Build-A-Bear Workshop, Inc. (NYSE: BBW) today announced results
for the second fiscal quarter and first half ended July 29,
2023.
- Total revenues, pre-tax income, and diluted earnings per share
(“EPS”) were all second quarter records and increased 8.5%, 37.1%,
and 50.0% respectively
- First half total revenues, pre-tax income, and diluted EPS were
records and increased 5.0%, 15.5%, and 23.6%, respectively
- The Company reiterates fiscal 2023 guidance for 5% to 7%
revenue growth and 10% to 15% pre-tax income growth
- Through the fiscal first half of 2023, the Company returned
$33.3 million to shareholders through dividends and share
repurchases
“We are pleased with our second-quarter results, including
strong store traffic growth, which continues to significantly
outpace reported national retail traffic, and double-digit growth
in consolidated e-commerce demand. Our eighth consecutive quarter
of record revenue results demonstrates the evolution of our
business model leveraging the power and the broad appeal of the
Build-A-Bear brand. Our digital transformation has further enabled
us to expand the Company’s addressable market to include gifting
and collectibles, with 40% of sales now generated by teens and
adults,” commented Sharon Price John, President and Chief Executive
Officer of Build-A-Bear Workshop. “We enter the second half of the
year, with positive momentum, and expect to drive growth by the
continued opening of corporate and partner-operated locations, a
strong product pipeline, and impactful marketing campaigns,
highlighted by the new heart-warming film featuring our multi-year
best-selling holiday collection, ‘Glisten and the Merry Mission,’”
concluded Ms. John.
Voin Todorovic, Chief Financial Officer of Build-A-Bear Workshop
added, “With solid revenue growth, and both gross margin and store
contribution margin expanding in the second quarter and for the
first half of the year, we believe we are well positioned to
deliver our third consecutive year of record results, leading us to
reiterate our guidance for the year. Our year-to-date results
further demonstrate Build-A-Bear's ability to consistently operate
at a higher level of profitability, inclusive of the continued
investment to support sustainable long-term profitable growth.”
Fiscal Second Quarter 2023 Results (13 weeks ended July
29, 2023, compared to the 13 weeks ended July 30, 2022)
- Total revenues were $109.2 million and increased 8.5%
- Net retail sales were $103.5 million and increased 7.9%
- Consolidated e-commerce demand increased 14.1% (online orders
fulfilled from either the Company’s warehouse or its stores)
- Commercial and international franchise revenues were a combined
$5.8 million and increased 19.9%
- Pre-tax income grew 37.1% to $10.5 million, or 9.6% of total
revenues, an improvement of 200 basis points, driven by a 410-basis
point increase in gross margin, primarily due to lower freight
expense and leverage of fixed occupancy cost, partially offset by
an increase in Selling, General and Administrative (“SG&A”)
expense from higher wages due to inflation, the planned addition of
talent, and other investments to support future growth.
- Diluted EPS was $0.57 per share, a 50.0% year-over-year
increase driven by pre-tax margin expansion, a modest decrease in
tax rate, and a reduction in share count.
- Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) grew 26.9% to $13.5 million, or 12.4% of total revenues,
an expansion of 180 basis points year over year.
First Half 2023 Results (26 weeks ended July 29,
2023, compared to the 26 weeks ended July 30, 2022)
- Total revenues were $229.3 million and increased 5.0%
- Net retail sales were $215.6 million and increased 3.3%
- Consolidated e-commerce demand decreased 6.4%
- Commercial and international franchise revenues were a combined
$13.7 million and increased 43.2%
- Pre-tax income grew 15.5% to $29.8 million, or 13.0% of total
revenues, an expansion of 120 basis points, driven by a 270-basis
point increase in gross margin, primarily due to lower freight
expense and leverage of fixed occupancy cost, partially offset by
an increase in SG&A from higher wages due to inflation, the
planned addition of talent, and other investments to support future
growth.
- Diluted EPS was $1.57 per share, a 23.6% year-over-year
increase driven by pre-tax margin expansion, plus a reduction in
share count, offset by a slight increase in tax rate.
- EBITDA grew 11.7% to $35.9 million, or 15.7% of total revenues,
an expansion of 100 basis points year over year.
Store Activity The Company added eight
corporately-managed and partner-operated locations in the quarter.
As of the fiscal second quarter end, Build-A-Bear had 491 global
locations through a combination of its corporately-managed,
partner-operated, and international franchise models. This reflects
351 corporately-managed stores with two store openings in the
quarter, 76 partner-operated stores with six store openings, and 64
international franchise stores with one store opening.
