"We believe this is absolutely this best move for our company,"said CEO Betsy McLaughlin during the chain's earnings conferencecall on Wednesday. The decision to scale down expansion plans comeson the heels of another disappointing quarter for the apparelretailer, which currently operates 662 Hot Topic stores and 120Torrid stores.

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

The frequency and number of transactions was down across thechain, and gross margin declined 500 basis points. Driven byincreased transaction amounts, net sales for the fourth quarterincreased 9% to $230.4 million from $211.3 million for the fourthquarter of fiscal 2004. However, comparable store sales decreased3.8% for the quarter compared to a decrease of 6% in the fourthquarter of fiscal 2004.