What's the Hot Topic? "Everything About the Music," according to this teen-focused retailer. Hot Topic's 600-plus mall-based stores in the US, Puerto Rico, and Canada sell rock-inspired clothing and accessories in settings resembling the industrial clubs where kids (ages 12 to 22) rock out. It also runs more than 200 Torrid shops offering apparel and accessories for plus-sized females (as old as 29!). Though focused on selling licensed concert apparel from current and classic rockers including Iron Maiden, Nirvana, and Metallica, Hot Topic also sells tees celebrating pop culture and trendy apparel that appeals to various musical subcultures. Hot Topic is owned by private equity firm Sycamore Partners.
Change in Company Type
In June 2013, Hot Topic sold itself to the private equity firm Sycamore Partners for about $600 million. Sycamore, which had recently purchased the struggling women's apparel chain Talbots, paid Hot Topic shareholders $14 per share.
The company recently began opening Hot Topic store in Canada. Currently, there are no Torrid shops there.
In its last year as a public company, Hot Topic's net sales increased 6%, to $741.7 million, in fiscal 2013 (ended January). The gain reversed several years of falling sales and profits. Driving the sales gain were increases from new Torrid and Hot Topic shops, as well as same-store sales gains at each, and the inclusion of an extra week in fiscal 2013 versus 2012.
After several years of shrinking its retail footprint, the company plans to begin aggressively growing its stronger-performing Torrid chain in fiscal 2013. About 50 new Torrid opened over the course of the year, while its larger sister-chain Hot Topic will continue to shrink by about a dozen locations. Torrid fills a niche not covered by many other plus-size apparel retailers, offering pop culture-inspired fashion forward apparel and accessories for larger girls and young women. The relative lack to head-to-head competition helps to explain Torrid's better performance compared with Hot Topic, which trades in a more crowded market. The company is looking to Lisa Harper -- its new CEO who joined the company in 2011-- and other recent hires to reverse its long sales slump. Their strategy is to return the Hot Topic brand to its "edgy, dark and sexy core," while upping the fashion quotient at Torrid.
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