Core Viewpoint - Build-A-Bear (BBW) is positioned well to potentially beat earnings estimates in its upcoming quarterly report, continuing a strong trend of surpassing expectations in previous quarters [1][6]. Earnings Performance - Build-A-Bear has consistently exceeded earnings estimates, with an average surprise of 4.45% over the last two quarters [2]. - In the last reported quarter, the company achieved earnings of $1.59 per share, surpassing the Zacks Consensus Estimate of $1.52 per share by 4.61% [3]. - In the previous quarter, Build-A-Bear reported earnings of $0.73 per share against an expectation of $0.70 per share, resulting in a surprise of 4.29% [3]. Earnings Estimates and Predictions - Recent estimates for Build-A-Bear have been revised upwards, indicating a positive outlook for the company's earnings [6]. - The Zacks Earnings ESP for Build-A-Bear is currently +0.97%, suggesting that analysts are optimistic about the company's earnings prospects [9]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) indicates a high likelihood of another earnings beat [9]. Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [7]. - The Earnings ESP metric compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [8].

Company Overview - Build-A-Bear Workshop, Inc. (NYSE: BBW) is a specialty retail store primarily focused on selling children's plush toys [1] - The company differentiates itself by emphasizing in-store customer experience and fostering emotional connections with customers rather than just selling products [1] Investment Strategy - The focus is on identifying strong companies that are undervalued by the stock market, with the belief that corrective forces will realign these "mispriced" stocks to their intrinsic value [1] - Corrective forces may include activist investors' proxy fights, leadership and strategic changes, spin-offs, and industry cyclicality [1] - The objective is to identify these opportunities before they materialize, as stock return overperformance is expected from such investments [1]

Retail Expansion - In fiscal 2024, the company opened a net of 64 new Build-A-Bear Workshop retail experience locations, with expectations of at least 50 new locations in fiscal 2025[26]. - The company has shifted to non-traditional retail locations, with over a third of total stores now in such settings, including family-centric tourist sites[26]. - The company’s retail stores also function as mini distribution centers, facilitating efficient fulfillment of digital demand through programs like "Buy Online, Ship From Store"[34]. Digital Transformation - The company has accelerated its digital transformation initiatives, enhancing marketing and loyalty programs to increase consumer engagement and expand its total addressable market[26]. Financial Performance - The company’s cash flows have improved significantly, allowing for increased support for key initiatives and returning capital to shareholders through dividends and share repurchases[26]. - The company’s operating margins have remained robust despite inflationary pressures, allowing for disciplined expense management and continued investment in growth initiatives[26]. Inventory and Currency Risk - As of February 1, 2025, the company's inventory balance was $69.8 million, an increase of $6.3 million compared to February 3, 2024[30]. - The company purchases all inventory in U.S. dollars, exposing it to currency risk from fluctuations in foreign currencies[237]. - A hypothetical 10% decrease in current foreign currency exchange rates would not have a material effect on the company's financial position or results of operations[238]. - Foreign currency transaction gains and losses have not been material to the company's financial statements to date[238]. - The company does not have a formal hedging program with respect to foreign currency[238]. - International sales are primarily denominated in Canadian dollars, Euros, and British pounds, which may affect pricing and revenue[237]. - The company’s foreign subsidiaries buy inventory in their functional currency, which can increase costs if their currencies depreciate against the U.S. dollar[237]. - Translation adjustments from foreign operations are reported in accumulated other comprehensive income[238]. - The company’s financial results are reported in U.S. dollars, which may be impacted by changes in currency exchange rates[236]. Employee Information - The company employs approximately 1,000 full-time and 4,100 part-time employees across the U.S., Canada, the UK, and the Republic of Ireland as of February 1, 2025[35]. Licensing and Brand Relationships - The company has developed licensing relationships with major brands such as Disney, NBCUniversal, and Pokémon to enhance its product offerings and marketing opportunities[49]. - The company’s strategic focus includes expanding product offerings and licensing relationships to drive retail performance and leverage brand equity[25]. Regulatory Compliance - The company is subject to the reporting requirements of the Securities Exchange Act of 1934 and files periodic reports with the SEC[50]. Risk Factors - For detailed risk factors that could affect results, refer to "ITEM 1A. RISK FACTORS" in the Annual Report[239].

