Sourcing Improvements Push Hot Topic Q1 Profit Up

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Marvel-ous bags at Hot Topic

Marvel-ous bags at Hot Topic

City of Industry, CA—Improvements in sourcing initiatives and productivity helped mall-based retailer Hot Topic record an earnings increase in its first quarter.

Adjusted EBITDA increased to $22.6 million from $16.9 million last year. Adjustments include a non-cash compensation expense, non-cash charges from asset impairments, losses on fixed asset disposal and the impact of non-cash rent.

Hot Topic’s adjusted gross margin percentage increased 170 basis points in the quarter primarily due to improvements from sourcing initiatives and productivity improvements from its distribution centers, partially offset by additional store rent and store depreciation expenses as a result of an increase in number of stores.

Net sales increased $23.7 million, or 13.6%, to $198.5 million thank to additional stores opened and a comparable sales increase of 7.1%.