Hot Topic Names Two New Presidents
Teen retailer Hot Topic Inc. on Wednesday named new presidents of its two divisions, signaling the growing importance of its 2-year-old Torrid chain.
The City of Industry-based company also said August sales jumped 31% to $61.5 million. Hot Topic’s comparable-stores sales -- considered a better indicator of a retailer’s health because it measures sales at established stores open at least a year -- rose nearly 12% as young shoppers snapped up music-themed clothes and accessories before heading back to school.
Encouraged by last month’s results, the firm raised its third-quarter earnings-per-share projection by a penny to 26 cents.
Investors rewarded Hot Topic by pushing its stock to a 52-week high of $24.92 during trading Wednesday. It closed at $24.80, up 97 cents, on Nasdaq. The stock’s value has ballooned 122% over the last year.
“They’re hot right now, literally and figuratively,” said Adrienne Tennant, a Wedbush Morgan Securities analyst.
Rejiggering its management team, the company said it has promoted Jerry Cook, formerly the chief operating officer, to president of the Hot Topic chain. Patricia Van Cleave, who was chief merchandising officer, was named president of Torrid, the company’s apparel chain for plus-size young women.
“Now each [division] will have a dedicated leader that will set the direction and provide the focus and drive each business separately, as they should be,” Chief Executive Betsy McLaughlin said.
Analysts say the changes won’t make much difference in the company’s operations because Cook and Cleave already were intimately involved with the divisions they now officially head.
“They’ve basically been doing this anyway,” said Lauren Cooks Levitan, an analyst with SG Cowen Securities Corp.
Such management restructuring is a necessary step as the company, which operates 464 Hot Topic stores and 42 Torrid outlets, continues to grow, analysts said. It also is a further indication that the Torrid concept, which had a wobbly start, is finding its footing.
“It’s a testament to the fact that Torrid is working, it has legs and is probably going to be a very material part of the business going forward,” Tennant said.
When the company launched the plus-size chain in April 2001, its merchandise and ambience mimicked the edgy feel of the sister chain. But analysts say the company has since better identified the needs of young plus-size women. To satisfy them, Hot Topic has altered the merchandise mix, offering a broader array of styles, including more pulled-together outfits and office attire.
