Build-A-Bear Workshop, Inc. (NYSE: BBW) today announced results
for the first quarter of fiscal year 2024 ended May 4, 2024.
- First quarter revenues were $114.7 million, a decrease of 4.4%,
pre-tax income was $15.0 million, a decrease of 22.3%, and diluted
earnings per share was $0.82, a decrease of 16.3%
- The Company reiterates its fiscal 2024 guidance with
expectations for growth in total revenues and pre-tax income, as
well as net new unit growth of at least 50 experience locations
globally
- For first quarter 2024, the Company returned $12.1 million to
shareholders in the form of share repurchases and a quarterly
dividend
“Although first quarter results were slightly below internal
expectations due to some continued web demand challenges and a
weaker spending environment, we remain confident in our annual
guidance,” commented Sharon Price John, President and Chief
Executive Officer of Build-A-Bear Workshop. “As we continue to
execute on our strategic initiatives to leverage the power of the
Build-A-Bear brand, we expect to see positive momentum as the year
progresses across a number of fronts. These include our
omni-channel integration and new global experience locations across
our corporately-operated, partner-operated, and franchise store
models, such as recently opened partner locations in Italy,
Colombia, and France,” Ms. John continued. “We also recently
launched a new brand campaign, 'The Stuff You Love,' to commemorate
more than a quarter-century of creating and celebrating cherished
memories worldwide, with a user-generated-content contest for
consumers to share their own special moments.”
Voin Todorovic, Chief Financial Officer of Build-A-Bear Workshop
added, “As previously shared, we had planned first quarter to have
unfavorable expense timing, and while results were lower than
expected, the quarter was significantly more profitable than any
pre-Covid first quarter since our IPO, demonstrating the
sustainability of our transformed business model. In conjunction
with Build-A-Bear’s strong cash flow generation, and our confidence
in the company's continued financial performance, we have returned
nearly $30 million to shareholders in the form of share repurchases
and a quarterly dividend over the past twelve months, inclusive of
$12 million in the first quarter."
First Quarter Fiscal 2024 Results
(13 weeks ended May 4, 2024, compared to the 13 weeks ended
April 29, 2023)
- Total revenues were $114.7 million and decreased 4.4%
- Net retail sales were $107.9 million and decreased 3.8%
- Consolidated e-commerce demand (online orders fulfilled from
either the Company’s warehouse or its stores) decreased 11.3%
- Commercial and international franchise revenues were a combined
$6.9 million and decreased 13.7%
- Pre-tax income was $15.0 million, or 13.1% of total revenues, a
decrease of 300 basis points, driven by a 350-basis point increase
in Selling, General and Administrative (“SG&A”) expense, mainly
from higher wage rates, expense timing, and general inflationary
pressures, partially offset by an increase in interest income and
gross margin expansion.
- Diluted earnings per share (“EPS”) was $0.82, a decline of
16.3%, reflecting lower pretax income, partially offset by a lower
tax rate, as well as a reduction in share count.
- Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) was $18.3 million, a decline of 18.3%, and represented
15.9% of total revenues.
Store Activity
For the quarter, the company had net new unit growth of six
global experience locations, comprised of five partner-operated
locations and three franchise locations, less the net closure of
two corporately-managed locations. At the end of the first quarter,
Build-A-Bear had 531 global locations through a combination of its
corporately-managed, partner-operated, and franchise models.
Globally, this reflects 357 corporately-managed stores, 97
partner-operated stores, and 77 franchise stores.
Balance Sheet
At first quarter end, cash and cash equivalents totaled $38.2
million, an increase of $5.4 million, or 16.5%, compared to $32.8
million at first quarter-end last year. The Company finished the
quarter with no borrowings under its revolving credit facility.
For the first quarter, capital expenditures totaled $2.4
million.
Inventory at quarter end was $64.0 million, reflecting a decline
of $2.5 million, or 3.7% compared to first quarter-end last year.
The Company remains comfortable with the level and composition of
its inventory.
