We’ve all known Hot Topic as one of the carriers of Twilight merchandise. We’ve all also noticed how the quantity of that merchandise changed movie to movie. Here’s what Hot Topic thinks they learned. Interestingly, there’s no thought given to tee shirt design and Hot Topic’s incredibly small size range/cuts of shits, an item that has frequently been discussed here.
According to CFO:
It also comes as no surprise that companies like Hot Topic, a pop-culture-oriented apparel and accessory retailer, are tying their profits to the hit film. Hot Topic, a $697 million company that targets older teens, has a long-running relationship with popular franchises like Harry Potter and Twilight. But budgeting and planning for the movie releases has not always been easy.
“We’ve had some big blockbusters in the past that kind of caused our business to go boom and bust,” says Hot Topic CFO Jim McGinty. “Boom when they came out, and then bust either immediately after” or at the end of the year, when the stores held an abundance of excess inventory that no one wanted to buy.
Case in point: Twilight, the film based on a teen novel about a girl who falls in love with a handsome vampire. After the first Twilight movie was released, the demand for Bella- and Edward-related merchandise shot through the roof — and the company was on a sales high, McGinty says. When the next Twilight film, New Moon, came out, Hot Topic bought more merchandise than it could sell. “We made a big commitment,” he says. “The idea was more about making sure we didn’t miss a sale.”
Ultimately, this strategy backfired. “In buying that much merchandise, we probably didn’t miss a sale, but we certainly gave up margin dollars because of the markdowns on the back end,” says McGinty. Because the stores were so heavily stocked, they would sometimes sell only about 40% of their film-related inventory by the time a popular movie was released.
Definitely check out the rest of the article. Do you agree with their conclusions, or are they missing some key points?