Hot Topic Inc. said Wednesday that same store sales for March rose a modest 1.2 percent, sending shares of the company higher by almost 5 percent.
In a statement, the City of Industry, Calif., -based specialty retailer said net sales for the five weeks ended April 6 rose 30 percent to $32.4 million from $25 million last year.
"Our positive comparable store sales for March were driven by the earlier spring break caused by an earlier Easter holiday this year," said Betsy McLaughlin, president and chief executive officer.
Total sales for the first nine weeks of fiscal 2002 were $55.5 million an increase of 28 percent over sales of 43.3 million for the same period last year.
Hot Topic is a mall-based specialty retailer of music-licensed and music-influenced apparel, accessories and gift items for young men and women, principally between the ages of 12 and 22.
The company carries brand names such as Caffeine and UFO, as well as private-label brands such as Morbid Threads.
Elizabeth Pierce, a retail analyst with Los Angeles-based Wedbush Morgan Securities, said the company's announcement was "above our flat estimate."
"The company's ability to posy a 1.2 percent comp on top of last year's difficult 9.6 percent increase amid a non-promotional period demonstrates the power of the Hot Topic concept," said Pierce in a research report released Wednesday.
The company operates 362 Hot Topic stores, and six Torrid stores nationwide.
"We continued to be pleased with sales at both our Torrid stores and torrid.com," said McLaughlin. "Construction has started on the first two of the planned 15 additional Torrid locations in 2002."
The stores are expected to open in May, she said.
"Although Torrid is still in the early stages of development, we believe that it will be a strong growth vehicle for the company based on our store visits and the fact that this plus-size juniors' market is so underserved," said Pierce.
In her report, Pierce reiterated her "buy" recommendation with a price target of $31.
Wachovia Securities did not completely share Pierce's positive feelings about Hot Topic.
The Charlotte, N.C., -based firm downgraded Hot Topic shares from a "strong buy" to "buy."
"We are downgrading shares of Hot Topic ... due primarily to weaker-than-expected sales trends as well as to the limited upside to our $25 target price from current levels," said analyst Joseph Teklits in a research report.
Teklits said the move was made in response to the company's same store sales for March coming in below "our estimate of a 2 percent increase." He said despite limited upside potential from current levels Hot Topic "remains one our favorite core holdings."
Hot Topic's positive sales news followed similar reports this week from Lands' End, CVS Corp., Abercrombie & Fitch Co. and Wal-Mart Stores Inc.
Shares of Hot Topic gained 99 cents, or 4.45 percent, to $23.24 on moderate volume of 694,200 shares traded on the Nasdaq stock market. The stock reached its 52-week high of $25.47 on May 22, 2001, and hit its 52-week low of $14.34 on Sept. 21, 2001.
