Build-A-Bear Workshop (BBW) Q2 2026 Earnings Call August 28, 2025 09:00 AM ET Company ParticipantsGary Schnierow - VP - Investor Relations & Corporate FinanceSharon Price John - President & CEOJ. Christopher Hurt - Chief Operations & Experience Officer, DirectorVoin Todorovic - CFO & PresidentKeegan Cox - Research AssociateConference Call ParticipantsEric Beder - CEO & Senior Research AnalystGreg Gibas - VP & Senior Research AnalystSteve Silver - Senior Equity Research AnalystOperatorGreetings and welcome t ...

Financial Data and Key Metrics Changes - In Q2 2025, revenues grew 11% to over $124 million, pretax income increased by 33% to over $15 million, and EPS rose by 47% to $0.94 [5][20] - For the first half of 2025, revenues grew more than 11% to over $252 million, pretax income increased over 31% to almost $35 million, and EPS rose approximately 45% to $2.11 [5][20] - The first half EBITDA margin rate was nearly 17%, more than tripled compared to 2019 [5] Business Line Data and Key Metrics Changes - Retail segment grew by 11.2% and commercial segment grew by 18.3% in Q2 2025 [16][19] - Net retail sales were $114.6 million, an increase of 10.8%, with e-commerce demand increasing by 15.1% [18][19] - The Mini Beans collection saw an 80% year-on-year revenue increase [12][46] Market Data and Key Metrics Changes - Domestic store traffic rose 3%, outperforming the national benchmark which saw a 3% decline [18][35] - International expansion included new locations in Georgia and Uzbekistan, with 14 net new experience locations opened in the quarter [9][10] Company Strategy and Development Direction - The company focuses on three strategic pillars: expanding experiential retail footprint, advancing digital transformation, and leveraging brand equity for growth [4][7] - Plans for future evolution include innovative concepts and returning to Germany with a partner-operated model [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth despite potential economic uncertainties and increased guidance for 2025 [6][15] - The company anticipates record results for the fifth consecutive year, assuming stable tariffs and economic conditions [15][22] Other Important Information - The company returned over $13 million in capital to shareholders during the first half of the fiscal year [5][17] - Tariffs are expected to impact costs, with an estimated $11 million negative impact on the fiscal year [25][66] Q&A Session Summary Question: Can you talk about the response from consumers when prices are raised due to tariffs? - Management indicated that price increases are selective and strategic, aimed at maintaining value for consumers while managing entry-level price points [31][33] Question: How should we think about the maturity of partner-operated locations? - Management noted that partner-operated locations are expanding successfully, with significant opportunities in international markets [39][40] Question: Can you provide an update on Mini Beans sales and wholesale distribution? - The Mini Beans collection has seen an 80% year-on-year increase, with ongoing discussions for broader wholesale distribution [46][48] Question: What is the outlook for the second half of the year regarding margins? - Management acknowledged tougher comparisons in the second half but remains optimistic about maintaining profitability despite headwinds from tariffs and other costs [62][66] Question: How does the company view potential expansion of company-operated stores outside the U.S.? - The company is open to considering operating stores internationally but emphasizes the importance of partnerships for local market knowledge [75][79]