Return of Capital to Shareholders
For the first quarter, the Company utilized $9.2 million in cash
to repurchase 343,406 shares of its common stock and paid a $2.9
million quarterly cash dividend to shareholders.
Since first quarter-end through May 29, the Company utilized
$2.0 million in cash to repurchase an additional 66,476 shares of
its common stock, with $15.0 million remaining under the Board
authorized $50.0 million stock repurchase program adopted on August
31, 2022.
2024 Outlook
The Company reaffirms its fiscal 2024 outlook with expectations
of delivering growth in total revenues and pre-tax income compared
to our 53-week fiscal 2023:
- Total revenue growth on a low-to-mid-single-digit percentage
basis
- Pre-tax income growth on a low-single-digit percentage
basis
For comparative purposes, the company notes that the additional
week in fiscal 2023 was approximately $7 million in total revenues
with an estimated 35% flow-through to EBITDA.
For fiscal 2024, as compared to the 2023 non-GAAP 52-week year,
the Company expects:
- Total revenue growth on a mid-single-digit percentage
basis
- Pre-tax income growth on a mid-single-digit percentage
basis
In addition, for fiscal 2024, the Company currently expects:
- Net new unit growth of at least 50 experience locations,
through a combination of corporately-managed, partner-operated, and
franchised business models
- Capital expenditures in the range of $18 million to $20
million
- Depreciation and amortization in the range of $15 million to
$16 million
- Tax rate to approximate 26%, excluding discrete items
The Company’s guidance considers a variety of factors including
anticipated ongoing inflationary pressures and increased freight
costs. Additionally, the Company’s outlook assumes no further
material changes in the macroeconomic or geopolitical environment,
or relevant foreign currency exchange rates.
Note Regarding Non-GAAP Financial Measures
In this press release, the Company’s financial results are
provided both in accordance with generally accepted accounting
principles (GAAP) and using certain non-GAAP financial measures. In
particular, the Company provides historic income adjusted to
exclude certain costs, which are non-GAAP financial measures. These
results are included as a complement to results provided in
accordance with GAAP because management believes these non-GAAP
financial measures help identify underlying trends in the Company’s
business and provide useful information to both management and
investors by excluding certain items that may not be indicative of
the Company’s core operating results. These measures should not be
considered a substitute for or superior to GAAP results. These
non-GAAP financial measures are defined and reconciled to the most
comparable GAAP measure later in this document.
Webcast and Conference Call Information
At 9:00 AM ET today, Build-A-Bear Workshop will host a
conference call with investors and financial analysts to discuss
its financial results. The conference call will be webcast on
Build-Bear’s Investor Relations website,
https://ir.buildabear.com.
The dial-in number for the live conference call is (877)
407-3982 or (201) 493-6780 for international callers. The access
code is Build-A-Bear. The call is expected to conclude by 10 AM
ET.
A replay of the conference call webcast will be available in the
investor relations website for one year. A telephone replay will be
available beginning at approximately 1:00 PM ET today until 11:59
PM ET on June 6, 2024. The telephone replay is available by calling
(412) 317-6671 (toll/international) or (844) 512-2921 (toll free).
The access code is 13745995.
About Build-A-Bear
Since its beginning in 1997, Build-A-Bear has evolved to become
a beloved multi-generational brand focused on its mission to “add a
little more heart to life” where guests of all ages make their own
“furry friends” in celebration and commemoration of life moments.
Guests create their own stuffed animals by participating in the
stuffing, dressing, accessorizing, and naming of their own teddy
bears and other plush toys based on the Company’s own intellectual
property and in conjunction with a variety of best-in-class
licenses. The hands-on and interactive nature of our more than 500
company-owned, partner-operated and franchise experience locations
around the world, combined with Build-A-Bear’s pop-culture appeal,
often fosters a lasting and emotional brand connection with
consumers, and has enabled the Company to expand beyond its retail
stores to include e-commerce sales on www.buildabear.com and
non-plush branded consumer categories via out-bound licensing
agreements with leading manufacturers, as well as the creation of
engaging content via Build-A-Bear Entertainment (a subsidiary of
Build-A-Bear Workshop, Inc.). Build-A-Bear Workshop, Inc. (NYSE:
BBW) posted consolidated total revenues of $486.1 million for
fiscal 2023. For more information, visit the Investor Relations
section of buildabear.com.
