Financial Performance - Fourth quarter revenues reached $150.4 million, a 0.8% increase on a GAAP basis, and a 5.7% increase when excluding the extra week of operations in the fourth quarter of 2023[4] - Pre-tax income for the fourth quarter was $27.5 million, reflecting a 5.1% year-over-year increase, and a 15.8% increase when excluding the extra week of operations in the fourth quarter of 2023[4] - For fiscal year 2024, total revenues were $496.4 million, a 2.1% increase on a GAAP basis, and a 3.6% increase when excluding the extra week of operations in fiscal 2023[12] - Total revenues for the 52 weeks ended February 1, 2025, were $496,404 thousand, compared to $486,114 thousand for the 53 weeks ended February 3, 2024[29] - Net income for the 13 weeks ended February 1, 2025, was $21,678 thousand, compared to $22,273 thousand for the same period in 2024, reflecting a decrease of 2.7%[27] - Adjusted net income for the year ended February 1, 2025, was $51,349 million, up from $49,546 million in the previous year, representing a growth of 3.6%[37] - Adjusted net income per diluted share (adjusted EPS) increased to $3.77 in 2025 from $3.42 in 2024, marking an increase of 10.3%[37] - Net income for Q1 2025 was $21,678 million, slightly down from $22,273 million in Q1 2024, a decrease of 2.7%[37] Shareholder Returns - The company returned $42.0 million to shareholders in fiscal 2024 through share repurchases and dividends, including a 10% increase in quarterly dividend to $0.22 per share[4] Growth and Expansion - Build-A-Bear opened 64 net new retail units in fiscal 2024, expanding its international presence to over 25 countries[2] - The company had net new unit growth of 24 global experience locations in the fourth quarter, totaling 589 locations at year-end[9] - The company expects mid-single-digit revenue growth and pre-tax income to range from a low-single-digit decline to low-single-digit growth for fiscal 2025[17] Capital Expenditures - Capital expenditures for fiscal 2025 are projected to be between $20 million and $25 million[17] - Capital expenditures for the 13 weeks ended February 1, 2025, were $9,746 thousand, an increase from $7,171 thousand in the prior year[33] Cash and Assets - At fiscal year-end, cash and cash equivalents totaled $27.8 million, down from $44.3 million the previous year, impacted by higher inventory investment[10] - Total current assets decreased to $126,298 thousand as of February 1, 2025, from $127,772 thousand a year earlier[31] E-commerce and Franchise Performance - Consolidated e-commerce demand decreased by 11.6% in the fourth quarter, while commercial and international franchise revenues increased by 20.5%[8] - Net retail sales accounted for $139,499 thousand, representing 92.7% of total revenues for the 13 weeks ended February 1, 2025[27] Profitability Metrics - Consolidated gross profit for the 13 weeks ended February 1, 2025, was $85,144 thousand, up from $84,217 thousand in the previous year[27] - The company reported a retail gross margin of 56.9% for the 13 weeks ended February 1, 2025, slightly up from 56.7% in the previous year[33] - Adjusted income before income taxes for Q1 2025 was $27,486 million, compared to $23,729 million in Q1 2024, reflecting a year-over-year increase of 15.5%[37] - EBITDA for Q1 2025 was reported at $31,138 million, compared to $29,861 million in Q1 2024, indicating a growth of 4.3%[38] - Adjusted EBITDA for the year ended February 1, 2025, was $81,052 million, up from $76,637 million in 2024, reflecting a year-over-year increase of 5.0%[38] Tax and Interest Expenses - The company recorded a valuation allowance of $436 million on its net deferred tax assets in the UK for the year ended February 1, 2025[37] - The interest expense for the year ended February 1, 2025, was $(861) million, compared to $(929) million in 2024, showing a decrease of 7.3%[37] Other Financial Impacts - The impact of the 53rd week on income was estimated at $(2,420) million, affecting both EBITDA and adjusted EBITDA calculations[38] - The company undertook international restructuring, which had a tax impact of $1,102 million in the previous year[37]

