Build-A-Bear Workshop Reports First Quarter Fiscal 2024 Results
Build-A-Bear Workshop (NYSE: BBW) reported first quarter fiscal 2024 results, with revenues at $114.7 million, down 4.4% year-over-year. Pre-tax income dropped 22.3% to $15.0 million, and diluted EPS fell 16.3% to $0.82. Despite declines, the company reiterated its fiscal 2024 guidance, expecting revenue and pre-tax income growth. The company repurchased $12.1 million in shares and paid a $2.9 million dividend. CEO Sharon Price John cited web demand issues and a weaker spending environment as reasons for the underperformance. The firm plans to see positive momentum from new global stores and a brand campaign. CFO Voin Todorovic highlighted strong cash flow and a transformed business model, noting $30 million returned to shareholders in the past year. At quarter-end, cash stood at $38.2 million, up 16.5% year-over-year, with no borrowings under its credit facility.
- Reaffirmed fiscal 2024 guidance expecting revenue and pre-tax income growth.
- Net new unit growth of six global experience locations in Q1.
- Cash and cash equivalents increased by 16.5% to $38.2 million.
- Returned $30 million to shareholders in the past year through share repurchases and dividends.
- Strong cash flow generation highlighted.
- Launch of new brand campaign 'The Stuff You Love'.
- First quarter revenues decreased by 4.4% to $114.7 million.
- Pre-tax income fell 22.3% to $15.0 million.
- Diluted EPS dropped 16.3% to $0.82.
- Net retail sales decreased by 3.8% to $107.9 million.
- E-commerce demand decreased by 11.3%.
- Commercial and international franchise revenues decreased by 13.7%.
- EBITDA declined by 18.3% to $18.3 million.
- Higher SG&A expenses due to increased wage rates and inflationary pressures.
Insights
The first quarter results for Build-A-Bear Workshop present a mixed bag for investors. The company reported a 4.4% decline in total revenues to
However, there are bright spots. The company has reiterated its annual guidance, expecting to see growth in both total revenues and pre-tax income. Moreover, the fact that the quarterly pre-tax income is more profitable than any pre-COVID first quarter since IPO is notable. This suggests that their transformed business model is somewhat resilient.
The increase in SG&A expenses by 350 basis points, driven by higher wage rates and inflationary pressure, is a concern and something investors should monitor closely. In a positive light, the company’s cash reserves have increased and they have returned
While the company faces some headwinds, their strategic initiatives like expanding their global experience locations and launching new brand campaigns could provide long-term growth. Investors need to weigh these factors carefully, considering both the short-term volatility and the potential long-term benefits.
Analyzing Build-A-Bear’s first quarter results from an industry perspective, it's clear that consumer discretionary spending has impacted the company’s performance. A 3.8% drop in net retail sales and an 11.3% decline in e-commerce demand highlight ongoing challenges in both physical and online retail spaces.
Nonetheless, the strategic push to open 50 new experience locations globally demonstrates a commitment to growth. The introduction of new stores in diverse markets like Italy, Colombia and France indicates confidence in international expansion, which could diversify revenue streams and mitigate geographical risks.
The launch of their new brand campaign, 'The Stuff You Love', aims to build emotional engagement and leverage user-generated content to enhance brand loyalty. While this is a positive step for brand recognition, its impact on financials will require time to materialize, especially in a fluctuating economic environment.
Investors should note the company’s comfortable inventory levels and liquidity position, which are essential for sustaining operations during turbulent periods. The reiteration of full-year guidance is a cautiously optimistic signal, but it’s also pivotal to monitor how macroeconomic factors and consumer behaviors evolve moving forward.
