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WRAPUP 1-Hot Topic beats Oct comp views, Zumiez numbers miss

Wed Nov 4, 2009 5:50pm EST

Stocks

   

* Hot Topic Oct comp sales -2.6 pct vs est -3.5 pct

* Zumiez Oct comp sales -8.9 pct vs est -6.7 pct

* Hot Topic raises Q3 earnings view

* Q3 net sales $189.6 mln

By Nivedita Bhattacharjee

BANGALORE, Nov 4 (Reuters) - Hot Topic Inc (HOTT.O) posted a lower-than-expected fall in October sales at stores open at least a year, while fellow teen apparel retailer Zumiez Inc (ZUMZ.O) saw a bigger-than-expected fall.

Hot Topic, which also reported third quarter sales of $189.6 million, now expects third quarter earnings to come in at the high end of its previous guidance of $0.11 to $0.13 a share.

Analysts, on average, were looking at a profit of 12 cents a share, according to Thomson Reuters I/B/E/S.

"The company likely benefited in October from Halloween falling on Saturday, and (from its) special edition "New Moon" items online and in stores," Wall Street Strategies analyst Brian Sozzi wrote in a note.

Last year, the company's sales were boosted by merchandise related to the vampire romance "Twilight", and it is expecting to repeat that success with the movie's sequel, "New Moon."

Analyst Sozzi, who upgraded the company to "hold" from "sell", said that the company's Torrid stores too showed resilience, as its Ed Hardy line and a greater presentation of handbags drives traffic.

Comparable sales fell 2.6 percent at the mall and web-based retailer, while analysts were expecting a drop of 3.5 percent, according to Thomson Reuters data.

On the other hand, Zumiez, which sells skate and snow-boarding inspired clothing & equipment, saw same store sales drop 8.9 percent, while analysts were looking at a 6.7 percent fall.

The Everett, Washington-based company saw comparable sales fall across all regions and in all categories, apart from footwear, Chief Financial Officer Trevor Lang said in a pre-recorded call.

"The key to focus on here is that even with the down 8.9 percent comparable sales, the implied third-quarter comp is negative 7, which is still at the high end of their guidance," MKM Partners analyst Linda Tsai said.

Tsai also said that October was the smallest contributor of the quarter for Zumiez, and this "still leaves a little of room for improvement."

Hot Topic also named Amy Kocourek as its new chief merchandising officer. Kocourek, who joined the company from American Eagle Outfitters (AEO.N), will oversee all elements of Hot Topic merchandising including hottopic.com.

Hot Topic shares were up 4 percent at $7.79, while Zumiez was down slightly at $13.37, in trading after the bell. Reporting by Nivedita Bhattacharjee in Bangalore)



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