Hot Topic sets Torrid gaze on plus-size juniors segment - Brief Article

DSN Retailing Today,  May 1, 2001  by Mike Duff

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CITY OF INDUSTRY, CALIF. -- Plus-size juniors has been a hot segment over the past couple of years, so it's hardly surprising that apparel retailer Hot Topic has warmed to the trend and developed a new concept called Torrid, specifically created for this demographic.

Hot Topic, a juniors-oriented 290-unit chain of mall-based specialty stores, has planned an initial six-store test of the new Torrid concept. The first unit opened April 19 in Brea, a community in the Los Angeles area. Like Hot Topic, Torrid units will be mall-based and will average between 1,500 and 1,700 sq. ft., which is a little bit larger than the average Hot Topic, said Christine Thompson, the company's marketing manager. But she added that Hot Topics are getting larger, so Torrid locations are in line with the latest-generation Hot Topic outlets.

The product assortment will range from lingerie to streetwear to prom dresses and be available at Torrid.com, as well as in the stores. Offering plus-size junior apparel won't be a departure for Hot Topic. About two years ago, in response to a chorus of customer requests, Hot Topic began testing plus-size products in its existing stores, Thompson said. "Expanded sizes had become our No. 1 request," she said. The new segment took off and plus-size departments were rolled out to all Hot Topic locations.

Torrid is the next step in Hot Topics' plus-size evolution and, naturally, arises from the changing environment. While traditionally associated with women over age 40, the typical plus-size buyer actually is between the ages of 15 and 30 and wears sizes 14 to 26, the company stated. The 30% of young American women who wear size 14 or greater contributed significantly to $29 billion in sales that the plus-size segment racked up last year.

Although various observers track the plus-size segment differently, The NPD Group's women's large size/full figure numbers provide a general demonstration of dynamic growth. Unit volume in the NPD Topline Report increased by 34.2% in 2000.

Plus size has become increasingly fashion-oriented in recent years as consumers have come to demand more from products. And this has created opportunities, as the purchase of Catherine's by Charming Shops indicates. Both specialists and broadliners have reconfigured stores and redefined selections to better serve more demanding plus-size consumers.

Zellers launched Delta Burke apparel in Canada in one example, while Cato redesigned stores in the United States to better meet the demands of its plus-customer. Discounters from Ames to Target have pursued plus-size juniors initiatives in the hope their expertise in Larger garments could translate into a draw for the elusive younger consumer.

Already youth-focused, Hot Topics may have an advantage over its competitors in the plus-size juniors segment. In a recent report, Deustche Banc Alex. Brown analyst Marcia Aaron noted Hot Topic has been succeeding--March comparable store sales were up 9.6%--because it has the knack of getting juniors fashions right. She told DSN Retailing Today after a visit to the newly opened Brea store that the concept lived up to her expectations. It was crowded on opening day and was even being shopped by consumers who weren't typical plus-size customers. Aaron said the new concept and Hot Topics had about 10% merchandise overlap, but were sufficiently independent of one another to give management the ability to explore directions independently of one another.

Torrid is "young, hip; they offered low-rise jeans and sparkle jeans very similar to a pair offered in bebe," Aaron said, adding that long-term financial prospects are promising. "On a near-term basis, Torrid produced a little drag last year as Hot Topic was investing in the business. As you look forward, and as they build and refine and execute the concept, it could be a significant addition."

For its fiscal year ended Feb. 3, 2001, Hot Topic posted net income of $23.2 million, or $1.09 a diluted share, vs. $13.5 million, or $0.69 a diluted share, a year earlier. Fiscal 2000 sales reached $257.2 million, as compared with $169 million in fiscal 1999. Comps were up 16.7% for the year.

The additional five stores that fill out the test will be widely distributed geographically to give the test maximum scope. They will open in Mission Valley, Calif.; Attleboro, Mass.; Omaha, Neb.; Annapolis, Md.; and Littleton, Colo., between May 3 and May 24.

COPYRIGHT 2001 Lebhar-Friedman, Inc.
COPYRIGHT 2001 Gale Group