Hot Topic, Inc. Reports 3rd Quarter EPS Of $0.13

Provides Guidance for the 4th Quarter of 2009


CITY OF INDUSTRY, Calif., Nov. 18, 2009 (GLOBE NEWSWIRE) -- Hot Topic, Inc. (Nasdaq:HOTT) today reported net income in the third quarter of fiscal 2009 (13 weeks ended October 31, 2009) of $5.8 million, or $0.13 per share, compared to $7.4 million, or $0.17 per share, in the third quarter of fiscal 2008 (13 weeks ended November 1, 2008). The results for the third quarter of fiscal 2009 and fiscal 2008 include approximately $0.02 and $0.01 per share of expense, respectively, related to ShockHound (www.shockhound.com), the company's online music site.

Total sales for the third quarter of fiscal 2009 decreased 3.9% to $189.6 million compared to $197.3 million for the third quarter last year. Total company comparable store sales declined 5.0% for the third quarter of fiscal 2009. A summary of the sales results by division (including internet) is as follows:



                                                   Comparable Store
                                Net Sales           Sales % Change
                            --------------------  --------------------
                                        % Change
                                $       To Last     This       Last
                             Millions    Year       Year       Year
                            ---------  ---------  ---------  ---------
  THIRD QUARTER:
   Hot Topic                 $151.0      -5.6%      -5.8%      1.7%

   Torrid                    $38.6        2.9%      -1.4%     -3.0%

   Total Co.                 $189.6      -3.9%      -5.0%      1.0%

At the end of the third quarter of fiscal 2009, the company operated 680 Hot Topic stores and 156 Torrid stores compared to 683 Hot Topic stores and 158 Torrid stores at the end of the third quarter of fiscal 2008. During the third quarter of fiscal 2009, the company opened one Hot Topic store. The company also remodeled or relocated six Hot Topic stores during the quarter.

The company issued fourth quarter (13 weeks ending January 30, 2010) guidance of earnings in the range of $0.23 to $0.26 per diluted share based upon a high-single-digit decline in comparable store sales.

A conference call to discuss third quarter results, business trends, guidance and other matters is scheduled for November 18, 2009 at 4:30 PM (ET). The conference call number is 866-271-0675, pass code "Hot Topic," and will be accessible to all interested parties. It will also be webcast on the company's Investor Relations website located at http://investorrelations.hottopic.com. A replay of the conference call will be available at 888-286-8010, pass code 29624475, for approximately two weeks. In addition, a webcast replay of the conference call will be available on the company's Investor Relations website for approximately two weeks.

Hot Topic, Inc. is a mall and web based specialty retailer operating the Hot Topic and Torrid concepts, as well as the e-space music discovery concept, ShockHound. Hot Topic offers music/pop culture-licensed and music/pop culture-influenced apparel, accessories, music and gift items for young men and women principally between the ages of 12 and 22. Torrid offers apparel, lingerie, shoes and accessories designed for various lifestyles for plus-size females principally between the ages of 15 and 29. ShockHound (www.shockhound.com) is a one-stop, genre-spanning music website where people of all ages can purchase MP3s and music merchandise, share their music interests, and read music news and editorial content. As of October 31, 2009, the company operated 680 Hot Topic stores in all 50 states and Puerto Rico, 156 Torrid stores, and Internet stores www.hottopic.com, www.torrid.com and www.shockhound.com.

In addition to historical information, this news release and the aforementioned prerecorded commentary contain forward-looking statements, which may include statements relating to financial results, guidance, store operations, closures, remodels and relocations, projections and other financial performance. These statements involve risks and uncertainties, including risks and uncertainties associated with meeting expected financial results, fluctuations in sales and comparable store sales results, our online music site, music, licensing and fashion trends, competition from other retailers, uncertainties generally associated with specialty retailing, technology and other risks associated with Internet sales, the effect of negative conditions in the economic environment (including global capital and credit markets), the effect of severe weather or natural disasters, political and/or social changes or events that could negatively impact shopping patterns and/or mall traffic, relationships with mall developers and operators, relationships with our vendors, litigation proceedings and contingent liabilities, as well as other risks detailed in the company's SEC reports including its Annual Report on Form 10-K for the year ended January 31, 2009 and its Quarterly Reports on Form 10-Q. Historical results achieved are not necessarily indicative of the future prospects of the company, and actual results or circumstances could differ materially from the forward-looking statements.