-
First quarter revenues were
$114.7 million 4.4% , pre-tax income was$15.0 million 22.3% , and diluted earnings per share was$0.82 16.3% - The Company reiterates its fiscal 2024 guidance with expectations for growth in total revenues and pre-tax income, as well as net new unit growth of at least 50 experience locations globally
-
For first quarter 2024, the Company returned
$12.1 million
“Although first quarter results were slightly below internal expectations due to some continued web demand challenges and a weaker spending environment, we remain confident in our annual guidance,” commented Sharon Price John, President and Chief Executive Officer of Build-A-Bear Workshop. “As we continue to execute on our strategic initiatives to leverage the power of the Build-A-Bear brand, we expect to see positive momentum as the year progresses across a number of fronts. These include our omni-channel integration and new global experience locations across our corporately-operated, partner-operated, and franchise store models, such as recently opened partner locations in
Voin Todorovic, Chief Financial Officer of Build-A-Bear Workshop added, “As previously shared, we had planned first quarter to have unfavorable expense timing, and while results were lower than expected, the quarter was significantly more profitable than any pre-Covid first quarter since our IPO, demonstrating the sustainability of our transformed business model. In conjunction with Build-A-Bear’s strong cash flow generation, and our confidence in the company's continued financial performance, we have returned nearly
First Quarter Fiscal 2024 Results
(13 weeks ended May 4, 2024, compared to the 13 weeks ended April 29, 2023)
-
Total revenues were
$114.7 million 4.4% -
Net retail sales were
$107.9 million 3.8% -
Consolidated e-commerce demand (online orders fulfilled from either the Company’s warehouse or its stores) decreased
11.3% -
Commercial and international franchise revenues were a combined
$6.9 million 13.7%
-
Net retail sales were
-
Pre-tax income was
$15.0 million 13.1% of total revenues, a decrease of 300 basis points, driven by a 350-basis point increase in Selling, General and Administrative (“SG&A”) expense, mainly from higher wage rates, expense timing, and general inflationary pressures, partially offset by an increase in interest income and gross margin expansion. -
Diluted earnings per share (“EPS”) was
$0.82 16.3% , reflecting lower pretax income, partially offset by a lower tax rate, as well as a reduction in share count. -
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was
$18.3 million 18.3% , and represented15.9% of total revenues.
Store Activity
For the quarter, the company had net new unit growth of six global experience locations, comprised of five partner-operated locations and three franchise locations, less the net closure of two corporately-managed locations. At the end of the first quarter, Build-A-Bear had 531 global locations through a combination of its corporately-managed, partner-operated, and franchise models. Globally, this reflects 357 corporately-managed stores, 97 partner-operated stores, and 77 franchise stores.
Balance Sheet
At first quarter end, cash and cash equivalents totaled
For the first quarter, capital expenditures totaled
Inventory at quarter end was
Return of Capital to Shareholders
For the first quarter, the Company utilized
Since first quarter-end through May 29, the Company utilized
2024 Outlook
The Company reaffirms its fiscal 2024 outlook with expectations of delivering growth in total revenues and pre-tax income compared to our 53-week fiscal 2023:
- Total revenue growth on a low-to-mid-single-digit percentage basis
- Pre-tax income growth on a low-single-digit percentage basis
For comparative purposes, the company notes that the additional week in fiscal 2023 was approximately
For fiscal 2024, as compared to the 2023 non-GAAP 52-week year, the Company expects:
- Total revenue growth on a mid-single-digit percentage basis
- Pre-tax income growth on a mid-single-digit percentage basis
In addition, for fiscal 2024, the Company currently expects:
- Net new unit growth of at least 50 experience locations, through a combination of corporately-managed, partner-operated, and franchised business models
-
Capital expenditures in the range of
$18 million $20 million -
Depreciation and amortization in the range of
$15 million $16 million -
Tax rate to approximate
26% , excluding discrete items
The Company’s guidance considers a variety of factors including anticipated ongoing inflationary pressures and increased freight costs. Additionally, the Company’s outlook assumes no further material changes in the macroeconomic or geopolitical environment, or relevant foreign currency exchange rates.
