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Stock Watch: Why Hot Topic Is No Longer A Hot Investment


July 20, 2016

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There is a 68 percent chance that Hot Topic files for bankruptcy by 2018.  It’s no surprise either.

When you think about shopping stores in your local mall.  Powerhouse stores like J.C. Penny, Macys, Nordstrom, and Sears come to mind.  Other more prominent stores like Abercrombie and Fitch and Victoria’s Secret get more sales than Hot Topic because there is something about those stores that appeals that sells.

That’s just the shopping area in malls.

Did you know that 47 percent of individuals that buy things at Hot Topic are between the ages of 14-19?  Did you also know that 57 percent of customers don’t return to Hot Topic after turning 28?  Having a target market of ages 14-28 limits the sales and success of Hot Topic severely.

Also 40 percent of the companies’ profits come from one thing.  Exclusive rights to represent bands and the merchandise that those bands provides.  Hot Topic basically makes revenue from Exclusive Band T-Shirts that they sponsor.

Hot Topic has had a good run over the years as the company was founded in 1988.  Expect the 30-year anniversary at Hot Topic to be a short one though with so much uncertainty within the company.

Last month, Hot Topic CEO Lisa Harper left Hot Topic to take over at Belk.  Hot Topic still hasn’t found a full time replacement for Harper as their CEO.  James M. McGinty the CFO of Hot Topic has been the interim CEO for Hot Topic while the company searches for a new CEO, but no candidate has emerged yet.

The only person that can save Hot Topic at this point is Mick Jagger.  He would get older people to buy clothes at Hot Topic and getting older people invested in Hot Topic is one way that they can possibly save their business.

I doubt Hot Topic makes a big play for someone like Mick Jagger.  Hot Topic has always been more practical rather than bold when it comes to making business decisions.  Businesses cannot grow without bold leaders and bold decision making.

Other stores like A&N, Anchor Blue, and County Seat all lasted for years because they focused on certain aspects of fashion in practical manner.  These fashion stores weren’t bold as businesses.

Not being bold led to those stores having outdated clothes and business plans which ultimately led to those stores filing for bankruptcy.  Hot Topic is bound to suffer the same fate unless they adjust and adapt to today’s average consumer that spends money on clothes at the mall. This is the latest edition of Stock Watch.


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Robert D. Cobb
Founder, Publisher and CEO of INSCMagazine. Works have appeared and featured in places such as Forbes, Huffington Post, ESPN and NBC Sports to name a few. Follow me on Twitter at @RobCobb_INSC, email me at robert.cobb@theinscribermag.com