Build-A-Bear Workshop(BBW) - 2026 Q1 - Earnings Call Transcript

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]