Core Insights - Build-A-Bear Workshop has significantly outperformed the S&P 500, with a total return of 53% over the past 12 months compared to the S&P 500's 15% [2]. - Over the last three years, Build-A-Bear's total return reached 152%, while the S&P 500 returned 76% [2]. - In a five-year span, Build-A-Bear's stock skyrocketed nearly 1,400%, far exceeding the S&P 500's 101% return [3]. Financial Performance - Build-A-Bear is currently trading at a forward price-to-earnings (P/E) ratio of 11.6, significantly lower than the S&P 500's estimated forward P/E ratio of 23.6, indicating a strong valuation relative to the market [5]. - The company has achieved four consecutive years of record revenue and profits, with third-quarter revenue reported at $122.7 million, reflecting a 3% year-over-year increase [10]. - Build-A-Bear has announced a quarterly cash dividend of $0.22 per share and has repurchased 336,000 shares in the first nine months of fiscal 2025 [10]. Growth Strategy - Build-A-Bear has shifted its retail model by launching partner-operated units in locations such as Great Wolf Lodge and SeaWorld, which allows for higher-margin revenue as a wholesale supplier [7]. - International franchise stores have contributed to growth, with revenue increasing by 176% from 2020 to 2024 [8]. - E-commerce demand has surged by 110% over the past six years, further expanding Build-A-Bear's market presence [8]. Investment Perspective - The company's diversified retail strategy has taken time to unfold, demonstrating the benefits of a long-term investment approach [11]. - A basic buy-and-hold strategy would have yielded total returns of 1,400% over five years, highlighting the importance of patience in wealth-building [12].

Core Viewpoint - Build-A-Bear Workshop's profits have been significantly impacted by tariffs, leading to a sharp decline in its stock price and earnings [1][4]. Financial Performance - Build-A-Bear's revenue increased by 2.7% year over year to $122.7 million in the fiscal third quarter ended November 1 [2]. - The company's pre-tax income fell by 18% to $10.7 million, primarily due to $4 million in tariff-related costs [4]. - Earnings per share decreased by 15% to $0.62 [4]. Expansion Plans - Build-A-Bear opened 24 net new stores during the quarter, bringing the total store count to 651 [2]. - The company plans to open at least 60 net new stores and aims for mid-to-high-single-digit revenue growth [5]. - The CEO emphasized the focus on global expansion and strategic initiatives despite the challenging economic environment [5]. Market Data - Build-A-Bear's current market capitalization is $1 billion, with a stock price decline of 15.54% to $48.48 [3]. - The stock has a 52-week range of $32.55 to $75.85 [4]. - The gross margin stands at 56.32%, and the dividend yield is 1.53% [4].

Jobless Claims Data - Initial Jobless Claims reported at 191K and Continuing Claims at 1.939 million, significantly lower than recent trends, indicating potential inaccuracies in data or a resilient labor market [1][2] - Current job losses in the private sector reported by ADP and anticipated layoffs from major corporations contrast with low jobless claims, suggesting that the labor market may be experiencing structural changes [2][3] - The latest Initial Claims figures are the lowest since late September 2022, with Continuing Claims remaining below the psychologically significant 2 million mark since Memorial Day [3] Earnings Reports - Dollar General (DG) exceeded earnings expectations by 39%, reporting $1.28 per share against a consensus of 92 cents, with revenues of $10.65 billion, leading to a pre-market share increase of over 5% [5] - Kroger (KR) reported earnings of $1.05 per share, slightly above estimates, but revenues of $33.86 billion fell short of expectations, resulting in a pre-market share decline of 2.8% [6] - Bank of Montreal (BMO) reported earnings of $2.36 per share, surpassing estimates by 9.26%, with revenues of $6.73 billion exceeding projections by 5.24%, leading to flat share performance [7] - Build-a-Bear Workshops (BBW) showed mixed results with a bottom-line beat of 12.7% at 62 cents per share, but a sales miss of 1.28% at $122.68 million, causing a pre-market share drop of 6.6% [8]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 grew nearly 3% to almost $123 million, while pre-tax income declined by $2 million to nearly $11 million, impacted by approximately $4 million in negative tariff effects [5][22] - Year-to-date revenue increased over 8% to over $375 million, with pre-tax income rising by 15% to almost $46 million, also inclusive of about $5 million in negative tariff impact [5][6] - Gross margin was 53.7%, a decline of 40 basis points compared to last year, primarily due to tariffs, which reduced gross profit by about $4 million in the quarter [24] Business Line Data and Key Metrics Changes - Net retail sales for the quarter were $112.3 million, an increase of 2.5% [22] - Direct-to-consumer sales showed solid performance in August and September but declined by 10.8% in October due to challenging comparisons from a strong license product launch last year [23] - Commercial revenue, primarily from wholesale sales, grew 4.2% for the quarter and 15.3% year-to-date, with expectations of over 20% growth for the year [24] Market Data and Key Metrics Changes - The company added 24 net new experience locations, with 70% of those openings outside the United States, bringing the total to 651 locations across 33 countries [8][10] - The Mini Beans product line saw a 60% increase in sales during Q3, approaching 3 million units sold [16][49] Company Strategy and Development Direction - The company aims to expand its experiential retail footprint, advance digital transformation, and leverage brand equity beyond workshops while returning capital to shareholders [7][14] - The strategy includes opening new co-branded locations and expanding the Mini Beans collection to various retail environments [11][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving record revenue of over $500 million for fiscal 2025, despite ongoing tariff headwinds [3][6] - The company is