Core Insights - Build-A-Bear Workshop is set to launch a new multi-level retail experience at ICON Park in Orlando, Florida, in the first half of 2026, marking a significant expansion in a major tourist destination [1][3] - The company is collaborating with design firm Chute Gerdeman to create an immersive retail space that enhances its existing experiential retail concept [2] - This initiative is part of a broader strategic evolution aimed at expanding Build-A-Bear's global presence, particularly in tourist-heavy areas, building on its nearly 600 locations [3] Company Strategy - The new location will feature a creative interpretation of Build-A-Bear's "make your own" teddy bear concept, targeting a diverse consumer base, including children and adults, with the latter representing 40% of sales [4] - The design will include a prominent facade to attract visitors, leveraging its location on International Drive, close to major attractions like Walt Disney World and Universal's Theme Parks [4] Market Position - ICON Park is recognized as a leading location for entertainment, attracting millions of visitors annually, which aligns with Build-A-Bear's strategy to enhance its brand visibility and consumer engagement [6][9] - The partnership with ICON Park reflects the appeal of doing business in Orange County, emphasizing the potential for high consumer traffic and engagement [5] Financial Overview - Build-A-Bear Workshop reported total revenues of $486.1 million for fiscal 2023, indicating a strong financial position to support its expansion efforts [5]

Core Concept - Build-A-Bear Workshop is launching a new collection of weighted plush toys called Heartwarming Hugs to celebrate National Hug Day, emphasizing the emotional connection and comfort that hugs provide [1][2][3]. Product Launch - The Heartwarming Hugs collection includes a bear and a sloth, each weighing three pounds and featuring a removable heart that can be warmed for added comfort [1][3]. - The collection aims to provide a sense of warmth and connection for all ages, promoting the benefits of hugging, such as stress reduction and increased oxytocin levels [2]. Marketing and Promotions - To celebrate the launch, Build-A-Bear is offering free shipping on online purchases of the Heartwarming Hugs plushes from January 21 to 23, 2025 [3]. - The Heartwarming Hugs Bear will be available in stores and online, while the Heartwarming Hugs Sloth will be exclusively available online [3]. Company Background - Build-A-Bear Workshop has been a multi-generational brand since 1997, focusing on creating personalized stuffed animals and fostering emotional connections with consumers [5]. - The company reported consolidated total revenues of $486.1 million for fiscal 2023, highlighting its strong market presence and growth [5].

Group 1 - Build-A-Bear Workshop has significantly outperformed the S&P 500, with an increase of over 80% in the past year [1]

Core Perspective - The article emphasizes the importance of investing in companies with a strong economic moat and simple yet effective business models, aligning with the investment philosophy of Warren Buffett [1]. Investment Strategy - The focus is on dividend investing in high-quality blue-chip stocks, Business Development Companies (BDCs), and Real Estate Investment Trusts (REITs) [1]. - The investment approach is characterized as buy-and-hold, prioritizing quality over quantity, with a goal to supplement retirement income through dividends within the next 5-7 years [1]. Target Audience - The article aims to assist hard-working lower and middle-class workers in building investment portfolios that consist of high-quality, dividend-paying companies [1]. - It seeks to provide a new perspective for investors to achieve financial independence [1].

Summary of Key Points Core Viewpoint - Build-A-Bear Workshop has shown strong growth in revenue and earnings, while Haverty Furniture Companies has faced significant declines in performance, but both companies have potential for future growth [4][6][12]. Build-A-Bear Workshop - Build-A-Bear reported a strong third quarter with $119 million in revenue and an EPS of 73 cents, exceeding analyst expectations [4]. - The company has opened 17 new locations, including international ones, and plans to increase its total locations by about 25% by 2025 [4]. - New product launches, such as the Mini Beans collection, have contributed to customer growth [4]. - Despite strong performance, Build-A-Bear's web sales have underperformed, leading to a narrowing of full-year revenue guidance [5]. - The company has a Buy rating with a price target of $52.50, indicating an upside potential of nearly 22% [6]. Haverty Furniture Companies - Haverty has experienced a 1-year total return of -37%, attributed to falling revenues, profits, and gross margins [2]. - The company announced a leadership change with Steven Burdette becoming CEO, who previously helped the company achieve significant net income growth during the pandemic [6]. - Haverty's design business reported a 19% year-over-year growth, and the company has a strong cash position of over $121 million with no funded debt [7]. - The firm plans to open three new stores in the fourth quarter and has a dividend yield of 5.78% [7]. Retail Industry Outlook - The retail industry may see transformative changes in 2025, with opportunities for building customer loyalty amid increasing competition and potential supply chain issues [11]. - Maintaining momentum beyond the holiday season will be crucial for retailers, including Build-A-Bear and Haverty [12].

