Clothing Chain Hitting Vein With Bet on Vampire Film Tie-In

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Hot Topic Inc. is one of the few retailers that have pleasantly surprised analysts lately, thanks largely to a licensing deal with the “Twilight” movie series. But can Hot Topic keep drawing fresh blood from the popular teen vampire franchise?

The true test of the apparel company’s “Twilight” partnership will be whether it can continue to bring in new customers after the movie’s DVD release, said one analyst.

“Hot Topic has been able to monetize the ‘Twilight’ customer,” said Elizabeth Pierce, an analyst with Roth Capital Partners LLC in Newport Beach. “She has bought things other than Twilight items. We don’t know how long that will last.

“But there’s some momentum here with ‘Twilight.’ It’s been a great driver.”

Hot Topic had scheduled “Twilight” DVD release parties in its stores for March 20. Customers were invited to the parties as part of a package with a preorder of a special edition two-disc set, which came with a film cell from the movie provided exclusively to the chain.

Since the City of Industry-based retailer started selling “Twilight” merchandise in November, same-store sales have been on the rise, even beyond analysts’ expectations. The company recently reported a 5.2 percent increase in same-store sales and a rise of 19 percent in net income for its fourth quarter, which ended Jan. 31.

Before “Twilight” was released in theaters, Chief Executive Betsy McLaughlin predicted the company would see strong sales every 12 to 18 months if all four “Twilight” books were turned into movies. After the box office success of the first film, at least one sequel is already planned, so the outlook is good.

Hot Topic’s “Twilight” boost comes after a long, dry spell. The company, which was largely associated with the Goth trend in music and fashion, has struggled to maintain sales as that fad died. From 2005 to 2008, the retail chain consistently reported decreasing same-store sales.

Hot Topic changed its product mix numerous times. In 2007, the company added slim-fit T-shirts better suited for girls and skinny jeans in various colors a significant variation from its old black motif.

“They realized they needed to find a look that fits with the Hot Topic brand,” Pierce said. “My major concern is how often they will be able to find a look that’s relevant.”

Much of Hot Topic’s brand identity has long been linked to rock bands. McLaughlin told Billboard magazine that when the “Twilight” soundtrack was released, the company realized the movie would be an excellent match for the store and its customers.

The chain has also begun selling rap-oriented gear. But Hot Topic’s partnerships aren’t limited to music; it has licensing deals with Care Bears and Hello Kitty. The company has 679 Hot Topic stores in malls nationwide. It also owns and operates 159 Torrid stores, which cater to plus-size shoppers.

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