Struggling Retailer Hot Topic Swings to Loss

Goth-inspired teen retailer Hot Topic Inc. on Wednesday posted a fiscal first-quarter loss, reversing a year-earlier profit, because of a steep decline in sales at established stores.

The company, which sells apparel and accessories, posted a loss of $1.4 million, or 3 cents a share, in the quarter ended April 29. That contrasted with a profit of $5 million, or 11 cents, a year earlier.

Hot Topic, based in the City of Industry, said the results included stock option expenses of about 2 cents a share.

Net sales rose 3% to $154 million. But sales at stores open at least a year -- a key retail measure known as same-store sales -- fell 9.6%.

Analysts on average had expected Hot Topic to post a loss of 3 cents a share on sales of $155.6 million, according to Reuters Estimates.

The retailer has struggled as fashion trends have turned to more preppy styles rather than the rock-music-inspired and gothic designs that Hot Topic carries.

Hot Topic reported its results after the close of markets. Its shares, which traded as high as $22.89 in May 2005, fell 33 cents to $14.04.