Group 1 - Build-A-Bear Workshop, Inc. (NYSE: BBW) presents an upside potential of 14.38% to 32.38% for investors [1] - Despite a bleak consumer outlook, BBW has demonstrated the ability to generate consistent cash flows [1] - The investment philosophy is based on fundamental bottom-up analysis and quantitative modeling, focusing on identifying perception gaps [1] Group 2 - The analysis emphasizes the importance of capitalizing on over-pessimism and excessive exuberance in the market [1] - The objective is to identify asymmetric opportunities for investors [1]

Store Operations and Growth - As of November 2, 2024, the company operated 362 corporately-managed stores, 123 partner-operated locations, and 80 international franchised stores[81]. - The company expects net new unit growth of at least 65 locations in fiscal 2024, focusing on non-traditional locations such as family-centric tourist sites[87]. - The company has opened a net of 40 new retail experience locations during the first thirty-nine weeks of fiscal 2024[87]. - The number of third-party retail locations increased to 123 by November 2, 2024, from 92 at the beginning of the period, highlighting the expansion of the capital-light retail model[91]. Financial Performance - The company reported growth in total revenues and profit in fiscal 2023, driven by strategic investments and improved operational efficiency[87]. - Consolidated revenues increased by 11.0%, driven by a $9.1 million (9.1%) increase in net retail sales and a $2.6 million (43%) increase in commercial revenue compared to the third fiscal quarter of 2023[98]. - Net retail sales for the thirteen weeks ended November 2, 2024, were $109.5 million, up from $100.4 million for the same period in 2023, with existing stores contributing $8.8 million to this increase[99]. - Commercial revenue reached $8.6 million for the thirteen weeks ended November 2, 2024, compared to $6.0 million for the same period in 2023, primarily due to increased sales volume from wholesale accounts[102]. - For the thirty-nine weeks ended November 2, 2024, net retail sales were $320.8 million, a $4.9 million (1.5%) increase compared to the same period in 2023[108]. - Commercial revenue for the thirty-nine weeks ended November 2, 2024, was $21.9 million, up from $17.7 million in the prior year, reflecting a $4.2 million increase[109]. - International franchising revenue was $1.3 million for the thirteen weeks ended November 2, 2024, compared to $1.1 million in the same period of 2023, mainly due to product shipment timing[103]. Profitability and Margins - Retail gross margin dollars increased by $6.5 million to $59.4 million, with the retail gross margin rate improving by 160 basis points compared to the prior year[104]. - EBITDA for the thirteen weeks ended November 2, 2024, increased by $3.4 million, or 25.3%, to $16.7 million from $13.3 million for the same period last year[117]. - EBITDA for the thirty-nine weeks ended November 2, 2024, increased by $0.7 million, or 1.5%, to $49.9 million from $49.2 million for the same period last year[118]. Shareholder Returns and Capital Management - The company returned $42 million to shareholders through special dividends and has initiated a quarterly dividend program, declaring cash dividends of $0.20 per share totaling $2.9 million, $2.7 million, and $2.7 million in the first three quarters of fiscal 2024[88]. - The company has implemented a $100 million stock repurchase program announced in September 2024, following previous repurchase programs totaling $75 million[88]. - The company utilized $23.0 million in cash to repurchase 832,944 shares during the thirty-nine weeks ended November 2, 2024, compared to $15.2 million for 672,734 shares in the same period last year[133]. Cash Flow and Capital Expenditures - Cash provided by operating activities decreased by $5.2 million to $27.6 million for the thirty-nine weeks ended November 2, 2024, compared to $32.7 million for the same period last year[124]. - Total inventory at quarter end was $70.8 million, an increase of $6.3 million or 10% from the end of the fiscal 2023 third quarter[131]. - Capital spending through the thirty-nine weeks ended November 2, 2024, totaled $9.6 million, with an expected capital expenditure of approximately $18 to $20 million in fiscal 2024[131]. Business Strategy and Digital Transformation - The company's digital transformation includes the launch of its first animated theatrical film in 2023, "Glisten and the Merry Mission," aimed at expanding its consumer base beyond children[87]. - The company aims to enhance its omnichannel capabilities, integrating customer communications to acquire new customers and increase purchase occasions[87]. - The company has shifted to asset-light business models, improving cash flows and supporting long-term profitable growth initiatives[88]. - The company operates in three segments: Direct-to-Consumer, Commercial, and International franchising, leveraging its brand strength across various channels[82]. Financial Position and Obligations - As of November 2, 2024, the company had a consolidated cash balance of $29.0 million, with 79% domiciled within the U.S.[123]. - The company had purchase obligations totaling approximately $99.7 million as of November 2, 2024, with $29.0 million due in the next 12 months[132]. - The company had no outstanding borrowings as of November 2, 2024, under its revolving credit agreement[127]. Economic Outlook - The company expects inflationary pressures to continue throughout fiscal 2024, particularly through wage increases[135].

