 2008 between the Registrant and Gerald Cook. (Filed as Exhibit 10.14a to Registrant’s Annual Report on Form 10-K for the year ended January 29, 2011 and incorporated herein by reference.)
10.3	Amendment dated March 21, 2011 to Amended and Restated Employment Letter Agreement dated November 24, 2008 between the Registrant and James McGinty. (Filed as Exhibit 10.16a to Registrant’s Annual Report on Form 10-K for the year ended January 29, 2011 and incorporated herein by reference.)
10.4	Employment Agreement, dated as of March 21, 2011, by and between Registrant and Lisa Harper. (Filed as Exhibit 10.21a to Registrant’s Annual Report on Form 10-K for the year ended January 29, 2011 and incorporated herein by reference.)
10.5	Mutual Separation Agreement, dated as of March 21, 2011, by and between Registrant and Elizabeth McLaughlin. (Filed as Exhibit 10.22a to Registrant’s Annual Report on Form 10-K for the year ended January 29, 2011 and incorporated herein by reference.)
10.6	Mutual Separation Agreement, dated as of April 6, 2011, by and between Registrant and Amy Kocourek.
31.1	Certification, dated May 20, 2011 of Registrant’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification, dated May 20, 2011, of Registrant’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications, dated May 20,  2011, of Registrant’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.