Financial Data and Key Metrics Changes - Revenue for Q3 2025 grew nearly 3% to almost $123 million, while pre-tax income declined by $2 million to nearly $11 million, impacted by approximately $4 million in negative tariff effects [5][22] - Year-to-date revenue increased over 8% to over $375 million, with pre-tax income rising by 15% to almost $46 million, also inclusive of about $5 million in negative tariff impact [5][6] - Gross margin was 53.7%, a decline of 40 basis points compared to last year, primarily due to tariffs, which reduced gross profit by about $4 million in the quarter [24] Business Line Data and Key Metrics Changes - Net retail sales for the quarter were $112.3 million, an increase of 2.5% [22] - Direct-to-consumer sales showed solid performance in August and September but declined by 10.8% in October due to challenging comparisons from a strong license product launch last year [23] - Commercial revenue, primarily from wholesale sales, grew 4.2% for the quarter and 15.3% year-to-date, with expectations of over 20% growth for the year [24] Market Data and Key Metrics Changes - The company added 24 net new experience locations, with 70% of those openings outside the United States, bringing the total to 651 locations across 33 countries [8][10] - The Mini Beans product line saw a 60% increase in sales during Q3, approaching 3 million units sold [16][49] Company Strategy and Development Direction - The company aims to expand its experiential retail footprint, advance digital transformation, and leverage brand equity beyond workshops while returning capital to shareholders [7][14] - The strategy includes opening new co-branded locations and expanding the Mini Beans collection to various retail environments [11][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving record revenue of over $500 million for fiscal 2025, despite ongoing tariff headwinds [3][6] - The company is focused on mitigating tariff impacts through cost management and selective price increases, with expectations of a reduced tariff rate in the coming year [35][36] Other Important Information - The company returned over $26 million to shareholders through dividends and buybacks, contributing to more than 24% EPS growth for the first three quarters of the fiscal year [6][25] - The company maintained a strong balance sheet with $27.7 million in cash and no borrowing under its revolving credit facility [26] Q&A Session Summary Question: Can you elaborate on the tariff impact and mitigation strategies for next year? - Management indicated that tariffs for the current year are expected to total less than $11 million, with ongoing efforts to mitigate costs through partnerships and selective price increases [34][35] Question: How is the diversification in pricing affecting customer demographics? - Management noted that 40% of sales are to teens and adults, allowing for greater pricing flexibility and attracting a broader customer base [40][41] Question: What trends are observed in promotional activity this quarter? - Management stated that promotional activity was managed more stringently, resulting in lower discount rates compared to previous quarters [46][47] Question: Can you provide insights on Mini Beans sales and new product introductions? - Management expressed excitement about Mini Beans, highlighting a 60% increase in sales and expansion into various retail channels [48][49] Question: How do high-profile movie tie-ins affect sales? - Management acknowledged that while movie tie-ins can drive sales, the overall performance is influenced by a broader assortment of products [56][58] Question: Will having multiple locations in large malls provide leverage in lease negotiations? - Management confirmed that increased revenue and foot traffic from multiple locations can create leverage in discussions with mall partners [60][61]

Build-A-Bear Workshop (NYSE:BBW) Q3 2026 Earnings Call December 04, 2025 09:00 AM ET Company ParticipantsKeegan Cox - Research AssociateSharon John - CEOVoin Todorovic - CFOChris Hurt - COOGary Schnierow - VP of Investor Relations and Corporate FinanceConference Call ParticipantsGreg Gibas - VP and Senior Research AnalystEric Beder - CEO and Senior Research AnalystSteve Silver - Senior Equity Research AnalystOperatorGreetings. Welcome to Build-A-Bear Workshop third quarter 2025 earnings call. At this time, ...

