Hot Topic, Inc. (NASDAQ:HOTT)
CAPS Rating:
The Company is a small mall-based specialty retailer operating the Hot Topic and Torrid store concepts.
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The Company is a small mall-based specialty retailer operating the Hot Topic and Torrid store concepts.
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My two cents: this is a very high price for a very risky stock. Trading at 27 times earnings and 13 times cash flows. This company is attempting to compete in a very tough industry. In addition, teen and young adult unemployment continue to be at very high levels across the country. Do they really have the extra $$ to spend in stores such as this? My guess is no but maybe Mommy and Daddy are making up for the lack of cash in most teens' pockets.
I expect margins to continue to get squeezed across the clothing industry. Mostly due to higher cotton and material costs (driven by high soft commodity and oil prices). I did not look at their website for long but it looks very grungy and maybe a little Goth. How many teens still adhere to this style? Didn't grunge and goth go out of style in the 1990's?