70.7 F
Los Angeles
Monday, Sep 25, 2023

Investors Are Sold on Clothing Chain’s Business Plan

Hot Topic Inc. is showing signs of new life.

The City of Industry retailer reported earlier this month that same-store sales rose 10.5 percent in April, after declining for the previous 23 months. As of last week, the company’s shares were up 54 percent since its business improvement plan was announced in March.

Hot Topic was the top gainer on the Business Journal’s Stock Index, trading at $7.93, up 22 percent for the week. (See page 50.)

The good news follows the hiring of Lisa Harper – a retail veteran responsible for reviving San Francisco-based Gymboree Corp. – as chief executive. The company also closed online music store ShockHound.com and wrote down unproductive inventory.

Jeff Van Sinderen, a senior analyst at West L.A. investment banking firm B. Riley & Co. who follows Hot Topic, said the retailer has started implementing some strategies to boost sales, including restocking shelves with new merchandise at a faster rate.

“They have been able to get more traffic into stores and convert more customers,” Van Sinderen said. “In the early days, it’s certainly a very positive data point.”

The chain operates 642 Hot Topic stores and 151 Torrid locations, which carry its plus-size brand. The company remodeled three Hot Topics, closed three Hot Topics and one Torrid during the first quarter.

Van Sinderen expects Harper to revamp the retailer’s apparel, accessories and other products in the coming months before the end-of-summer shopping season.

“The first big impact on merchandise assortment content that Lisa can have is for back to school,” he said.

Executive Hand

Andrew Forbes has overseen designer shoe brands Taryn Rose and Jimmy Choo, and now he’s looking to boost the prospects of a local high-end handbag maker.

Hammitt Los Angeles announced earlier this month that Forbes joined the company as chairman, advising the Hermosa Beach firm on business strategy, manufacturing and logistics operations, and helping raise capital for continued growth.

Forbes, who also runs L.A. retail consulting firm Forbes Consulting Co. LLC, said Hammitt Los Angeles has been growing at more than 100 percent during the previous several years. As a result, one of his focuses is working with the company’s L.A.-area manufacturing contractors to improve operations.

“We need to make sure we have enough capacity in the people we work with in Los Angeles to meet the demand we are getting,” Forbes said.

Hammitt Los Angeles bags are sold at boutiques and Bloomingdale’s nationwide, retailing for $150 to $1,250.

Stephanie Hammitt founded the company in 2005, and its growth since has partly been fueled by a following among celebrities and stylists. The company is collaborating with HBO’s popular vampire series “True Blood” on a collection of five handbags named after show characters.

Forbes has guided companies through periods of expansion, including Taryn Rose International, where he served as chief executive, and Jimmy Choo USA, where he served as chief operating officer.

Forbes will rely on previous experience to help Hammitt Los Angeles navigate the challenges that come with expanding a company.

“You need capital to fund the growth,” he said, “and there’s always pressure to manage margins and control overhead.”

Mass Appeal

Christian Audigier successfully licensed the Ed Hardy brand, known for its skull-and-dagger designs, for everything from wine to car air fresheners. But the local fashion designer has just sold off some of the fun and profit.

Iconix Brand Group Inc. last month acquired the worldwide master license for the Ed Hardy brand from Audigier’s Culver City company, Nervous Tattoo Inc., for $55 million. Nervous Tattoo retains the rights to license Ed Hardy T-shirts, hats and hoodies in a $7 million deal.

Iconix, which had a small investment in the brand, increased its ownership stake in Ed Hardy to 85 percent. The remaining 15 percent is owned by San Francisco tattoo artist Don Ed Hardy, whose artwork was the basis for the brand’s graphics.

Candace Corlett, president at New York retail consulting firm WSL Strategic Retail, expects Iconix to take the Ed Hardy brand to mass retailers such as Wal-Mart and Target, making the products affordable for people who previously couldn’t pay $125 for a rhinestone-encrusted T-shirt, for example.

“It will be more accessible to more people, which means it’s going from a specialty brand to a mass brand,” Corlett said.

Iconix, based in New York, owns, licenses and markets a stable of consumer brands, including Mossimo, Ocean Pacific and Madonna’s Material Girl.

Audigier runs upscale clothing brand Christian Audigier, a street wear label called Smet, teen girl brand Crystal Rock and Latino-themed clothing line Paco Chicano.

Staff reporter Alexa Hyland can be reached at ahyland@labusinessjournal.com or at (323) 549-5225, ext. 235.

Featured Articles

Related Articles