ANF Abercrombie and Fitch Co

Hot Topic Inc. (HOTT) reported positive same-store sales for the month of May following a robust 10.5% growth in the sequentially preceding period. Same-store sales in May came in at 0.4% compared with a fall of 9.0% in the year-earlier period.

The company reported the second consecutive month of positive results of same-store sales after 23 straight months of negative comparables.  Prior to it, the company had last registered same-store sales growth of 3.1% way back in April 2009.

However, Hot Topic recorded a 1.5% year-over-year decline in total sales for the month, totalling $42 million.

May Sales Update

Hot Topic: Segment same-store sales inched down 0.9% in May 2011, improving noticeably from a 9.6% drop in the prior-year period. Total sales of $29.7 million, decreased 2.7% year over year for the month.

Torrid: Torrid registered same-store sales growth of 4% compared with a decline of 7.4% in the prior-year period. Sales improved 1.7% year over year to reach $12.3 million in the month.

Preliminary First-Quarter Sales

Year to date, the company reported same-store sales increase of 0.2%, reversing the fall of 8.7% in the prior-year period. Total sales for the period slipped 1.0% to $203.3 million.

Year to date, same-store sales at the Hot Topic segment declined 1.2%. Though in the red, comparables improved considerably from a drop of 11.8% in the prior-year quarter. Sales for the period plunged 3.1% to $145.7 million.

Torrid: Torrid recorded same-store sales growth of 4.6% compared with 1.9% in the year-ago period. Sales improved 4.7% year over year to reach $57.6 million for the year-to-date period.

Guidance

The company estimates second-quarter 2011 loss per share between 9 cents and 11 cents, on the back of flat same store sales growth.

We maintain our long-term Neutral recommendation on Hot Topic Inc. The quantitative Zacks #3 Rank (short-term Hold rating) for the company however indicates no clear directional pressure on the stock over the near term.

Based in City of Industry, California, Hot Topic Inc. is a shopping mall-based specialty retailer operating the Hot Topic and Torrid store concepts across the U.S. as well as the e-space music discovery concept, ShockHound. The company competes with Abercrombie & Fitch Co. (ANF).

 
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