Balance Sheet As of July 29, 2023, cash and cash
equivalents totaled $32.6 million compared to $14.4 million as of
July 30, 2022. The Company finished the quarter with no borrowings
under its revolving credit facility.
During the second quarter of fiscal 2023, the Company utilized
$8.1 million in cash to repurchase 394,321 shares of its common
stock. For the first half of 2023, the Company returned $33.3
million to shareholders, reflecting dividend payments of $22.1
million and share repurchases of $11.2 million. As of July 29,
2023, the Company had $35.3 million available under the current
$50.0 million stock repurchase program adopted on August 31,
2022.
For the second quarter and first half of fiscal 2023, capital
expenditures totaled $3.1 million and $6.2 million,
respectively.
Inventory at quarter end was $66.3 million, reflecting a decline
of $21.4 million, or 24.4% from July 30, 2022. The Company remains
comfortable with the level and composition of its inventory.
2023 Outlook The Company is reaffirming its fiscal 2023
outlook with expectations of delivering growth in total revenues
and pre-tax income, as compared to fiscal year 2022.
For fiscal 2023, the Company continues to expect:
- Total revenues to increase in the range of 5% to 7%, with
growth in its three operating segments
- Pre-tax income growth of 10% to 15%, surpassing 2022’s record
high
- To open 20 to 30 experience locations, through a combination of
partner-operated and corporately-managed business models
- Capital expenditures in the range of $15 million to $20
million
- Depreciation and amortization of approximately $13 million to
$14 million
- Tax rate to approximate 25%, excluding discrete items
While the Company notes that its fiscal 2023 is a 53-week year
compared to a 52-week year in fiscal 2022, it expects to deliver
growth in total revenues and pre-tax income versus the prior year
exclusive of the projected benefit of the 53rd week. For reference,
the additional week in fiscal 2023, which will be reflected in the
Company’s fourth quarter, is estimated to be $7 million in total
revenues with approximately 35% flow-through to EBITDA.
The Company’s guidance considers a variety of factors ranging
from anticipated ongoing inflationary pressures to the expected
benefit of reduced freight costs. Additionally, the Company noted
that its outlook assumes no further material changes in the
macro-economic and geo-political 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 August 31, 2023. The telephone replay is available by
calling (844) 512-2921. The access code is: 13739859.
About Build-A-Bear Build-A-Bear is a multi-generational
global brand focused on its mission to “add a little more heart to
life” appealing to a wide array of consumer groups who enjoy the
personal expression in making their own “furry friends” to
celebrate and commemorate life moments. Nearly 500 interactive
brick-and-mortar experience locations operated through a variety of
formats provide guests of all ages a hands-on entertaining
experience, which often fosters a lasting and emotional brand
connection. The Company also offers engaging e-commerce/digital
purchasing experiences on www.buildabear.com including its online
“Bear-Builder” as well as the “Bear Builder 3D Workshop”. In
addition, extending its brand power beyond retail, Build-A-Bear
Entertainment, a subsidiary of Build-A-Bear Workshop, Inc., is
dedicated to creating engaging content for kids and adults that
fulfills the Company’s mission, while the Company also offers
products at wholesale and in non-plush consumer categories via
licensing agreements with leading manufacturers. Build-A-Bear
Workshop, Inc. (NYSE: BBW) posted total revenues of $467.9 million
in fiscal 2022. 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 of 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 14, 2022 and other periodic reports filed with the SEC
which are incorporated herein.
