- First half total revenues were $218.3 million, the highest
in the first half in the Company’s history, an increase of 17.1%
from the fiscal 2021 first half and included total revenues of
$100.7 million in the fiscal second quarter, an increase of 6.3%
from the fiscal 2021 second quarter
- First half pre-tax income was $25.8 million, the highest for
the first half in the Company’s history, compared to pre-tax income
of $22.7 million in the fiscal 2021 first half. Second quarter
pre-tax income was $7.6 million, including incremental freight
expenses of approximately $3.8 million, and compared to the
previous record-high of $9.5 million in pre-tax income for the
fiscal 2021 second quarter
- Board authorized new share repurchase program of $50.0
million following completion of the previous $25.0 million share
repurchase program which was announced in November 2021
- Reiterates fiscal 2022 annual guidance including growth in
total revenues and profitability compared to fiscal 2021
Build-A-Bear Workshop, Inc. (NYSE: BBW) today reported results
for the second quarter and first half ended July 30, 2022.
Sharon Price John, Build-A-Bear Workshop President and Chief
Executive Officer commented, “We are pleased to have delivered a
strong fiscal 2022 second quarter which contributed to
record-setting levels for total revenues and profitability for the
fiscal first half, following the most profitable year in our
company’s history. We believe that our strategic plan which
capitalizes on our powerful brand, executed with discipline and
agility, is the primary driver of our sustained profitable growth.
Thus far in the third quarter, our overall sales trends and retail
traffic patterns have continued to be positive, and while we are
mindful of the macro-economic uncertainties, we have demonstrated
an ability to remain nimble and adapt our resilient and more
diversified business model to navigate challenging environments.
These factors are reflected in our Board’s confidence in our future
and the value of our business leading to the authorization of a new
$50 million share repurchase program which was announced yesterday.
This follows the completion of a $25 million stock buyback program
which was authorized in November 2021 which resulted in the
repurchasing of approximately 10% of our shares outstanding.
“As we look forward to the balance of the year and all-important
holiday season, we believe we are well-positioned to achieve our
expectations and are reaffirming our annual guidance. We continue
to make progress on our strategic initiatives including
accelerating a broad-reaching and comprehensive digital
transformation, continuing to evolve our retail experience and
footprint while optimizing our expanded omnichannel capabilities,
and leveraging our solid financial position to invest in
initiatives intended to drive growth and return value to our
shareholders,” concluded Ms. John.
Second Quarter Fiscal 2022 Results (13 weeks ended July
30, 2022 compared to the 13 weeks ended July 31, 2021):
- Total revenues were $100.7 million, a 6.3% increase compared to
$94.7 million in the fiscal 2021 second quarter;
- Net retail sales were $95.9 million, a 5.0% increase compared
to $91.3 million in the fiscal 2021 second quarter;
- Consolidated e-commerce demand (orders generated online to be
fulfilled from either the Company’s warehouse or its stores)
declined 8.4% compared to the fiscal 2021 second quarter which had
the benefit of strong launches of key products as growth in Europe
was offset by a decline in North America. Compared to the fiscal
2019 second quarter, digital demand increased by almost 150%;
and
- Commercial and international franchise revenues were $4.8
million, a 41.1% increase compared to $3.4 million in the fiscal
2021 second quarter;
- Gross profit margin was 49.6%, compared to 53.2% in the fiscal
2021 second quarter. The 360 basis-point contraction in gross
profit margin was primarily driven by the negative impact of an
increase of approximately 400 basis points in transportation costs,
as well as other inflationary pressures, partially offset by
leverage of fixed occupancy and warehouse costs and lower
promotional activity. The Company expects its ongoing mitigation
efforts along with some moderation in freight cost pressure to
contribute to an improvement in gross profit margin in the second
half of fiscal 2022 versus the first half of 2022. Compared to the
fiscal 2019 second quarter, gross profit margin improved by 550
basis points;
- Selling, general and administrative (“SG&A”) expenses were
$42.3 million, or 42.0% of total revenues, compared to $40.9
million, or 43.2% of total revenues, in the fiscal 2021 second
quarter;
- Pre-tax income was $7.6 million, including incremental freight
expense of approximately $3.8 million compared to a record-setting
pre-tax income of $9.5 million in the fiscal 2021 second
quarter;
- Income tax expense was $1.8 million compared to an income tax
expense of $2.6 million in the fiscal 2021 second quarter;
- Net income was $5.8 million, or $0.38 per diluted share,
compared to net income of $6.8 million, or $0.42 per diluted share,
in the fiscal 2021 second quarter; and
- Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) was $10.7 million, a $1.8 million decrease from $12.5
million in the fiscal 2021 second quarter.