Forward-Looking Statements
This press release contains certain statements that are, or may
be considered to be, “forward-looking statements” for the purpose
of federal securities laws, including, but not limited to,
statements that reflect our current views with respect to future
events and financial performance. We generally identify these
statements by words or phrases such as “may,” “might,” “should,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,”
“predict,” “future,” “potential” or “continue,” the negative or any
derivative of these terms and other comparable terminology. All the
information concerning our future liquidity, future revenues,
margins and other future financial performance and results,
achievement of operating of financial plans or forecasts for future
periods, sources and availability of credit and liquidity, future
cash flows and cash needs, success and results of strategic
initiatives and other future financial performance or financial
position, as well as our assumptions underlying such information,
constitute forward-looking information.
These statements are based only on our current expectations and
projections about future events. Because these forward-looking
statements involve risks and uncertainties, there are important
factors that could cause our actual results, level of activity,
performance or achievements to differ materially from the results,
level of activity, performance or achievements expressed or implied
by these forward-looking statements, including those factors
discussed under the caption entitled “Risks Related to Our
Business” and “Forward-Looking Statements” in our Annual Report on
Form 10-K filed with the Securities and Exchange Commission (“SEC”)
on April 18, 2024 and other periodic reports filed with the SEC
which are incorporated herein.
All our forward-looking statements are as of the date of this
Press Release only. In each case, actual results may differ
materially from such forward-looking information. We can give no
assurance that such expectations or forward-looking statements will
prove to be correct. An occurrence of or any material adverse
change in one or more of the risk factors or other risks and
uncertainties referred to in this Press Release or included in our
other public disclosures or our other periodic reports or other
documents or filings filed with or furnished to the SEC could
materially and adversely affect our continuing operations and our
future financial results, cash flows, available credit, prospects,
and liquidity. Except as required by law, the Company does not
undertake to publicly update or revise its forward-looking
statements, whether as a result of new information, future events
or otherwise.
All other brand names, product names, or trademarks belong to
their respective holders.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
13 Weeks 13 Weeks Ended Ended May
4, % of Total April 29, % of Total
2024
Revenues (1)
2023
Revenues (1) Revenues:
Net retail sales $
107,868
94.0
$
112,096
93.4
Commercial revenue
5,985
5.2
6,688
5.6
International franchising
877
0.8
1,266
1.0
Total revenues
114,730
100.0
120,050
100.0
Cost of merchandise sold:
Cost of merchandise sold - retail (1)
49,415
45.8
50,904
45.4
Cost of merchandise sold - commercial (1)
2,533
42.3
3,358
50.2
Cost of merchandise sold - international franchising (1)
617
70.4
885
69.9
Total cost of merchandise sold
52,565
45.8
55,147
45.9
Consolidated gross profit
62,165
54.2
64,903
54.1
Selling, general and administrative expense
47,562
41.5
45,626
38.0
Interest (income) expense, net
(426
)
(0.4)
(76
)
(0.1)
Income before income taxes
15,029
13.1
19,353
16.1
Income tax expense
3,570
3.1
4,745
4.0
Net income $
11,459
10.0
$
14,608
12.2
Income per common share: Basic $
0.82
$
1.01
Diluted $
0.82
$
0.98
Shares used in computing common per share amounts: Basic
13,925,957
14,457,858
Diluted
14,006,400
14,974,930
(1)
Selected statement of operations
data expressed as a percentage of total revenues, except cost of
merchandise sold - retail, cost of merchandise sold - commercial
and cost of merchandise sold - international franchising that are
