Hot Topic Sees Q1 EPS of $(0.01) to $(0.04)

Hot Topic, Inc. HOTT today announced the following business changes to better position the company for growth: 1. Discontinuation of the ShockHound.com business operations. 2. Write down of unproductive inventory. 3. Write down of fixed assets that are no longer critical to the strategic direction of the company. The company estimates that implementing these changes, along with the severance costs related to recent changes in management, will result in a total pre-tax charge of approximately $15 million ($0.21 per diluted share) primarily in the first quarter of fiscal 2011. The company issued first quarter (13 weeks ending April 30, 2011) guidance of a loss in the range of $0.01 to $0.04 per share, excluding the costs associated with the above changes. This guidance is based upon a low-single-digit decline in comparable store sales. The company also announced full year (52 weeks ending January 28, 2012) guidance of earnings per diluted share of $0.05 to $0.15 based upon a comp performance that is in the range of flat to down low-single-digits, excluding the costs associated with the above changes. The company now estimates that capital expenditures for 2011 will be approximately $25 million.