Core Viewpoint - The article emphasizes the importance of value investing and highlights BuildABear Workshop (BBW) as a strong value stock based on its financial metrics and Zacks Rank system [2][4][7] Valuation Metrics - BBW has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating it is a high-quality value stock [4] - The current P/E ratio of BBW is 9.20, significantly lower than the industry average of 14.83, suggesting it may be undervalued [4] - BBW's P/B ratio stands at 3.86, compared to the industry average of 11.13, further indicating solid valuation [5] - The P/CF ratio for BBW is 7.37, which is attractive relative to the industry's average of 15.51, reinforcing the notion of undervaluation [6] Historical Performance - Over the past year, BBW's Forward P/E has fluctuated between a high of 12.41 and a low of 6.38, with a median of 9.02 [4] - The P/B ratio for BBW has ranged from a high of 5.04 to a low of 2.63, with a median of 3.76 [5] - BBW's P/CF ratio has varied between a high of 9.56 and a low of 5.17, with a median of 7.21 [6] Conclusion - The combination of BBW's strong earnings outlook and favorable valuation metrics suggests it is currently an impressive value stock [7]

Group 1 - The article highlights that investors may not be focusing on the Consumer Discretionary sector, particularly Build-A-Bear Workshop, Inc. (NYSE: BBW), due to rising economic uncertainty [1] Group 2 - The author expresses a personal investment strategy focused on dividend investing in quality blue-chip stocks, BDCs, and REITs, aiming to build a portfolio that supports retirement income [2] - The article emphasizes the importance of conducting due diligence for investors and encourages building investment portfolios of high-quality, dividend-paying companies [2] Group 3 - The author has a beneficial long position in BBW shares, indicating a personal investment interest in the company [3] - The article does not provide specific investment recommendations or advice, emphasizing that past performance is not indicative of future results [4]

Core Viewpoint - Build-A-Bear (BBW) shows potential for significant upside, with a mean price target of $54.33 indicating a 39.9% increase from its current price of $38.84 [1] Price Targets - The average price target ranges from a low of $50 to a high of $58, with a standard deviation of $4.04, suggesting a consensus among analysts [2] - The lowest estimate indicates a 28.7% increase, while the highest suggests a 49.3% upside [2] Analyst Sentiment - Analysts are optimistic about BBW's earnings prospects, as indicated by upward revisions in earnings estimates, which historically correlate with stock price movements [4][11] - Over the last 30 days, two earnings estimates have increased, leading to a 0.9% rise in the Zacks Consensus Estimate [12] Zacks Rank - BBW holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for near-term upside [13]

Financial Data and Key Metrics Changes - Total revenues increased by 3.6% to over $496 million, with pretax income growing by 5.1% to more than $67 million [10][41] - The company returned $42 million in capital to shareholders, including a 10% increase in quarterly dividends to $0.22 per share [35][36] Business Line Data and Key Metrics Changes - Net retail sales for Q4 were $139.5 million, up 4.7%, while commercial revenue rose 20.5% year-over-year [37][38] - The gross margin improved to 56.6%, reflecting a slight expansion in both retail and commercial gross margins [39] Market Data and Key Metrics Changes - Store traffic increased by 3%, significantly outpacing the national average decline of nearly 1% [38] - The company expanded its global footprint with 24 new locations, including 30 partner-operated locations in ten new countries [18][21] Company Strategy and Development Direction - The company focuses on three strategic initiatives: expanding experiential retail locations, advancing digital transformation, and investing in brand strength while returning capital to shareholders [11][26] - Plans for 2025 include opening at least 50 new net locations, primarily partner-operated, to enhance global brand reach [21][45] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2025, anticipating mid-single-digit revenue growth but potential challenges in pretax income due to tariff concerns [8][46] - The toy industry is viewed as recession-resistant, with a significant portion of sales driven by birthdays and collectors [56][100] Other Important Information - The company has reduced its dependency on China, expecting less than 50% of inventory shipped to North America to come from there in 2025 [70][112] - The introduction of a new retail experience in Orlando, Florida, is planned for 2026, aimed at capitalizing on tourist traffic [19][20] Q&A Session Summary Question: Overall consumer environment and business reaction to a slowdown - Management noted positive quarter-to-date results, with traffic outpacing national averages, indicating resilience in the toy industry [54][56] Question: Progress in e-commerce - Management acknowledged opportunities for improvement in e-commerce and emphasized efforts to integrate omnichannel capabilities [58][62] Question: Tariff impacts and inventory management - The company is proactively managing inventory purchases to mitigate potential tariff impacts and expects to maintain a diversified supply chain [68][70] Question: Revenue guidance and potential offsets - Management provided guidance for mid-single-digit revenue growth, citing macro-level headwinds as potential offsets to a more optimistic outlook [132]