First Six Months Highlights (26 weeks ended July 30, 2022
compared to the 26 weeks ended July 31, 2021):
- Total revenues were $218.3 million, the highest in the first
half in the Company’s history, reflecting an increase of 17.1%,
compared to $186.4 million in the first six months of fiscal 2021;
- Consolidated net retail sales were $208.8 million, an increase
of 15.7% compared to $180.5 million in the first six months of
fiscal 2021;
- Consolidated e-commerce demand (orders generated online to be
fulfilled from either the Company’s warehouse or its stores)
declined 2.3% compared to the first six months of fiscal 2021 with
an increase in Europe offset by a decline in North America.
Compared to the fiscal 2019 first six months, digital demand
increased by 180%; and
- Commercial and international franchise revenues were $9.6
million, a 62.7% increase compared to $5.9 million in the first six
months of fiscal 2021;
- Pre-tax income reached a record-setting level at $25.8 million
compared to the previous record in pre-tax income of $22.7 million
in the first six months of fiscal 2021;
- Net income was $20.0 million, or $1.27 per diluted share,
compared to net income of $17.2 million, or $1.08 per diluted
share, in the first six months of fiscal 2021; and
- EBITDA was $32.1 million, an increase of $3.3 million from
EBITDA of $28.8 million in the first six months of fiscal
2021.
Store Activity: As previously shared, the Company expects
to end fiscal 2022 with an increase in total store locations in
North America inclusive of third-party locations, as it continues
to make progress on its previously announced plans to open twenty
workshops. Separately, the Company continues to expect to end the
year with a reduction in locations within Europe. Combined across
geographies, the Company plans to have more total locations at the
end of the 2022 fiscal year compared to the end of fiscal 2021
inclusive of third-party locations.
As of July 30, 2022, the Company had 346 corporately-managed
stores (excluding 6 temporary seasonal shops) which reflects six
net closures as compared to the end of the fiscal 2021 second
quarter with an increase in store count in North America and a
decrease in Europe. There was no change in corporately-managed
store count at the end of the fiscal 2022 second quarter compared
to the beginning of the fiscal 2022 year. The Company maintains a
high level of lease optionality with over 70% of its
corporately-managed stores having a lease event within the next
three years.
Through the Company’s third-party retail business model, there
were 65 locations as of July 30, 2022 with relationships that
include Carnival Cruise Lines, Great Wolf Lodge Resorts, Landry’s
and Beaches Family Resorts, reflecting 4 net openings in the first
half of fiscal 2022. The Company’s international franchisees
operated 62 locations at the end of the fiscal 2022 second quarter
reflecting 12 net closures compared to the end of the 2021 second
quarter.
Balance Sheet: As of July 30, 2022, cash and cash
equivalents totaled $14.4 million, compared to $51.1 million as of
July 31, 2021. The Company noted that the 2022 quarter-end position
as compared to the prior year period reflected the use of cash to
repurchase shares of its common stock, payment of a special
dividend, and an increased investment in working capital to support
strategic initiatives intended to drive further growth. The Company
finished the quarter with no borrowings under its revolving credit
facility.
Total inventory at quarter end was $87.7 million, an increase of
$40.4 million from the end of the fiscal 2021 second quarter
reflecting strategically planned accelerated inventory purchases
intended to partially mitigate inflationary and supply chain
pressures. The increase in inventory as compared to the end of the
fiscal 2021 second quarter reflects: (i) higher on-hand units
compared to last year’s unusually low level driven by supply chain
disruptions; (ii) increased freight and other inflationary costs;
and (iii) a shift in product mix. The Company noted that it is
comfortable with the composition and level of its inventory which
supports increased consumer demand and critical seasonal products.
The Company continues to expect to end the year with total
inventory below the 2021 fiscal year-end level.
Subsequent to quarter-end: As of August 9, 2022, the
Company completed the stock repurchase program approved by its
Board of Directors on November 30, 2021. Under the program, the
Company repurchased 1,522,680 shares at an average price of $16.42
per share representing the entirety of the $25.0 million stock
buyback program. The shares repurchased were nearly 10% of the
shares outstanding as of the end of the fiscal 2021 third
quarter.
