Hot Topic Q3 profit up on sales rise

Mall-based retailer Hot Topic has booked a 38% rise in third-quarter net profit on the back of higher sales of new fashion-forward merchandise.

The company, which operates 810 Hot Topic and Torrid stores, also said its new vertical sourcing model “significantly improved” gross margin rate.

“We validated the new merchandising and sourcing strategies at Torrid this quarter, and continue to be enthusiastic about Torrid as a growth vehicle for the company,” said CEO and chairman Lisa Harper.

“Customers reacted positively to the new fashion-forward assortment and brand marketing introduced in late July. At Hot Topic, we continue to see improvement in the fashion apparel and tee businesses, which offset the challenges in the accessory categories.”

During the three months to 27 October, net income reached $4.3 million or $0.10 per share, compared to $3.1 million or $0.07 per share last year. Income from operations jumped 62.4% to $6.9 million.

The California-based retailer said sales climbed 2% to $179.4 million, while comparable sales edged up 0.2%.

Hot Topic also unveiled its new lingerie retail concept in five mall-based stores and online yesterday. The range, which has been developed under the Blackheart banner for women between 18 and 30, will include bras, corsets, hosiery, sleepwear, accessories and beauty products.

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