Build-A-Bear Workshop(US:BBW)2024-12-12 21:02Store 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].