Core Viewpoint - Build-A-Bear (BBW) reported quarterly earnings of $1.59 per share, exceeding the Zacks Consensus Estimate of $1.52 per share, and showing an increase from $1.34 per share a year ago, indicating a positive earnings surprise of 4.61% [1][2] Financial Performance - The company achieved revenues of $150.45 million for the quarter ended January 2025, surpassing the Zacks Consensus Estimate by 2.55% and showing a slight increase from $149.28 million year-over-year [2] - Over the last four quarters, Build-A-Bear has exceeded consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Performance - Build-A-Bear shares have declined approximately 22.9% since the beginning of the year, contrasting with the S&P 500's decline of 4.8% [3] - The current Zacks Rank for Build-A-Bear is 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.84 on revenues of $116.3 million, while the estimate for the current fiscal year is $3.88 on revenues of $500.3 million [7] - The trend of estimate revisions for Build-A-Bear is currently mixed, which may change following the recent earnings report [6] Industry Context - The Retail - Miscellaneous industry, to which Build-A-Bear belongs, is currently ranked in the top 27% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - Total revenues for fiscal year 2024 reached $496.4 million, an increase of 3.6% year-over-year [28] - Pre-tax income grew by 5.1% to $67.1 million, marking a record for the company [28] - Adjusted EPS increased by 10.2% to $3.77 [28] - For Q4, total revenues were $150.4 million, up 5.7%, with net retail sales increasing by 4.7% [25][28] - Gross margin improved to 56.6%, a 20 basis points increase from the previous year [26] Business Line Data and Key Metrics Changes - The commercial revenue segment, which includes wholesale sales and international franchise revenue, rose by 20.5% compared to the prior year [26] - Store traffic increased by 3%, significantly outpacing the national average decline of nearly 1% [25][26] - The company opened 24 new locations in 2024, contributing to a total of 64 new locations opened over the year [64] Market Data and Key Metrics Changes - The company expanded its global footprint by over 100 additional locations in the past two years, primarily through partner-operated models [8] - The largest unit expansion occurred in Italy, with 13 partner-operated locations now established [11] Company Strategy and Development Direction - The company is focused on three key initiatives: expanding experiential retail locations, advancing digital transformation, and increasing investments to drive profitable growth [8][15] - Plans to open at least 50 new net locations in 2025, with a majority being partner-operated internationally [30][64] - The introduction of a new retail experience in ICON Park, Orlando, is set to enhance the brand's presence in tourist destinations [13] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for fiscal year 2025, anticipating continued revenue growth despite potential tariff impacts [6][30] - The company has successfully navigated previous economic challenges, including the retail apocalypse and COVID-19 [19] - Positive early reactions to spring and Easter offerings were noted, alongside strong social media engagement [20] Other Important Information - The Board of Directors increased the quarterly dividend by 10% to $0.22 per share [23] - The company returned $42 million to shareholders through dividends and share repurchases during the year [23] Q&A Session Summary Question: Overall consumer environment and business reaction to a slowdown - Management noted positive quarter-to-date results, with traffic outpacing national levels, and highlighted the toy industry's recession-resistant nature [36][37] Question: Progress in e-commerce - Management acknowledged the need for improvement in e-commerce and emphasized the importance of an integrated omnichannel strategy [38] Question: Tariff impacts and dependence on China - The company has diversified its supply chain, reducing dependency on China to less than 50% of inventory shipped to North America [46] Question: Future of same-day delivery partnerships - Management highlighted the importance of partnerships like Uber for enhancing customer convenience, especially during peak seasons [50][52] Question: Plans for MiniBeans product line expansion - The MiniBeans collection has sold over 1.25 million units, and the company plans to extend its reach into wholesale retail locations [57][59] Question: Inventory levels and expansion - Management indicated that inventory levels would rise to support new store openings, but overall growth would be managed carefully [70] Question: Revenue guidance and macroeconomic headwinds - Management provided mid-single-digit revenue growth guidance, accounting for potential macroeconomic challenges while remaining optimistic about store performance [75][76]

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]