As announced yesterday, the Company’s Board of Directors
authorized a new share repurchase program of up to $50.0 million
effective through August 31, 2025.
2022 Outlook: Given its positive first half and
year-to-date performance, the Company has confidence that it is
continuing to make progress on its strategic initiatives including
the acceleration of its digital transformation, the evolution of
its retail experience and footprint and the leveraging of its
strong balance sheet and cash flow to make capital allocation
decisions that are intended to drive growth and enhance shareholder
value. With its current momentum continuing into the third quarter,
the Company is reaffirming its fiscal 2022 guidance including:
- Total revenues in the range of $440 million to $460 million, as
compared to $411.5 million in fiscal 2021;
- Pre-tax income in the range of $52 million to $62 million, as
compared to $50.7 million in fiscal 2021;
- EBITDA in the range of $65 million to $75 million, as compared
to $63.0 million in fiscal 2021;
- Income tax rate in the range of 24% to 25%;
- Capital expenditures in the range of $10 to $15 million;
- Depreciation and amortization of approximately $13 million;
and
- To finish the year with inventory levels below the end of
fiscal 2021.
The Company’s guidance for growth in profitability takes into
account anticipated ongoing inflationary pressures as well as its
plans to mitigate the impact on its margins. The Company noted that
its outlook assumes no further material changes in the operations
of its supply chain including the ability to receive and ship
product on a timely basis, the macro-economic 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 U.S. generally accepted accounting principles
(GAAP) and using certain non-GAAP financial measures. In
particular, the Company provides historic and projected EBITDA,
which is a non-GAAP financial measure. These results are included
as a complement to results provided in accordance with GAAP because
management believes this non-GAAP financial measure helps 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. This measure should not be considered a substitute for or
superior to GAAP results. This non-GAAP financial measure is
defined and reconciled to the most comparable GAAP measure later in
this document.
Today’s Conference Call Webcast: Build-A-Bear Workshop
will host a conference call and audio webcast to discuss its
results today, August 25, 2022 at 9:00 a.m. Eastern Time. The
conference call may be accessed by dialing (877) 407-3982 or, for
international callers, (201) 493-6781. Additionally, a live webcast
of the call can be accessed at http://IR.buildabear.com. The call
is expected to conclude by 10 a.m. ET. The webcast will be archived
on the Company’s website for one year and will be available for
replay approximately one hour after the conclusion of the call.
Additionally, a telephonic re-play of the call will be available at
12:00 p.m. ET on August 26, 2021 until 11:59 p.m. ET on September
1, 2022 and can be accessed by dialing (844) 512-2921, or (412)
317-6671 for international callers and entering replay pin number
13731669.
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 retail 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 new “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 revenue of $411.5 million
in fiscal 2021. 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 15, 2021 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 30,
% of Total
July 31,
% of Total
2022
Revenues (1)
2021
Revenues (1)
Revenues: Net retail sales $
95,882
95.3
$
91,289
96.4
Commercial revenue
4,054
4.0
2,946
3.1
International franchising
749
0.7
493
0.5
Total revenues
100,685
100.0
94,728
100.0
Cost of merchandise sold: Cost of merchandise sold - retail (1)
48,387
50.5
42,677
46.7
Cost of merchandise sold - commercial (1)
1,949
48.1
1,286
43.7
Cost of merchandise sold - international franchising (1)
437
58.4
365
74.0
Total cost of merchandise sold
50,773
50.4
44,328
46.8
Consolidated gross profit
49,912
49.6
50,400
53.2
Selling, general and administrative expense
42,264
42.0
40,919
43.2
Interest expense (income), net
3
0.0
8
0.0
Income (loss) before income taxes
7,645
7.6
9,473
10.0
Income tax expense (benefit)
1,815
1.8
2,638
2.8
Net income (loss) $
5,830
5.8
$
6,835
7.2
