LOS ANGELES — Hot Topic Inc. is stripping down to its skivvies with Blackheart, a new lingerie retail concept that will be launched in the middle of this month.
Cultivating an edgy, rock ’n’ roll sensibility, Blackheart, which uses the tagline “Love You to Death,” is sort of the garage-band lovers’ antidote to the preppy girls’ Victoria’s Secret Pink. The darker, subversive approach is what has distinguished Hot Topic, known for its pop culture- and music-related merchandise, from the rest of the stores in mall directories, and it believes that approach has legs outside of Hot Topic’s four walls.
“The Blackheart lingerie concept is a test that allows us to leverage the Hot Topic customer and offer her product categories that will not cannibalize the core Hot Topic brand,” said Lisa Harper, Hot Topic’s chairman and chief executive officer. “We have a great opportunity to aggressively cross-promote Blackheart to our 5 million active database customers, nearly 5 million Facebook fans and in our 620 Hot Topic stores.”
Starting Nov. 15, Blackheart stores will open at the California shopping centers Irvine Spectrum, Glendale Galleria and the Brea Mall, and the Texas shopping centers Houston Galleria and the Baybrook Mall. The average footprint of the stores is 1,800 square feet, and the stores will carry mostly lingerie, accessories and beauty products. Bras at Blackheart will be priced from $29.50 to $44.50, panties $8.50 to $14.50, apparel $19.50 to $78, and accessories $5 to $29.50.
Hot Topic has assigned a merchandising and design team specifically to develop Blackheart’s assortment. A Hot Topic spokeswoman said Harper would lead that team as Blackheart gets out of the gate. Harper and the team have already honed a look and feel for Blackheart as exhibited by a video on the retailer’s Web site in which a woman in lacy black underthings is being tattooed with Blackheart’s black heart logo as she receives a cell phone call from a man.
Hot Topic revealed the launch of Blackheart on Wednesday simultaneously with the release of its sales results for the third quarter ended Oct. 27. For the company as a whole, comparable-store sales increased 0.2 percent in the quarter, with Torrid, a plus-size division with 186 stores, advancing 0.5 percent and Hot Topic 0.1 percent. Year-to-date, Hot Topic has experienced a 3.8 percent jump in same-store sales overall, with Hot Topic rising 4.2 percent and Torrid 2.4 percent.
Hot Topic’s company-wide net sales climbed 2 percent to $179.3 million in the third quarter, although net sales at Hot Topic stores dipped 1.6 percent to $134.9 million. Torrid’s sales gained 14.9 percent to reach $44.4 million in the period. Year-to-date, Hot Topic’s total net sales are up 4.2 percent to $508.7 million, with Hot Topic’s contribution increasing 2.1 percent to $373.1 million and Torrid’s 10.6 percent to $135.6 million.
“We are happy to report our strategy of moving to a vertical sourcing model at Torrid has resulted in very strong gross margins and regular price selling, which validates our continued investment in the brand’s growth,” said Harper. “At Hot Topic, we are pleased with the progress in the fashion apparel and [T-shirt] businesses while still having challenges in the accessory categories. However, the combination of gross margin improvements in both brands has positioned us to achieve a strong earnings increase over last year and maintain our guidance on what was essentially a flat comp.”
Hot Topic reaffirmed its third-quarter guidance of earnings per share in the range of 8 to 10 cents and its fourth-quarter guidance of EPS in the range of 23 to 27 cents. The guidance is based upon an expectation that comp-store sales will climb in the low- to midsingle digits in percentages. The company also said its board approved an expansion of Hot Topic’s stock repurchase program of up to $25 million of common stock.
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