ANF Abercrombie and Fitch Co

HOT Topic Inc. (HOTT) reported positive same-store sales of 7.3% for the month of July, striding ahead of the 0.4% rise in the preceding quarter and leaving behind the 9.0% fall in the year-earlier period.

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

Hot Topic recorded a 5.5% year-over-year rise in total sales for the month, totalling $50.9 million.

July Sales Update

Hot Topic: Segment same-store sales moved up 6.2% in July 2011, improving substantially from a 9.4% drop in the prior-year period. Total sales of $39.3 million increased 4.5% year over year for the month.

Torrid: Torrid registered same-store sales growth of 11.8% compared with a decline of 7.2% in the prior-year period. Sales improved 9.8% year over year to reach $11.6 million in the month.

Preliminary Second Quarter Sales Update

For the second quarter of fiscal 2011, the company reported a same-store sales increase of 2.6%, reversing the fall of 6.4% in the prior-year period. Total sales for the period increased marginally by 0.6% to $150.9 million.

Hot Topic: For the quarter, same-store sales increased 1.2%. Despite the marginal increase, comparables improved considerably from a drop of 6.5% in the prior-year quarter. Sales for the period dipped 0.7% to $112.2 million.

Torrid: Torrid recorded same-store sales growth of 7.4% compared with 6.0% in the year-ago period. Sales improved 5.3% year over year to reach $38.7 million for the quarter.

Guidance

The company updated its estimate for second-quarter 2011 from a loss per share between 9 cents and 11 cents to a loss per share of 8 cents a share.

We maintain our long-term Neutral recommendation on Hot Topic Inc. The quantitative Zacks #1 Rank (short-term Strong Buy rating) for the company indicates upward directional pressure on the stock in 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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