Financial Data and Key Metrics Changes - Revenue for Q3 2025 grew nearly 3% to almost $123 million, while pre-tax income declined by $2 million to nearly $11 million, impacted by approximately $4 million in negative tariff effects [5][20] - Year-to-date revenue increased over 8% to over $375 million, with pre-tax income rising by 15% to almost $46 million, also inclusive of about $5 million in negative tariff impact [5][20] - Gross margin was 53.7%, a decline of 40 basis points compared to last year, primarily due to tariffs, which reduced gross profit by about $4 million in the quarter [23][24] Business Line Data and Key Metrics Changes - Direct-to-consumer sales saw a decline of 10.8% in e-commerce demand, primarily due to challenging comparisons from a strong license product launch last year [22] - Commercial revenue, mainly from wholesale sales, grew 4.2% for the quarter and 15.3% year-to-date, with expectations of over 20% growth for the year [23][24] Market Data and Key Metrics Changes - Domestic store traffic outperformed the national benchmark, although there was a slight transaction decrease driven by a 1% decline in traffic [21] - The company opened 24 net new experience locations, with 70% of those outside the United States, bringing the total to 651 locations across 33 countries [7][8] Company Strategy and Development Direction - The company aims to expand its experiential retail footprint, advance digital transformation, and leverage brand equity beyond workshops while returning capital to shareholders [6][27] - The introduction of the Mini Beans collection has been successful, with nearly 3 million units sold and over 60% growth in Q3 alone, indicating a strategy to reach broader markets [15][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaffirming full-year guidance, expecting revenue to exceed $500 million for the first time in company history despite ongoing tariff headwinds [3][5] - The company is focused on executing strategic objectives while managing external challenges, including tariffs and inflationary pressures [27] Other Important Information - The company returned over $26 million to shareholders through dividends and buybacks, contributing to more than 24% EPS growth for the first three quarters of the fiscal year [5][24] - The company has maintained significant flexibility with about $70 million remaining under its board-approved repurchase authorization [24] Q&A Session Summary Question: What are the opportunities to reduce tariff impacts next year? - Management indicated that while tariffs will continue to impact, they are working on mitigating costs through partnerships and selective price increases [30][32] Question: How is the diversification in pricing affecting customer engagement? - Management noted that diversification allows for appealing to different customer segments, with 40% of sales coming from teens and adults, enhancing pricing flexibility [35][38] Question: What trends are seen with Mini Beans sales? - Mini Beans have shown strong sales growth, with plans to expand distribution beyond workshops, indicating a successful product line [45][46] Question: How does promotional activity compare year over year? - Management stated that promotional activity has been managed more stringently, resulting in lower discount rates while focusing on enhancing customer experience [43][44] Question: How does the company leverage its presence in malls? - Management highlighted that having multiple locations in major malls enhances foot traffic and strengthens partnerships with mall operators [57][59]

Core Insights - Build-A-Bear Workshop, Inc. (BBW) is experiencing significant growth in its Commercial arm, which is diversifying revenues and profitability beyond traditional retail locations [2][5] - The company reported an 18.3% increase in Commercial revenues and a 15.2% rise in combined Commercial and International franchise revenues in Q2 of fiscal 2025 [2][9] - The partner-operated model is a key driver of this growth, allowing for high-margin wholesale revenues with minimal capital expenditure [3][4] Revenue Growth - Commercial revenues grew by 18.3% in Q2, while total partner and franchise revenues increased by 15.2% [9] - The Commercial segment has expanded at a 63% compound annual growth rate from fiscal 2020 to 2024 [2] Business Model - The partner-operated model requires low capital investment and leverages existing infrastructure, contributing to higher gross margins [3][4] - With 157 partner-operated stores now representing 25% of Build-A-Bear's 627 global locations, this model is scaling faster than corporate stores [3] Future Outlook - Management anticipates at least 60 net new locations in fiscal 2025, primarily through partners [5] - The success of the Commercial arm indicates a structural shift towards a hybrid consumer-products brand, potentially rivaling the retail business in margin contribution [5] Competitive Position - Build-A-Bear has outperformed competitors, with a 50.8% stock price increase over the past year compared to the industry's 7.3% growth [6] - The company's forward 12-month price-to-earnings ratio is 12.79, lower than the industry average of 17.84, indicating a potential valuation opportunity [7][10] Financial Estimates - The Zacks Consensus Estimate for current financial-year sales and earnings per share suggests year-over-year growth of 7.4% and 6.9%, respectively [11] - Current quarter sales are estimated at $124.28 million, with a year-over-year growth estimate of 4.06% [12]

Core Insights - Build-A-Bear Workshop is successfully targeting adults, leveraging nostalgia to diversify its portfolio and enhance customer engagement [3][12][14] - The company reported record-breaking revenue of $252.6 million in the first half of fiscal 2025, marking a nearly 12% increase year-over-year [3][4] - Build-A-Bear's stock has risen approximately 60% year-to-date, nearing a $1 billion market cap, despite challenges faced by other retailers [4][10] Financial Performance - The company raised its outlook following effective tariff mitigation strategies, including increased inventory management [4][8] - Build-A-Bear's diverse revenue streams, including new products and demographics, have contributed to its financial resilience [10][11] Market Position and Strategy - The company has expanded beyond traditional retail locations, establishing a presence in cruise ships, amusement parks, and hospitality [5][6] - Build-A-Bear's ability to discreetly raise prices through constant product innovation has helped mitigate tariff impacts [10][11] Consumer Engagement - A recent survey indicated that 92% of adults still own their childhood teddy bears, highlighting the brand's strong nostalgic appeal [14][16] - The experiential nature of Build-A-Bear's offerings fosters deep emotional connections with consumers, enhancing brand loyalty [16][17] Future Outlook - Analysts suggest that Build-A-Bear's international expansion presents significant growth opportunities, with high returns on capital [11] - The brand's focus on personalization and creating memorable experiences positions it well in a competitive retail landscape [9][18]

