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From the Election Issue (Oct 2000):

Punk's Not Dead, and I Bought a T-shirt to Prove It

Matthew Kondratowicz

Matching the blistering speed that Marylyn Manson runs away from talent, Hot Topic (Nasdaq symbol: HOTT) is steadily spreading throughout malls across America and is burning up the charts of Wall St. analysts.

In fact, the blue line of Hot Topic as crossed through so many of Wall St.'s precious black lines over the past several months that the stock has become one of the financial industry's darlings. For those who do not listen to Slipknot or are not trader for Goldman Sachs, Hot Topic is a self-described "mall-based retail store specializing in music related influenced apparel, accessories, and gifts."

In other words, when you see a group of pale, skinny fourteen-year-olds wearing oversized black jeans, purple hair, t-shirts with the phrase "I hate you" on them, huddling over a pizza in the mall food court - they are on their way to or coming from Hot Topic.

As part of The Fed's in-depth business and financial coverage, we have sent our investigative team onsite at the New Jersey Garden State Plaza Hot Topic store, ground zero for malldom and chief outfitter of Satan's army of 15-year-old girls. We sat down to talk Jenny Needlin, a Hot Topic employee at the Garden State location for 6 months, who specializes in the inventory-management end of Hot Topic's vast empire, ensuring that the Limp Bizket t-shirts always remain separate from the Rage Against The Machine t-shirts.

When asked: "Do you get a comprehensive stock option plan as part of your employee benefit package?" Jenny replied, "Um, we only have that in the sizes shown up front here."

Upon further probing we found that employees make minimum wage but, "it pretty cool cause like, I can like wear my hair how I want and when I worked at the fucking Grand Union they always gave me crap about my piercings and shit." This type of strong leadership from the ground level up is what sets Hot Topic apart and makes their $20million per year profit possible.

Another key to Hot Topic's success is their application of very advanced business maximization models such as discrete time-pricing instruments and constant K-Rock background in all their stores. For example, according to their most recent annual report, "Bi-monthly planograms are developed to assist store managers in displaying merchandise in an exciting and dynamic manner."

We asked Mr. Steve Mueller, Columbia School of Business '78 and VP of Goth and Punk Rawk related sales at JP Morgan, to explain how this business strategy worked. He told us, "Apparently, the headquarters for Hot Topic maximizes revenue by giving extensive floor-plan engineering guidance to the regional director. This allows for the greatest utilization of the skulls, stickers, and tongue ring displays." Steve then gave The Fed a flyer to see his band, The Bull Stampedes play at the Fort Lee American Legion this Saturday at 7:00PM.

The investing opportunity in Hot Topic is very promising. The Fed's chief financial consultant has issued the following statement: "Hot Topic is truly able to keep a pulse of what is 'hip' with teenagers, and those teenagers spend a lot of money. With the Halloween and Christmas seasons on the horizon we should see a significant increase in sales of the spike bracelets, Manic-Panic, and those weird ripped mesh shirts that come already all messed up and cost twenty dollars but could be bought at a salvation army for two. Now I would kill my kid if he came home dressed like that cause he is not some kind of fruit or anything, but as long as other fruits out there spend their money on hair dye and records, Hot Topic's stock is a strong buy."


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