All of 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
July 29,
% of Total
July 30,
% of Total
2023
Revenues (1)
2022
Revenues (1)
Revenues: Net retail sales $
103,465
94.8
$
95,882
95.2
Commercial revenue
4,978
4.6
4,054
4.0
International franchising
782
0.7
749
0.7
Total revenues
109,225
100.1
100,685
99.9
Cost of merchandise sold:
Cost of merchandise sold - retail (1)
47,710
46.1
48,387
50.5
Cost of merchandise sold - commercial (1)
2,425
48.7
1,949
48.1
Cost of merchandise sold - international franchising (1)
454
58.1
437
58.4
Total cost of merchandise sold
50,589
46.3
50,773
50.4
Consolidated gross profit
58,636
53.7
49,912
49.6
Selling, general and administrative expense
48,324
44.2
42,264
42.0
Interest (income) expense, net
(167
)
(0.2)
3
0.0
Income before income taxes
10,479
9.6
7,645
7.6
Income tax expense
2,141
2.0
1,815
1.8
Net income $
8,338
7.6
$
5,830
5.8
Income per common share:
Basic $
0.58
$
0.38
Diluted $
0.57
$
0.38
Shares used in computing common per share amounts:
Basic
14,419,365
15,274,770
Diluted
14,500,971
15,536,308
(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 Statements of
Operations (dollars in thousands, except share and per share
data)
26 Weeks
26 Weeks
Ended
Ended
July 29,
% of Total
July 30,
% of Total
2023
Revenues (1)
2022
Revenues (1)
Revenues:
Net retail sales $
215,561
94.0
$
208,772
95.6
Commercial revenue
11,665
5.1
8,340
3.8
International franchising
2,049
0.9
1,235
0.6
Total revenues
229,275
100.0
218,347
100.0
Cost of merchandise sold:
Cost of merchandise sold - retail (1)
98,614
45.7
101,987
48.9
Cost of merchandise sold - commercial (1)
5,783
49.6
3,895
46.7
Cost of merchandise sold - international franchising (1)
1,339
65.3
725
58.7
Total cost of merchandise sold
105,736
46.1
106,607
48.8
Consolidated gross profit
123,539
53.9
111,740
51.2
Selling, general and administrative expense
93,950
41.0
85,884
39.3
Interest (income) expense, net
(243
)
(0.1)
22
0.0
Income before income taxes
29,832
13.0
25,834
11.8
Income tax expense
6,886
3.0
5,814
2.7
Net income $
22,946
10.0
$
20,020
9.2
Income per common share:
Basic $
1.59
$
1.30
Diluted $
1.57
$
1.27
Shares used in computing common per share amounts:
Basic
14,438,611
15,375,250
Diluted
14,630,089
15,749,058
(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)
July 29,
January 28,
July 30,
2023
2023
2022
ASSETS Current assets: Cash, cash
equivalents and restricted cash
$
32,642
$
42,198
$
14,437
Inventories, net
66,329
70,485
87,722
Receivables, net
13,120
15,374
15,337
Prepaid expenses and other current assets
11,898
19,374
12,910
Total current assets
123,989
147,431
130,406
Operating lease right-of-use asset
70,915
71,791
76,560
Property and equipment, net
50,435
50,759
46,689
Deferred tax assets
6,828
6,592
7,596
Other assets, net
6,246
4,221
2,184
Total Assets
$
258,413
$
280,794
$
263,435
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable
$
15,598
$
10,286
$
29,086
Accrued expenses
28,347
37,358
22,873
Operating lease liability short term
27,194
27,436
25,244
Gift cards and customer deposits
18,305
19,425
17,969
Deferred revenue and other
4,444
6,646
4,416
Total current liabilities
93,888
101,151
99,588
Operating lease liability long term
55,368
59,080
68,291
Other long-term liabilities
1,291
1,446
1,692
Stockholders' equity:
Common stock, par value $0.01 per share
145
148
150
Additional paid-in capital
66,773
69,868
69,409
Accumulated other comprehensive loss
(12,017
)
(12,274
)
(12,385
)
Retained earnings
52,965
61,375
36,690
Total stockholders' equity
107,866
119,117
93,864
Total Liabilities and Stockholders' Equity
$
258,413
$
280,794
$
263,435
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES Unaudited
Selected Financial and Store Data (dollars in thousands)
13 Weeks
13 Weeks
26 Weeks
26 Weeks
Ended
Ended
Ended
Ended
July 29,
July 30,
July 29,
July 30,
2023
2022
2023
2022
Other financial data:
Retail gross margin ($) (1) $
55,755
$
47,495
$
116,947
$
106,785
Retail gross margin (%) (1)
53.9
%
49.5
%
54.3
%
51.1
%
Capital expenditures (2) $
3,073
$
2,995
$
6,138
$
4,065
Depreciation and amortization $
3,229
$
3,026
$
6,309
$
6,276
Store data (3):
Number of corporately-managed retail locations
at end of period North America
314
307
Europe
37
39
Total corporately-managed retail locations
351
346
Number of franchised stores at
end of period
64
62
Number of third-party retail
locations at end of period
76
65
Corporately-managed store square
footage at end of period (4) North America
726,857
722,000
Europe
52,763
58,216
Total square footage
779,620
780,216
(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 are 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
26 Weeks
26 Weeks
Ended
Ended
Ended
Ended
July 29,
July 30,
July 29,
July 30,
2023
2022
2023
2022
Income before income taxes (pre-tax)
$
10,479
$
7,645
$
29,832
$
25,834
Interest expense, net
(167
)
3
(243
)
22
Depreciation and amortization expense
3,229
3,026
6,309
6,276
Earnings before interest, taxes, depreciation and amortization
(EBITDA)
$
13,541
$
10,674
$
35,898
$
32,132
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230824529511/en/
Investor Relations Gary Schnierow, Vice President
Investor Relations & Corporate Finance garys@buildabear.com
Media Relations pr@buildabear.com
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