Financial Data and Key Metrics Changes - The company reported record revenue of over $128 million, an increase of 11.9% year-over-year [6][20] - Pretax income grew by 30.6% to nearly $20 million, with an EPS increase of 42.7% to $1.17 [6][20] - The pretax margin rate for Q1 was 15%, compared to 3% in Q1 2019, indicating significant improvement [6][8] Business Line Data and Key Metrics Changes - Net retail sales increased by 10.9% to $119.6 million, with strong performance across all segments [20] - E-commerce demand rose by 0.5%, while commercial revenue, primarily from wholesale sales, grew by 28.3% [22][20] - The Mini Beans collectibles line expanded by 30% year-over-year, with total sales reaching nearly 2 million units [16] Market Data and Key Metrics Changes - Domestic store traffic increased by 3%, significantly outperforming the U.S. national traffic, which declined by 3% [21][20] - The company ended the quarter with over 600 locations, with 30% of those outside the United States [9][10] Company Strategy and Development Direction - The company is focused on three strategic initiatives: expanding experiential retail footprint, advancing digital transformation, and leveraging brand strength through investments [9][14] - Plans include opening at least 50 net new locations in 2025, primarily operated by international partners [25][13] - The company aims to enhance inventory management systems to better respond to market trends and consumer demands [14][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic and geopolitical challenges, reiterating revenue guidance for 2025 [8][18] - The company expects to report record revenue for the year, maintaining strong profitability with double-digit pretax margins [18][26] - Management highlighted the importance of a clean balance sheet and strong cash flow in supporting long-term growth initiatives [9][18] Other Important Information - The company returned over $7 million in capital to shareholders through dividends and share repurchases [6][20] - Inventory at quarter-end was $72.3 million, reflecting an increase due to accelerated purchases of core products [25] Q&A Session Summary Question: How will the company capitalize on movie-related events? - Management noted strong relationships with major film creators and the ability to leverage popular characters like Stitch for broader appeal beyond children [34][35] Question: How will the new inventory management system improve responsiveness to trends? - The new system will enhance real-time inventory visibility and allow for better movement of stock between e-commerce and physical stores, improving responsiveness to demand spikes [38][39] Question: How did the retail stores perform compared to expectations? - Retail stores exceeded expectations with positive traffic, conversion rates, and average unit retail, indicating effective execution by the team [47][48] Question: Who are the partners for operated stores and are there plans for more? - Partners include well-known firms in various markets, and the company is in negotiations for new partnerships while maintaining high standards for partner operations [51][54] Question: What is the impact of tariffs on the updated guidance? - The updated pretax income guidance reflects less than $10 million in tariff impacts, with ongoing efforts to mitigate costs through diversified sourcing [62][63]

Financial Data and Key Metrics Changes - The company reported record revenue of over $128 million, an increase of 11.9% year-over-year [5][17] - Pretax income grew by 30.6% to nearly $20 million, with an EPS increase of 42.7% to $1.17 [5][20] - The pretax margin rate for Q1 was 15%, compared to 3% in Q1 2019, indicating significant improvement [5][6] Business Line Data and Key Metrics Changes - Net retail sales increased by 10.9% to $119.6 million, with strong performance across all segments [17] - E-commerce demand rose by 5%, while commercial revenue, primarily from wholesale sales, grew by 28.3% [19] - The Mini Beans collectibles line expanded by 30% year-over-year, with total sales reaching nearly 2 million units [13] Market Data and Key Metrics Changes - Domestic store traffic increased by 3%, significantly outperforming the U.S. national traffic, which declined by 3% [18][45] - The company ended the quarter with over 600 locations, with 30% of these outside the United States [8] Company Strategy and Development Direction - The company is focused on three strategic initiatives: expanding experiential retail, advancing digital transformation, and leveraging brand strength through investments [7][12] - Plans include opening at least 50 net new locations in 2025, primarily operated by international partners [22][11] - The company aims to maintain its revenue guidance while updating pretax income guidance to a range of $61 million to $67 million, inclusive of current tariff rates [23][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic and geopolitical challenges, citing a clean balance sheet and strong cash flow [6][15] - The company anticipates continued momentum into Q2 and robust plans for the remainder of 2025, expecting record revenue and strong profitability [15][25] Other Important Information - The company returned over $7 million in capital to shareholders during the quarter [5][17] - Inventory at quarter-end was $72.3 million, reflecting an increase due to accelerated purchases of core products [21] Q&A Session Summary Question: How will the company capitalize on movie-related events? - The company maintains strong relationships with major film creators and has evolved its product lines to appeal to a broader audience, including collectible items for teens and adults [32][34] Question: How will the new inventory management system improve responsiveness to trends? - The new system will enhance inventory visibility and allow for better management of stock levels, enabling the company to respond more effectively to trends [36][37] Question: How did the company’s operated stores perform compared to expectations? - The company reported positive performance across all metrics, with traffic up 3% and conversion rates improving, indicating successful execution of marketing strategies [44][45] Question: Who are the partners for operated stores and are there plans for more? - The company partners with well-known firms in various markets, ensuring they can deliver the Build A Bear experience effectively [48][49] Question: What is the impact of tariffs on the updated guidance? - The updated pretax income guidance reflects less than $10 million in tariff impacts, with ongoing efforts to mitigate costs through diversified sourcing [60][61]