Hot Topic shares up on 4Q beat, forecast
Shares of Hot Topic Inc. rose in trading Thursday after the teen retailer's recent quarterly results and earnings guidance beat market expectations.
THE SPARK: Hot Topic reported late Wednesday that it earned 21 cents per share for its fourth quarter, beating analyst expectations of 19 cents per share, according to FactSet. The company's revenue fell but beat expectations as well.
Cost-cutting helped Hot Topic improve its profitability. With that benefit and higher sales, it expects to earn 2 cents to 5 cents per share for the first quarter. That's better than beat the break-even forecast analysts had for the company on a per-share basis.
THE BIG PICTURE: Hot Topic and other retailers have struggled to find their optimal profitability in the still-unbalanced economy.
Hot Topic has closed unprofitable stores, changed its product lineup and shuttered its music download and social networking website. Its profitability has improved and sales are rising at its stores open at least a year, which is a key indicator of financial performance because it strips away the temporary impact of closing or opening stores.
THE ANALYSIS: Janney Capital Markets analyst Adrienne Tennant praised the retailer's ability to grow, especially noting upcoming products tied to the popular Hunger Games books and movie. Tennant also pointed to the management team's edgier vision for its stores and plans to increase the number of Torrid stores to pay off in the long run.
SHARE ACTION: Shares of Hot Topic were up 92 cents, more than 10 percent, trading in early afternoon at $9.71. They have traded between $5.05 and $9.38 in the past 52 weeks.
Source: http://news.yahoo.com/hot-topic-shares-4q-beat-forecast-191936753.html
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