Hot Topic shares up on strong October sales

NEW YORK - Shares of Hot Topic Inc. rose on Thursday, after the teen apparel retailer reported strong October same-store sales, boosted by Halloween sales, and raised its third-quarter guidance.

Shares rose 33 cents, or 5.5 percent, to close at $6.34.

Late Wednesday, the City of Industry, Calif.-based company said same-store sales — or sales in stores open at least one year — rose 8.3 percent during the month, while analysts expected a 3.2 percent decline. The company also raised third-quarter guidance.

Sales were strongest during the last week in October, the week before Halloween, the company said in a recorded call.

However, analysts doubted the strong results were permanent amid a difficult environment.

"We continue to believe that the customer seeking alternative fashion has many more places to shop today which points to a need to move this business into a slightly different direction," wrote Buckingham Research analyst Barbara Wyckoff in a note to investors. "We do not think that current business trends are indicative of a sustainable turnaround."

Davidson analyst Crystal Kallik, who also rates the company "Neutral" expressed a similar sentiment.

"The positive (same-store sales) and guidance revision was a refreshing change from its peers, however, the benefit was largely due to Halloween sales," Kallik wrote. "It is unlikely positive (same-store sales) are sustainable in the current environment.

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