April 2, 2008, 12:00 AM

Hot Topic Internet sales climb 11% in 2007

The Internet was the only channel that produced higher sales for Hot Topic last year. To drive more web business, the company will launch ShockHound.com, a digital music site.

The Internet was the only channel that produced higher sales for Hot Topic Inc. in 2007.

For the year, Hot Topic, which operates HotTopic.com and Torrid.com, posted e-commerce sales of $34.4 million, an increase of 11.3% from web sales of $30.9 million in 2006. In comparison, comparable store sales declined by 4.4% in 2007 and total revenue declined year-over-year by 3.1% to $728.1 million from $751.6 million in 2006. Overall the web accounted for about 5% of total sales.

Over the past year, Hot Topic, No. 237 in the Internet Retailer Top 500 Guide, has been busy deploying a new business strategy to improve its financial performance. One part of the plan is the introduction later this spring of ShockHound.com, a niche digital music site.

To differentiate ShockHound.com from iTunes.com and other download music sites, Hot Topic will focus on emerging artists and niche-oriented content and merchandise. “We are positioning ShockHound.com as the ‘go to’ place for an experience in rock music discovery,” Hot Topic CEO Elizabeth McLaughlin told analysts on the company’s year-end earnings call. “A maverick point of view is desperately needed among the over-populated universe of music sites. New and emerging artists will be in the spotlight.”

Hot Topic, which sells primarily to young men and women between the ages of 12 and 22, will sell DRM-free music and related merchandise on ShockHound.com. “What we want to do with ShockHound.com is broaden the entire rock experience to include quite a bit of classic rock, indie rock and crossover rock,” McLaughlin told analysts. “We want to be able to have a point of view and we want to be able to direct those customers of ours who truly are into the rock genres of music to learn about new music and to have some direction.”

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