                        HOT TOPIC, INC.
               CONSOLIDATED INCOME STATEMENTS
          (In thousands, except per share amounts)
                        (Unaudited)

                                                Three Months Ended
                                          ----------------------------
                                          Oct. 31, 2009   Nov. 1, 2008
                                          -------------  -------------


 Net sales                                     $189,568       $197,309
 Cost of goods sold, including buying,
  distribution and occupancy costs              119,674        123,128
 Gross margin                                    69,894         74,181
 Selling, general & administrative
  expenses                                       60,260         62,422
 Income from operations                           9,634         11,759
 Interest income-net                                 93            511
 Income before income taxes                       9,727         12,270
 Provision for income taxes                       3,878          4,832
 Net income                                      $5,849         $7,438

 Earnings per share:
    Basic and Diluted                             $0.13          $0.17
 Shares used in computing income per share:
    Basic                                        44,143         43,810
    Diluted                                      44,497         43,972


                                                Nine Months Ended
                                          ----------------------------
                                          Oct. 31, 2009   Nov. 1, 2008
                                          -------------  -------------


 Net sales                                     $522,485       $523,101
 Cost of goods sold, including buying,
  distribution and occupancy costs              342,803        341,727
 Gross margin                                   179,682        181,374
 Selling, general & administrative
  expenses                                      173,622        173,457
 Income from operations                           6,060          7,917
 Interest income-net                                446          1,299
 Income before income taxes                       6,506          9,216
 Provision for income taxes                       2,609          3,634
 Net income                                      $3,897         $5,582

 Earnings per share:
    Basic and Diluted                             $0.09          $0.13
 Shares used in computing income per share:
    Basic                                        44,069         43,761
    Diluted                                      44,413         43,815


                      HOT TOPIC, INC.
            CONDENSED CONSOLIDATED BALANCE SHEETS
                     (In thousands)
                      (Unaudited)

                                          Oct. 31, 2009   Nov. 1, 2008
                                          -------------  -------------
 Current Assets:
 Cash, cash equivalents and
  short-term investments                        $91,424        $60,310
 Inventory                                       91,393         94,574
 Prepaid expenses and other                      14,503         15,392
 Deferred tax assets                              6,183          5,015
 Total current assets                           203,503        175,291

 Property and equipment, net                    145,253        160,644
 Deposits and other                               3,129          1,480
 Long-term investments                            8,184          9,545
 Deferred tax assets                              8,834          6,586
 Total assets                                  $368,903       $353,546

 Current Liabilities:
 Accounts payable                               $27,932        $31,805
 Accrued liabilities                             34,222         35,815
 Income taxes payable                               654          2,872
 Total current liabilities                       62,808         70,492

 Deferred rent                                   33,219         37,818
 Deferred compensation liability                  2,924          1,183
 Income taxes payable                             1,850            844
 Total liabilities                              100,801        110,337

 Total shareholders' equity                     268,102        243,209
 Total liabilities and shareholders' equity    $368,903       $353,546

                         OTHER DATA
                    (Dollars in thousands)
                         (Unaudited)

                                                Nine Months Ended
                                          ----------------------------
                                          Oct. 31, 2009   Nov. 1, 2008
                                          -------------  -------------
 Depreciation and amortization                  $28,438        $28,744
 Capital expenditures                           $19,519        $18,777

 Total company store square footage           1,584,000      1,594,200
 Hot Topic average store size                     1,757          1,755
 Torrid average store size                        2,495          2,501


            

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