Note Regarding Non-GAAP Financial Measures
In this press release, the Company’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures. In particular, the Company provides historic income adjusted to exclude certain costs, which are non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying trends in the Company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the Company’s core operating results. These measures should not be considered a substitute for or superior to GAAP results. These non-GAAP financial measures are defined and reconciled to the most comparable GAAP measure later in this document.
Webcast and Conference Call Information
At 9:00 AM ET today, Build-A-Bear Workshop will host a conference call with investors and financial analysts to discuss its financial results. The conference call will be webcast on Build-Bear’s Investor Relations website, https://ir.buildabear.com.
The dial-in number for the live conference call is (877) 407-3982 or (201) 493-6780 for international callers. The access code is Build-A-Bear. The call is expected to conclude by 10 AM ET.
A replay of the conference call webcast will be available in the investor relations website for one year. A telephone replay will be available beginning at approximately 1:00 PM ET today until 11:59 PM ET on June 6, 2024. The telephone replay is available by calling (412) 317-6671 (toll/international) or (844) 512-2921 (toll free). The access code is 13745995.
About Build-A-Bear
Since its beginning in 1997, Build-A-Bear has evolved to become a beloved multi-generational brand focused on its mission to “add a little more heart to life” where guests of all ages make their own “furry friends” in celebration and commemoration of life moments. Guests create their own stuffed animals by participating in the stuffing, dressing, accessorizing, and naming of their own teddy bears and other plush toys based on the Company’s own intellectual property and in conjunction with a variety of best-in-class licenses. The hands-on and interactive nature of our more than 500 company-owned, partner-operated and franchise experience locations around the world, combined with Build-A-Bear’s pop-culture appeal, often fosters a lasting and emotional brand connection with consumers, and has enabled the Company to expand beyond its retail stores to include e-commerce sales on www.buildabear.com and non-plush branded consumer categories via out-bound licensing agreements with leading manufacturers, as well as the creation of engaging content via Build-A-Bear Entertainment (a subsidiary of Build-A-Bear Workshop, Inc.). Build-A-Bear Workshop, Inc. (NYSE: BBW) posted consolidated total revenues of
Forward-Looking Statements
This press release contains certain statements that are, or may be considered to be, “forward-looking statements” for the purpose of federal securities laws, including, but not limited to, statements that reflect our current views with respect to future events and financial performance. We generally identify these statements by words or phrases such as “may,” “might,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “future,” “potential” or “continue,” the negative or any derivative of these terms and other comparable terminology. All the information concerning our future liquidity, future revenues, margins and other future financial performance and results, achievement of operating of financial plans or forecasts for future periods, sources and availability of credit and liquidity, future cash flows and cash needs, success and results of strategic initiatives and other future financial performance or financial position, as well as our assumptions underlying such information, constitute forward-looking information.
These statements are based only on our current expectations and projections about future events. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by these forward-looking statements, including those factors discussed under the caption entitled “Risks Related to Our Business” and “Forward-Looking Statements” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on April 18, 2024 and other periodic reports filed with the SEC which are incorporated herein.
All our forward-looking statements are as of the date of this Press Release only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or other risks and uncertainties referred to in this Press Release or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the SEC could materially and adversely affect our continuing operations and our future financial results, cash flows, available credit, prospects, and liquidity. Except as required by law, the Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
All other brand names, product names, or trademarks belong to their respective holders.
| BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | |||||||||||
| Unaudited Condensed Consolidated Statements of Operations | |||||||||||
| (dollars in thousands, except share and per share data) | |||||||||||
| 13 Weeks | 13 Weeks | ||||||||||
| Ended | Ended | ||||||||||
| May 4, | % of Total | April 29, | % of Total | ||||||||
2024 |
Revenues (1) | 2023 |
Revenues (1) | ||||||||
| Revenues: |
|
||||||||||
| Net retail sales | $ | 107,868 |
|
94.0 |
$ | 112,096 |
|
93.4 |
|||
| Commercial revenue | 5,985 |
|
5.2 |
6,688 |
|
5.6 |
|||||
| International franchising | 877 |
|
0.8 |
1,266 |
|
1.0 |
|||||
| Total revenues | 114,730 |
|
100.0 |
120,050 |
|
100.0 |
|||||
| Cost of merchandise sold: |
|
|
|||||||||
| Cost of merchandise sold - retail (1) | 49,415 |
|
45.8 |
50,904 |
|
45.4 |
|||||
| Cost of merchandise sold - commercial (1) | 2,533 |
|
42.3 |
3,358 |
|
50.2 |
|||||
| Cost of merchandise sold - international franchising (1) | 617 |
|
70.4 |
885 |
|
69.9 |
|||||
| Total cost of merchandise sold | 52,565 |
|
45.8 |
55,147 |
|
45.9 |
|||||
| Consolidated gross profit | 62,165 |
|
54.2 |
64,903 |
|
54.1 |
|||||
|
|
||||||||||
| Selling, general and administrative expense | 47,562 |
|
41.5 |
45,626 |
|
38.0 |
|||||
| Interest (income) expense, net | (426 |
) |
(0.4) |
(76 |
) |
(0.1) |
|||||
| Income before income taxes | 15,029 |
|
13.1 |
19,353 |
|
16.1 |
|||||
| Income tax expense | 3,570 |
|
3.1 |
4,745 |
|
4.0 |
|||||
| Net income | $ | 11,459 |
|
10.0 |
$ | 14,608 |
|
12.2 |
|||
| Income per common share: | |||||||||||
| Basic | $ | 0.82 |
|
$ | 1.01 |
|
|||||
| Diluted | $ | 0.82 |
|
$ | 0.98 |
|
|||||
| Shares used in computing common per share amounts: | |||||||||||
| Basic | 13,925,957 |
|
14,457,858 |
|
|||||||
| Diluted | 14,006,400 |
|
14,974,930 |
|
|||||||
(1) |
|
Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold - retail, cost of merchandise sold - commercial and cost of merchandise sold - international franchising that are expressed as a percentage of net retail sales, commercial revenue and international franchising, respectively. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales, commercial revenue or international franchising and immaterial rounding. |
| BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||||||
| Unaudited Condensed Consolidated Balance Sheets | ||||||||||
| (dollars in thousands, except per share data) | ||||||||||
| May 4, | February 3, | April 29, | ||||||||
2024 |
2024 |
2023 |
||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash, cash equivalents and restricted cash | $ |
38,233 |
|
$ |
44,327 |
|
$ |
32,819 |
|
|
| Inventories, net |
|
64,024 |
|
|
63,499 |
|
|
66,489 |
|
|
| Receivables, net |
|
9,547 |
|
|
8,569 |
|
|
13,307 |
|
|
| Prepaid expenses and other current assets |
|
12,046 |
|
|
11,377 |
|
|
13,503 |
|
|
| Total current assets |
|
123,850 |
|
|
127,772 |
|
|
126,118 |
|
|
| Operating lease right-of-use asset |
|
72,783 |
|
|
73,443 |
|
|
73,780 |
|
|
| Property and equipment, net |
|
53,897 |
|
|
55,262 |
|
|
50,385 |
|
|
| Deferred tax assets |
|
8,672 |
|
|
8,682 |
|
|
6,642 |
|
|
| Other assets, net |
|
6,074 |
|
|
7,166 |
|
|
4,785 |
|
|
| Total Assets | $ |
265,276 |
|
$ |
272,325 |
|
$ |
261,710 |
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ |
14,793 |
|
$ |
16,170 |
|
$ |
13,686 |
|
|
| Accrued expenses |
|
19,552 |
|
|
19,954 |
|
|
