Hot Topic: Out of the dungeon

Seller of rock, punk music-inspired clothing abandons dark look of stores in favor of a lighter and brighter feel as it strives to win back shoppers.

By Parija B. Kavilanz, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- Hot Topic's dark Goth stores, which were once a huge hit with rebellious teen shoppers, are getting a lighter, brighter makeover as the retailer struggles to pull sales out of a deep hole, the company's chief financial officer said Wednesday.

"Based on feedback from our customers and changes in the [apparel] industry, we're changing the look of our stores," James McGinty told a gathering of analysts at the Piper Jaffray Annual Consumer Conference in New York.

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Hot Topic is giving its dark stores a brighter makeover as it tries to woo back shoppers.

"People were telling us that the stores were too dark, gothic and intimidating to the average customer," McGinty said.

The presentation was monitored via Webcast in New York.

McGinty said the new prototype stores are "lighter and brighter" and more inviting.

"We're putting more merchandise at the front of the stores. We've put flatscreen TVs at the entrance that show our logo. The store walls are no longer black but a lighter color," he said.

"We still describe our stores as edgy but they're not as foreboding as they once were," said McGinty. "Our new stores don't scare you away."

The retailer expects to have between 12 to 15 percent of its nearly 700 stores in the new format by the end of the year. "We're already seeing a [sales] lift in these stores versus all our other stores because they are now also easier to shop," he said.

That's good news given that Hot Topic (Charts) has suffered three years of declining sales at its stores open at least a year - a key measure of retail performance known as same-store sales.

Hot Topic on Tuesday posted an 6.1 percent same-store sales drop for May.

But that wasn't always the story. Hot Topic was one of the fast-growing and best-performing clothing chains in the late 1990s until 2004, outperforming rivals such as Aeropostale (Charts) and Abercrombie & Fitch (Charts).

However, Hot Topic's problem was that while it offered shoppers a very unique concept when it was first launched, over time its merchandise was too narrowly focused on a niche market of fickle teens. As the winds of fashion changed bringing back colorful and preppy clothing, sales of Hot Topic's Goth and alternative music-inspired clothing took a hit.

McGinty said Hot Topic's core 12 to 22 year old customer hasn't changed "But I believe their preference in alternative wear has changed. The punk kid is no longer just punk. He is influenced by everything that's alternative," he said.

"The biggest change our buyers are making is every two weeks they spend a day in our stores or at a club and see what our customers are wearing. Then they source individual items on a timely basis instead of trying to match a top with a bottom with a necklace," McGinty added.

'American Idol' winner a Torrid fan

Although the company doesn't break out same-store sales for its second concept - Torrid - McGinty said those stores were generally doing better.

The company operates more than 130 Torrid shops that sell larger-sized trendy clothing and accessories. Among its biggest fans is Jordin Sparks, the latest "American Idol" winner.

"We have a much clearer brand vision for Torrid and we'll open 20 new Torrid stores this year," McGinty said.

What's more, he said he's counting on Sparks to help Torrid's business.

"Jordin was a Torrid model. She wore Torrid outfits for much of the American Idol competition," he said. "Her win is also a big win for us." Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.