CITY of INDUSTRY, CA-Hot Topic Inc. will open 50 stores this year, a decrease from its original expansion plan of 85 stores. The 40% decrease impacts both the Hot Topic and Torrid brands; 40 new Hot Topic stores are planned for this year, 20 less than previously announced, and an estimated 10 new Torrid stores will open this year, 15 less than previously announced.

“We believe this is absolutely this best move for our company,” said CEO Betsy McLaughlin during the chain’s earnings conference call on Wednesday. The decision to scale down expansion plans comes on the heels of another disappointing quarter for the apparel retailer, which currently operates 662 Hot Topic stores and 120 Torrid stores.

During the fourth quarter, the chain reported net income of $10.6 million, or 23 cents per diluted share, down from $17.4 million, or 38 cents per diluted share for the same period last fiscal year. “We were disappointed in fourth quarter results,” McLaughlin said, adding that the Southwest and Midwest regions were the worst performing.

The frequency and number of transactions was down across the chain, and gross margin declined 500 basis points. Driven by increased transaction amounts, net sales for the fourth quarter increased 9% to $230.4 million from $211.3 million for the fourth quarter of fiscal 2004. However, comparable store sales decreased 3.8% for the quarter compared to a decrease of 6% in the fourth quarter of fiscal 2004.

McLaughlin said during the call that CDs and licensed apparel was weak on the women’s side of the business, while the men’s category was down 12%. During fiscal 2005, the company opened a total of 71 Hot Topic stores and 46 Torrid stores.

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