The holiday season isn’t starting off very merrily for Hot Topic Inc.
Former employee Joaquin Maturino has socked the City of Industry-based teen retailer with a lawsuit that accuses the company of failing to provide meal and rest breaks. The suit was filed in Los Angeles Superior Court on behalf of a class of over 2,500 workers at about 70 Hot Topic stores in California.
In court documents, Maturino claims that Hot Topic “intentionally and systematically promulgated and enforced policies” to deny meal periods during work days. For each employee in the class, he demands compensation ranging from $50 to $200 for break violations per pay period.
Hot Topic is among scores of restaurant chains and retail outlets that have been sued over the past several years for alleged violations of the state labor code. Many of the companies have settled.
Last year, Keri Stanton, another former Hot Topic employee, also filed a class action lawsuit in L.A. Superior Court, charging that the company didn’t allow adequate breaks and properly pay for overtime, among other claims.
Kate Hartman, an attorney for Stanton with Callahan, McCune & Willis APLC in Tustin, said the two cases will probably be combined by the court. The Stanton case is due to go to trial in April of next year.
Calls to Hot Topic and an attorney for Hot Topic were not returned.
In a Securities and Exchange Commission filing, the company said it recorded a provision of $1.5 million for potential liabilities resulting from the two cases. The amount might be increased or reduced depending on the outcome of the cases.
Meanwhile, the company reported third-quarter net income of $5.9 million, compared with $12.4 million for the like period a year earlier. Revenue was $192.7 million from $180.8 million. Same-stores sales fell by 6.2 percent, compared with a 4.2 percent drop last year.
Hot Topic shares have taken a hit from several quarters of poor earnings reports. The stock has fallen nearly 40 percent from a high of $23.49 in the spring.
Premium Shopping
It’s been a whirlwind year for Paige Adams-Geller, a former fit model who has launched her own jeans brand.
Paige Premium Denim was named by US Weekly as one of the top 10 hottest denim brands as stars from Hilary Duff to Nicole Richie began wearing the pants. Now, Adams-Geller has opened her own store on Robertson Boulevard.
The location showcases new items that other retailers don’t stock and gives her an understanding of how customers react to those items. “I really wanted the store to be a testing ground for the product,” she said.
Adams-Geller also envisions Paige Premium Denim, owned by Culver City-based Fortune Casuals LLC, moving beyond its jeans focus to include sweaters, belts and trousers.
Solar Sustenance
Elissa Meadow recently opened Solar Harvest in Beverly Hills, but she’s already planning to enter restaurant’s next frontier: office buildings.
Meadow envisions Solar Harvest as providing nutritious meals to business people tired of eating unhealthy fare. She’s already dabbling in corporate catering, whipping up lunches for talent agencies and consulting firms near the restaurant.
A former investment banker, Meadow said she remembers longing for nutritious food and believes other business people are the same. “As a banker, I don’t think I ever ate at home. You end up gaining a lot of weight,” she said.
To accommodate a variety of diets, Solar Harvest’s menu is color coded for customers to choose dishes that fit their parameters. Carbohydrate-heavy ingredients are denoted by orange, while lean protein menu items are denoted by blue.
Fast Food Update
New York-based equity investment firm American Securities Capital Partners LP, is moving ahead with plans to sell El Pollo Loco to Trimaran Capital Partners LLC, also of New York. The deal, estimated at $400 million, is expected to close by the end of the fourth quarter.
Meanwhile, the Irvine-based chain is proceeding with its expansion plans. There are about 330 restaurants 139 that are company run, and the rest run by franchises, primarily in California. As part of its plans to add 130 franchised restaurants in the Southwest, Midwest and East Coast by 2009, the restaurant was opened in Chicago.
*Orange County Business Journal staff reporter Jennifer Bellantonio contributed to this column. Staff reporter Rachel Brown can be reached by phone at (323) 549-5225, ext. 224, or by e-mail at
[email protected]
.