Core Viewpoint - Build-A-Bear (BBW) reported quarterly earnings of $0.73 per share, exceeding the Zacks Consensus Estimate of $0.70 per share, and showing an increase from $0.53 per share a year ago, indicating a positive earnings surprise of 4.29% [1] Financial Performance - The company achieved revenues of $119.43 million for the quarter ended October 2024, surpassing the Zacks Consensus Estimate by 7.02%, compared to $107.56 million in the same quarter last year [2] - Over the last four quarters, Build-A-Bear has exceeded consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Build-A-Bear shares have increased approximately 64.9% since the beginning of the year, significantly outperforming the S&P 500's gain of 27.6% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.63 on revenues of $154 million, and for the current fiscal year, it is $3.72 on revenues of $492.1 million [7] - The estimate revisions trend for Build-A-Bear is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Retail - Miscellaneous industry, to which Build-A-Bear belongs, is currently ranked in the bottom 30% of over 250 Zacks industries, which may impact stock performance [8]

Build-A-Bear Workshop Q3 2024 Earnings Release [Financial Highlights and Executive Commentary](index=1&type=section&id=Financial%20Highlights%20and%20Executive%20Commentary) The company reported record Q3 2024 results with double-digit growth in revenue and pre-tax income, driven by brand evolution and global expansion Q3 2024 Key Metrics | Metric | Q3 2024 | Change YoY | | :--- | :--- | :--- | | Total Revenues | $119.4 million | +11.0% | | Pre-tax Income | $13.1 million | +26.4% | | Diluted EPS | $0.73 | +37.7% | - The company raised its fiscal 2024 guidance for net new unit growth from 50 to **at least 65 experience locations** globally[3](index=3&type=chunk) - CEO Sharon Price John attributed the record performance to the business model's evolution and the brand's strength, highlighting the expansion of its international footprint to over 20 countries[3](index=3&type=chunk) - CFO Voin Todorovic noted that strong retail and third-party sales drove profitability, but web demand underperformed, and the company repurchased **over 6% of its shares** outstanding in the past year[4](index=4&type=chunk) [Detailed Financial Performance](index=1&type=section&id=Detailed%20Financial%20Performance) The company achieved strong Q3 growth in revenue and profit, while year-to-date performance showed modest revenue growth and a slight decline in pre-tax income [Third Quarter Fiscal 2024 Results](index=1&type=section&id=Third%20Quarter%20Fiscal%202024%20Results) Q3 2024 saw an 11% revenue increase to $119.4 million and a 26.4% rise in pre-tax income, driven by strong sales and margin expansion Q3 2024 Revenue Performance | Revenue Stream | Q3 2024 Value | % Change YoY | | :--- | :--- | :--- | | Total Revenues | $119.4 million | +11.0% | | Net Retail Sales | $109.5 million | +9.1% | | E-commerce Demand | N/A | +1.3% | | Commercial & Franchise | $9.9 million | +38.8% | Q3 2024 Profitability Metrics | Profitability Metric | Q3 2024 Value | % Change YoY | | :--- | :--- | :--- | | Pre-tax Income | $13.1 million | +26.4% | | Diluted EPS | $0.73 | +37.7% | | EBITDA | $16.7 million | +25.3% | [Nine-Month Fiscal 2024 Results](index=2&type=section&id=Nine-Month%20Fiscal%202024%20Results) Year-to-date revenue grew 2.7% to $346.0 million, while pre-tax income slightly declined due to higher SG&A expenses Nine-Month 2024 Revenue Performance | Revenue Stream | Nine-Month 2024 Value | % Change YoY | | :--- | :--- | :--- | | Total Revenues | $346.0 million | +2.7% | | Net Retail Sales | $320.8 million | +1.5% | | E-commerce Demand | N/A | -11.8% | | Commercial & Franchise | $25.2 million | +20.5% | Nine-Month 2024 Profitability Metrics | Profitability Metric | Nine-Month 2024 Value | % Change YoY | | :--- | :--- | :--- | | Pre-tax Income | $39.7 million | -1.3% | | Diluted EPS | $2.20 | +4.8% | | EBITDA | $49.9 million | +1.5% | [Operational and Balance Sheet Review](index=2&type=section&id=Operational%20and%20Balance%20Sheet%20Review) The company expanded its global store count, maintained a strong debt-free balance sheet, and returned significant capital to shareholders [Store Activity](index=2&type=section&id=Store%20Activity) The company added 17 net new global locations in Q3, increasing its total store count to 565 Global Store Count (as of Q3 2024 End) | Store Type | Count at Q3 2024 End | | :--- | :--- | | Corporately-managed | 362 | | Partner-operated | 123 | | Franchise | 80 | | **Total Global Locations** | **565** | [Balance