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May 5, 2011
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Hot Topic April sales show turnaround

May 5, 2011

May 4 - Hot Topic Inc and Zumiez Inc posted April same store sales that bettered market expectations, helped by a boost from a late Easter this year and, for Hot Topic, a turnaround at its stores.

Hot Topic
Swimwear at Hot Topic

Sales at stores open for at least a year, or same-store sales, at Hot Topic turned positive and rose 10.5 percent. This surpassed analysts' average estimate of a rise of 3.4 percent, according to Thomson Reuters I/B/E/S.

The company, which has been struggling to get back on the teenage shopping list, has been closing underperforming stores and revamping others under new Chief Executive Lisa Harper, who took charge in March.

The company also raised its estimates for the first quarter.

"Of course there was some benefit from Easter, but Hot Topic is a singular story," Wall Street Strategies analyst Brian Sozzi said.

"They are offering differentiated merchandise. You see more local band and music themes applied to their T-shirts, which sets them apart from other teen retailers. Where there is strength in apparel, I think accessory sales will follow," he added.

This year, Easter was on April 24, compared with April 4 last year. So, more people shopped later in the month, boosting sales.

For Zumiez, which has been consistently outperforming peers, same store sales rose 17.5 percent against a market expectation of a 14 percent rise.

But analyst Sozzi said Zumiez's beat was more a reflection of broader market trends.

"I'm not sure the beat is enough. I think the market wanted more from them," he said.

Analysts expect April numbers to be strong across the board, despite rising gasoline prices that threaten to eat into shoppers' budgets.

Same-store sales are forecast to rise 8.2 percent, compared with a rise of 0.7 percent last year, according to Thomson Reuters data.

Hot Topic shares closed at $6.52 on Wednesday on Nasdaq, while Zumiez shares closed at $28.55 on the same exchange.

(Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Joyjeet Das)

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