27,272 |
|
|
| Operating lease liability short term |
|
24,276 |
|
|
25,961 |
|
|
27,843 |
|
|
| Gift cards and customer deposits |
|
16,620 |
|
|
18,134 |
|
|
18,637 |
|
|
| Deferred revenue and other |
|
3,432 |
|
|
3,514 |
|
|
5,010 |
|
|
| Total current liabilities |
|
78,673 |
|
|
83,733 |
|
|
92,448 |
|
|
| Operating lease liability long term |
|
56,906 |
|
|
57,609 |
|
|
59,030 |
|
|
| Other long-term liabilities |
|
1,356 |
|
|
1,321 |
|
|
1,260 |
|
|
| Stockholders' equity: | ||||||||||
| Common stock, par value |
|
139 |
|
|
142 |
|
|
149 |
|
|
| Additional paid-in capital |
|
64,065 |
|
|
66,330 |
|
|
70,324 |
|
|
| Accumulated other comprehensive loss |
|
(12,153 |
) |
|
(12,082 |
) |
|
(12,177 |
) |
|
| Retained earnings |
|
76,290 |
|
|
75,272 |
|
|
50,676 |
|
|
| Total stockholders' equity |
|
128,341 |
|
|
129,662 |
|
|
108,972 |
|
|
| Total Liabilities and Stockholders' Equity | $ |
265,276 |
|
$ |
272,325 |
|
$ |
261,710 |
|
|
| BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||
| Unaudited Selected Financial and Store Data | ||||||
| (dollars in thousands) | ||||||
| 13 Weeks | 13 Weeks | |||||
| Ended | Ended | |||||
| May 4, | April 29, | |||||
2024 |
2023 |
|||||
| Other financial data: | ||||||
| Retail gross margin ($) (1) | $ | 58,453 |
|
$ | 61,192 |
|
| Retail gross margin (%) (1) | 54.2 |
% |
54.6 |
% |
||
| Capital expenditures (2) | $ | 2,430 |
|
$ | 3,065 |
|
| Depreciation and amortization | $ | 3,658 |
|
$ | 3,080 |
|
| Store data (3): | ||||||
| Number of corporately-managed retail locations at end of period | ||||||
317 |
|
312 |
|
|||
40 |
|
37 |
|
|||
| Total corporately-managed retail locations | 357 |
|
349 |
|
||
| Number of franchised stores at end of period | 77 |
|
63 |
|
||
| Number of third-party retail locations at end of period | 97 |
|
70 |
|
||
| Corporately-managed store square footage at end of period (4) | ||||||
729,336 |
|
726,209 |
|
|||
55,535 |
|
52,763 |
|
|||
| Total square footage | 784,871 |
|
778,972 |
|
||
(1) |
|
Retail gross margin represents net retail sales less cost of merchandise sold - retail. Retail gross margin percentage represents retail gross margin divided by net retail sales. Store impairment is excluded from retail gross margin. |
|||||
(2) |
|
Capital expenditures represents cash paid for property, equipment, and other assets. |
|||||
(3) |
|
Excludes e-commerce. North American stores are located in |
|||||
(4) |
|
Square footage for stores located in |
|||||
| * Non-GAAP Financial Measures |
| BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||||
| Reconciliation of GAAP to Non-GAAP figures | ||||||||
| (dollars in thousands) | ||||||||
| 13 Weeks | 13 Weeks | |||||||
| Ended | Ended | |||||||
| May 4, | April 29, | |||||||
2024 |
2023 |
|||||||
| Income before income taxes (pre-tax) | $ |
15,029 |
|
$ |
19,353 |
|
||
| Interest (income) expense, net |
|
(426 |
) |
|
(76 |
) |
||
| Depreciation and amortization expense |
|
3,658 |
|
|
3,080 |
|
||
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | $ |
18,261 |
|
$ |
22,357 |
|
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240530689604/en/
Investor Relations Contact
Gary Schnierow, Vice President, Investor Relations & Corporate Finance
garys@buildabear.com
Media Relations Contact
pr@buildabear.com
Source: Build-A-Bear Workshop, Inc.
FAQ
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