Income (loss) per common share: Basic $
0.38
$
0.44
Diluted $
0.38
$
0.42
Shares used in computing common per share amounts: Basic
15,274,770
15,398,406
Diluted
15,536,308
16,111,587
(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 30,
% of Total
July 31,
% of Total
2022
Revenues (1)
2021
Revenues (1)
Revenues: Net retail sales $
208,772
95.6
$
180,501
96.8
Commercial revenue
8,340
3.8
5,055
2.7
International franchising
1,235
0.6
865
0.5
Total revenues
218,347
100.0
186,421
100.0
Costs and expenses: Cost of merchandise sold - retail (1)
101,987
48.9
84,770
47.0
Cost of merchandise sold - commercial (1)
3,895
46.7
2,190
43.3
Cost of merchandise sold - international franchising (1)
725
58.7
633
73.2
Total cost of merchandise sold
106,607
48.8
87,593
47.0
Consolidated gross profit
111,740
51.2
98,828
53.0
Selling, general and administrative expense
85,884
39.3
76,161
40.9
Interest expense, net
22
0.0
13
0.0
Income (loss) before income taxes
25,834
11.8
22,654
12.2
Income tax expense
5,814
2.7
5,439
2.9
Net income (loss) $
20,020
9.2
$
17,215
9.2
Income (loss) per common share: Basic $
1.30
$
1.13
Diluted $
1.27
$
1.08
Shares used in computing common per share amounts: Basic
15,375,250
15,230,215
Diluted
15,749,058
15,958,520
(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 30,
January 29,
July 31,
2022
2022
2021
ASSETS Current assets: Cash, cash equivalents and restricted
cash
$
14,437
$
32,845
$
51,136
Inventories, net
87,722
71,809
47,342
Receivables, net
15,337
11,701
8,648
Prepaid expenses and other current assets
12,910
13,643
8,841
Total current assets
130,406
129,998
115,967
Operating lease right-of-use asset
76,560
77,671
93,087
Property and equipment, net
46,689
48,966
48,161
Deferred tax assets
7,596
7,613
-
Other assets, net
2,184
2,076
7,060
Total Assets
$
263,435
$
266,324
$
264,275
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable
$
29,086
$
21,849
$
16,028
Accrued expenses
22,873
25,543
20,972
Operating lease liability short term
25,244
25,245
28,019
Gift cards and customer deposits
17,969
20,937
18,096
Deferred revenue and other
4,416
3,808
2,723
Total current liabilities
99,588
97,382
85,838
Operating lease liability long term
68,291
73,307
89,883
Deferred franchise revenue
592
734
847
Other liabilities
1,100
1,218
2,572
Stockholders' equity: Common stock, par value $0.01 per
share
150
162
163
Additional paid-in capital
69,409
75,490
73,394
Accumulated other comprehensive loss
(12,385
)
(12,470
)
(12,579
)
Retained earnings/(deficit)
36,690
30,501
24,157
Total stockholders' equity
93,864
93,683
85,135
Total Liabilities and Stockholders' Equity
$
263,435
$
266,324
$
264,275
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 30,
July 31,
July 30,
July 31,
2022
2021
2022
2021
Other financial data: Retail gross margin ($)
(1) $
47,495
$
48,612
$
106,785
$
95,731
Retail gross margin (%) (1)
49.5
%
53.3
%
51.1
%
53.0
%
Capital expenditures (2) $
2,995
$
1,062
$
4,065
$
1,553
Depreciation and amortization $
3,026
$
2,993
$
6,276
$
6,120
Store data (3): Number of corporately-managed retail
locations at end of period North America
307
305
Europe
39
47
Asia
—
—
Total corporately-managed retail locations
346
352
Number of franchised stores at end of period
62
74
Number of third-party retail locations at end of period
65
57
Corporately-managed store square footage at end of period
(4) North America
722,000
716,702
Europe
58,216
70,371
Total square footage
780,216
787,073
(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.
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 30,
July 31,
July 30,
July 31,
2022
2021
2022
2021
Income before income taxes (pre-tax)
$
7,645
$
9,473
$
25,834
$
22,654
Interest expense, net
3
8
22
13
Depreciation and amortization expense
3,026
2,993
6,276
6,120
Earnings before interest, taxes, depreciation and amortization
(EBITDA)
$
10,674
$
12,474
$
32,131
$
28,787
Fiscal 2022 Guidance (in
millions) Income before income taxes (pre-tax)
$52 - $62
Interest (income) expense, net
-
Depreciation and amortization expense
13
Earnings before interest, taxes, depreciation and amortization
(EBITDA)
$65 - $75
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220901005181/en/
Investors: Voin Todorovic Build-A-Bear Workshop (314) 423-8000
x5221
Media: PR@buildabear.com
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