expressed as a percentage of net retail sales, commercial revenue
and international franchising, respectively. Percentages will not
total due to cost of merchandise sold being expressed as a
percentage of net retail sales, commercial revenue or international
franchising and immaterial rounding.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES Unaudited
Condensed Consolidated Balance Sheets (dollars in thousands,
except per share data)
May 4, February 3,
April 29,
2024
2024
2023
ASSETS Current assets: Cash, cash equivalents and restricted
cash
$
38,233
$
44,327
$
32,819
Inventories, net
64,024
63,499
66,489
Receivables, net
9,547
8,569
13,307
Prepaid expenses and other current assets
12,046
11,377
13,503
Total current assets
123,850
127,772
126,118
Operating lease right-of-use asset
72,783
73,443
73,780
Property and equipment, net
53,897
55,262
50,385
Deferred tax assets
8,672
8,682
6,642
Other assets, net
6,074
7,166
4,785
Total Assets
$
265,276
$
272,325
$
261,710
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable
$
14,793
$
16,170
$
13,686
Accrued expenses
19,552
19,954
27,272
Operating lease liability short term
24,276
25,961
27,843
Gift cards and customer deposits
16,620
18,134
18,637
Deferred revenue and other
3,432
3,514
5,010
Total current liabilities
78,673
83,733
92,448
Operating lease liability long term
56,906
57,609
59,030
Other long-term liabilities
1,356
1,321
1,260
Stockholders' equity: Common stock, par value $0.01 per
share
139
142
149
Additional paid-in capital
64,065
66,330
70,324
Accumulated other comprehensive loss
(12,153
)
(12,082
)
(12,177
)
Retained earnings
76,290
75,272
50,676
Total stockholders' equity
128,341
129,662
108,972
Total Liabilities and Stockholders' Equity
$
265,276
$
272,325
$
261,710
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Selected Financial and Store Data (dollars in
thousands)
13 Weeks 13 Weeks Ended
Ended May 4, April 29,
2024
2023
Other financial data: Retail gross margin ($)
(1) $
58,453
$
61,192
Retail gross margin (%) (1)
54.2
%
54.6
%
Capital expenditures (2) $
2,430
$
3,065
Depreciation and amortization $
3,658
$
3,080
Store data (3): Number of corporately-managed retail
locations at end of period North America
317
312
Europe
40
37
Total corporately-managed retail locations
357
349
Number of franchised stores at end of period
77
63
Number of third-party retail locations at end of period
97
70
Corporately-managed store square footage at end of period
(4) North America
729,336
726,209
Europe
55,535
52,763
Total square footage
784,871
778,972
(1)
Retail gross margin represents
net retail sales less cost of merchandise sold - retail. Retail
gross margin percentage represents retail gross margin divided by
net retail sales. Store impairment is excluded from retail gross
margin.
(2)
Capital expenditures represents
cash paid for property, equipment, and other assets.
(3)
Excludes e-commerce. North
American stores are located in the United States and Canada. In
Europe, stores are located in the United Kingdom and Ireland.
Seasonal locations not included in store count.
(4)
Square footage for stores located
in North America is leased square footage. Square footage for
stores located in Europe is estimated selling square footage.
Seasonal locations not included in the store count.
* Non-GAAP Financial Measures BUILD-A-BEAR
WORKSHOP, INC. AND SUBSIDIARIES Reconciliation of GAAP to
Non-GAAP figures (dollars in thousands) 13
Weeks 13 Weeks Ended Ended May 4,
April 29,
2024
2023
Income before income taxes (pre-tax)
$
15,029
$
19,353
Interest (income) expense, net
(426
)
(76
)
Depreciation and amortization expense
3,658
3,080
Earnings before interest, taxes, depreciation and amortization
(EBITDA)
$
18,261
$
22,357
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version on businesswire.com: https://www.businesswire.com/news/home/20240530689604/en/
Investor Relations Contact Gary Schnierow, Vice
President, Investor Relations & Corporate Finance
garys@buildabear.com
Media Relations Contact pr@buildabear.com
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