Build-A-Bear Workshop(US:BBW)2022-09-01 17:58Financial Data and Key Metrics Changes - Total revenues for Q2 2022 were $100.7 million, a 6.3% increase from $94.7 million in Q2 2021 [32] - For the first half of 2022, total revenues reached $218.3 million, representing a record-setting performance with a 17% increase over the prior year [8][36] - Pretax income for Q2 2022 was $7.6 million, impacted by approximately $4 million in incremental freight expenses [8][31] - EBITDA for Q2 2022 was $10.7 million, a decrease from $12.5 million in Q2 2021 [35] - Net income for the first half of 2022 was $20 million, or $1.27 per diluted share, compared to $17.2 million, or $1.08 per diluted share in the first half of 2021 [36] Business Line Data and Key Metrics Changes - Retail stores and the Commercial and International Franchise segment saw revenue growth of over 40% compared to the prior year [32] - E-commerce demand declined by 8.4% compared to Q2 2021, but increased by almost 150% compared to Q2 2019 [32][33] - The gross profit margin for Q2 2022 was 49.6%, down from 53.2% in Q2 2021, reflecting the impact of higher freight and product inflation [33] Market Data and Key Metrics Changes - The company opened 12 new retail workshops year-to-date, aiming for approximately 20 new locations by the end of the fiscal year [20] - Approximately 35% of total retail locations are now in non-traditional settings, which have outperformed traditional retail locations [21] Company Strategy and Development Direction - The company is focused on a multi-year digital transformation, evolving retail experiences, and leveraging omnichannel capabilities to drive growth [9][10] - Plans to enter the metaverse with NFTs and expand into digital gaming platforms are part of the strategy to engage younger consumers [25][26] - The company aims to enhance its product offerings, including a new line of pet toys and family matching pajamas, to capture market trends [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving financial goals for the year despite macroeconomic uncertainties and inflationary pressures [8][31] - The company reaffirmed its annual guidance, expecting total revenues between $440 million and $460 million for fiscal 2022 [39][40] - Management highlighted the importance of the upcoming holiday season and the 25th anniversary celebrations to drive consumer engagement and sales [23][24] Other Important Information - The company completed a $25 million share repurchase program and announced a new program of up to $50 million [9][37] - Cash and cash equivalents at the end of Q2 2022 were $14.4 million, down from $51.1 million a year prior, reflecting strategic investments and share repurchases [37] Q&A Session Summary Question: Can you discuss your ability to pass along inflationary pressures to consumers? - Management indicated that they have selectively increased prices to offset inflation while maintaining accessibility for a broad range of consumers [45][47] Question: What has been the response to in-store parties? - The company noted a gradual increase in party bookings since their launch, with a goal to reach pre-pandemic levels [50][51] Question: Can you provide details on the new pet toys deal? - The pet toys will be available in 1,600 PetSmart locations, with some exclusivity for the season, but not necessarily long-term [55][57] Question: What are the expectations for freight costs in the second half of the year? - Management expects to see a sequential improvement in freight costs in Q3 and Q4, although Q3 costs may still be higher than Q2 [60] Question: Can you elaborate on the new product launches? - Exciting new products include 25th anniversary collectibles and seasonal items, with an expectation of slightly higher average price points [72][74]