NEW YORK — Booming sales and new store openings ignited fourth-quarter and year-end results at specialty retailers Hot Topic and Chico’s FAS.

For both companies, strong comparable-store gains for the quarter were overshadowed by even larger contributions from scores of store openings as well as from acquisitions.

Fort Myers, Fla.-based Chico’s posted a 70.3 percent net income gain on sales that rose 55.8 percent to $215.5 million for the quarter ended Jan. 31. Comparable-store sales climbed 20.5 percent.

In a statement, Scott Edmonds, president and chief executive officer, lauded the company’s “bridge to a billion” strategy, which has included acquisitions of new businesses and expansion of its current operations.

“This year we expect to reach that lofty billion-dollar sales goal while maintaining operating margins that are at or near the top of the specialty apparel industry,” said Edmonds.

While comps were significantly higher, sales figures got their biggest lift from the September acquisition of the White House/Black Market company. The company brought 179 stores into the fold over the course of the year, 107 of being White House/Black Market units. According to management, the new stores increased total selling square footage by 45 percent, a figure which almost mirrors the gain in overall sales for the year.

“Our goal is to build the White House/Black Market brand to achieve the same customer recognition we have enjoyed with the Chico’s brand,” said Edmonds.

As a result of the majority of growth coming through acquisition, the firm was spared the costs of erecting new stores. In fact, while general, administrative and store operating expenses rose $89.6 million to $289.1 million over the year, the expenses remained a flat 37.6 percent of sales compared with the prior year.

As Edmonds also noted, the company was able to achieve success despite completing a transition to a new chief executive officer and incurring a $3.6 million charge related to the September closure of Pazo, the company’s 10-store juniors concept.

City of Industry, Calif.-based teen retailer Hot Topic experienced a similarly strong quarter and year. Net income rose 35.7 percent to $22.5 million in the quarter and 38.7 percent to $48 million in the year. Sales for the quarter and year soared 30.9 percent and 29.1 percent, respectively, with comps showing a gain of 8.5 percent.The lion’s share of sales gains for Hot Topic was also fueled by expansion. By year’s end, the company added 109 stores, bringing the total number of stores in operation to 554 compared with 445 in the year-ago period.

During the conference call Jim McGinty, chief financial officer, attributed 59 percent of the sales gain during the quarter to “new and noncomparable Hot Topic Stores” while only 25 percent came from comp stores.

What makes Hot Topic stand out from other specialty retailers in particular is what segment is stimulating growth. While discussing the 7.6 percent comp increase reported for the month of February, Betsy McLaughlin, president and chief executive officer, indicated that men’s was the best performing category, “led by the continued strong performance of novelty Ts.” According to McLaughlin men’s comps were up 16 percent while women’s tracked down 3 percent.

By the Numbers
Chico's FAS.
?
Most-Recent Qtr.
Prior-Year Qtr.
% Change
Sales
215.5
138.3
55.8
Net Income
25.6
15.1
70.3
EPS
$0.29
$0.17
70.6
?
Year-End Period
Year-Ago Period
% Change
Sales
768.5
531.1
44.7
Net Income
100.2
66.8
50.1
EPS
$1.14
$0.78
46.2
?
Hot Topic
?
Most-Recent Qtr.
Prior-Year Qtr.
% Change
Sales
194.1
148.3
30.9
Net Income
22.5
16.6
35.7
EPS
$0.45
$0.34
32.4
?
Year-End Period
Year-Ago Period
% Change
Sales
572.0
443.3
29.1
Net Income
48.0
34.6
38.7
EPS
$0.97
$0.70
38.6
For the period ended Jan. 31, 2004. Figures are in millions, except for per share data. Net income and per share figures are exclusive of special items.

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