Hot Topic Plans Restructuring

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Teen clothing and accessories retailer Hot Topic Inc. announced Monday it plans to discontinue some operations as part of its turnaround plan.

The City of Industry company said in a regulatory filing that it’s ending its online music store ShockHound.com and writing down unproductive inventory and fixed assets “that are no longer critical to the strategic direction of the company.” Hot Topic also said it will discontinue reporting monthly sales as of the third quarter of this fiscal year.

The company also announced that Chief Merchandising Officer Amy Kocourek has left the company. Board member Lisa Harper, who took over as chief executive last week after Betsy McLaughlin resigned, will now also oversee merchandising.

Hot Topic said the moves, including severance costs related to recent changes in management, will result in a pre-tax charge of about $15 million, or 21 cents per diluted share, for the fiscal first quarter ending April 30. Excluding those charges, the company will report a loss between 1 cent and 4 cents per share for the quarter.

An apparel veteran, Harper is credited with improving the clothing and sales of children’s apparel retailer Gymboree while chief executive from 2001 to 2006. During a Monday conference call with analysts, Harper said that her job at Hot Topic will be easier than at Gymboree.

“Here I feel like operationally we are sound, we have a good structure and have good teams in places,” Harper said. “This is going to be more of a merchandising, planning, and mechanics of product turnaround in the short term. I think there is a solid business and core brand that still resonates with the customer. But we have to be better about getting out of products and concepts faster.”

Once popular for its “goth” merchandise, Hot Topic has reported declining sales as it has tried to sell shoppers on more pop culture-related merchandise such as Lady Gaga T-shirts and brightly colored skinny jeans.

Shares closed up 9 cents, or 1.5 percent, to $5.95 on the Nasdaq.

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