Sheet and Cash Flow](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) The company ended Q3 with a 16.8% year-over-year increase in cash to $29.0 million and no outstanding debt Key Balance Sheet Items | Balance Sheet Item | Value at Q3 2024 End | % Change YoY | | :--- | :--- | :--- | | Cash and cash equivalents | $29.0 million | +16.8% | | Inventory | $70.8 million | +9.8% | - The company finished the quarter with **no borrowings** under its revolving credit facility[10](index=10&type=chunk) - Capital expenditures totaled **$3.9 million** for the third quarter and **$9.6 million** for the first nine months of fiscal 2024[11](index=11&type=chunk) [Return of Capital to Shareholders](index=3&type=section&id=Return%20of%20Capital%20to%20Shareholders) The company returned $31.3 million to shareholders in the first nine months and adopted a new $100 million share repurchase program Capital Return Summary | Capital Return Activity | First Nine Months 2024 | | :--- | :--- | | Share Repurchases | $23.0 million | | Quarterly Dividends | $8.3 million | | **Total Capital Returned** | **$31.3 million** | - A new **$100.0 million** stock repurchase program was adopted on September 11, 2024, with **$97.0 million** remaining available for future repurchases[14](index=14&type=chunk) [2024 Outlook](index=3&type=section&id=2024%20Outlook) The company updated its fiscal 2024 guidance, raising its net new store growth target and projecting revenue between $489 million and $495 million Fiscal Year 2024 Financial Guidance | FY 2024 Guidance | Updated Range | | :--- | :--- | | Total Revenue | $489M - $495M | | Pretax Income | $65M - $67M | Fiscal Year 2024 Operational Guidance | FY 2024 Other Expectations | Updated Guidance | | :--- | :--- | | Net New Unit Growth | At least 65 locations | | Capital Expenditures | $18M - $20M | | Depreciation & Amortization | $15M - $16M | | Tax Rate | Approx. 24.5% | [Financial Statements and Reconciliations](index=6&type=section&id=Financial%20Statements%20and%20Reconciliations) This section presents detailed unaudited financial statements, including income statements, balance sheets, and non-GAAP reconciliations [Unaudited Condensed Consolidated Statements of Operations](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The Q3 income statement shows year-over-year growth in revenue and net income, while the nine-month period reflects revenue growth but slightly lower net income Q3 Statement of Operations ($ in thousands) | Q3 Statement of Operations | 13 Weeks Ended Nov 2, 2024 | 13 Weeks Ended Oct 28, 2023 | | :--- | :--- | :--- | | Total Revenues | $119,430k | $107,562k | | Gross Profit | $64,640k | $56,633k | | Net Income | $9,870k | $7,586k | Nine-Month Statement of Operations ($ in thousands) | Nine-Month Statement of Operations | 39 Weeks Ended Nov 2, 2024 | 39 Weeks Ended Oct 28, 2023 | | :--- | :--- | :--- | | Total Revenues | $345,958k | $336,837k | | Gross Profit | $187,374k | $180,172k | | Net Income | $30,107k | $30,532k | [Unaudited Condensed Consolidated Balance Sheets](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of November 2, 2024, reflects growth in total assets to $285.9 million and an increase in stockholders' equity Consolidated Balance Sheet Highlights ($ in thousands) | Balance Sheet Item | Nov 2, 2024 | Oct 28, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $28,955k | $24,800k | | Inventories, net | $70,774k | $64,466k | | Total Assets | $285,862k | $250,543k | | Total Stockholders' Equity | $128,573k | $111,648k | [Unaudited Selected Financial and Store Data](index=9&type=section&id=Unaudited%20Selected%20Financial%20and%20Store%20Data) This section provides supplementary data showing an improved retail gross margin and detailing the growth in store locations Retail Gross Margin | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Retail Gross Margin % | 54.2% | 52.6% | Store Count by Type | Store Count (End of Period) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Corporately-managed | 362 | 356 | | Franchised | 80 | 70 | | Third-party retail | 123 | 85 | [Reconciliation of GAAP to Non-GAAP figures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20figures) This section reconciles GAAP pre-tax income to non-GAAP EBITDA, showing year-over-year growth for both Q3 and the nine-month period Reconciliation of Income Before Taxes to EBITDA | EBITDA Reconciliation ($ in thousands) | Q3 2024 | Q3 2023 | Nine-Month 2024 | Nine-Month 2023 | | :--- | :--- | :--- | :--- | :--- | | Income before income taxes | $13,081 | $10,348 | $39,655 | $40,180 | | EBITDA | $16,660 | $13,298 | $49,915 | $49,196 |