focused on mitigating tariff impacts through cost management and selective price increases, with expectations of a reduced tariff rate in the coming year [35][36] Other Important Information - The company returned over $26 million to shareholders through dividends and buybacks, contributing to more than 24% EPS growth for the first three quarters of the fiscal year [6][25] - The company maintained a strong balance sheet with $27.7 million in cash and no borrowing under its revolving credit facility [26] Q&A Session Summary Question: Can you elaborate on the tariff impact and mitigation strategies for next year? - Management indicated that tariffs for the current year are expected to total less than $11 million, with ongoing efforts to mitigate costs through partnerships and selective price increases [34][35] Question: How is the diversification in pricing affecting customer demographics? - Management noted that 40% of sales are to teens and adults, allowing for greater pricing flexibility and attracting a broader customer base [40][41] Question: What trends are observed in promotional activity this quarter? - Management stated that promotional activity was managed more stringently, resulting in lower discount rates compared to previous quarters [46][47] Question: Can you provide insights on Mini Beans sales and new product introductions? - Management expressed excitement about Mini Beans, highlighting a 60% increase in sales and expansion into various retail channels [48][49] Question: How do high-profile movie tie-ins affect sales? - Management acknowledged that while movie tie-ins can drive sales, the overall performance is influenced by a broader assortment of products [56][58] Question: Will having multiple locations in large malls provide leverage in lease negotiations? - Management confirmed that increased revenue and foot traffic from multiple locations can create leverage in discussions with mall partners [60][61]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 grew nearly 3% to almost $123 million, while pre-tax income declined by $2 million to nearly $11 million, impacted by approximately $4 million in tariffs [5][22] - Year-to-date revenue increased over 8% to over $375 million, with pre-tax income rising by 15% to almost $46 million, also inclusive of about $5 million in tariff impacts [5][22] - Earnings per share (EPS) grew over 24% for the first three quarters of the fiscal year, reflecting strong shareholder returns totaling over $26 million through dividends and buybacks [6][25] Business Line Data and Key Metrics Changes - Direct-to-consumer sales showed solid performance in August and September but declined in October due to external factors, with e-commerce demand down 10.8% for the quarter [23][24] - Commercial revenue, primarily from wholesale sales, grew 4.2% for the quarter and 15.3% year-to-date, with expectations of over 20% growth for the year [24] Market Data and Key Metrics Changes - Domestic store traffic outperformed national benchmarks, although overall traffic saw a slight decline [23] - The company opened 24 net new experience locations, with 70% outside the U.S., bringing total locations to 651 across 33 countries [8][9] Company Strategy and Development Direction - The company aims to expand its experiential retail footprint, advance digital transformation, and leverage brand equity beyond workshops while returning capital to shareholders [7][14] - The introduction of Mini Beans collectibles has been successful, with nearly 3 million units sold and a 60% increase in sales during Q3 [16][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving record revenue of over $500 million for fiscal 2025, despite ongoing tariff headwinds [3][27] - The company is focused on mitigating tariff impacts through cost management and strategic initiatives, including diversifying its market presence [35][37] Other Important Information - The company has maintained a strong balance sheet with cash and cash equivalents totaling $27.7 million and no borrowing under its revolving credit facility [25][26] - The company is committed to executing its strategic objectives while delivering consistent value to shareholders through disciplined capital allocation [28] Q&A Session Summary Question: Tariff impact and mitigation strategies - Management acknowledged approximately $10 million in tariff expenses for the year and discussed ongoing efforts to mitigate these costs through partnerships and selective price increases [34][36] Question: Diversification in pricing and customer demographics - Management highlighted the success of Mini Beans and higher-priced items, noting that diversification attracts different customer segments, including teens and adults [40][41] Question: Promotional activity in the quarter - Management stated that promotional activity was managed more stringently, resulting in lower discount rates while focusing on enhancing customer experience [46][47] Question: Trends in Mini Beans sales and new SKU introductions - Management expressed excitement about Mini Beans, noting strong sales and expansion into various retail environments, indicating a successful strategy for growth [48][49] Question: Impact of high-profile movie tie-ins on sales - Management discussed the unpredictability of sales related to movie tie-ins, emphasizing a broader assortment as a key driver for Black Friday success [56][58] Question: Expansion into multiple locations in large malls - Management confirmed that having multiple locations in major malls enhances leverage in lease negotiations and contributes to increased foot traffic [60][61] Question: Customer behavior during government shutdown - Management noted a slowdown in traffic during the government shutdown but reported a rebound in November, indicating resilience in customer spending [68][69] Question: Opportunities in wholesaling Mini Beans - Management identified wholesaling Mini Beans as a significant growth opportunity, with plans to expand into additional retail channels [71][72]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 grew nearly 3% to almost $123 million, while pre-tax income declined by $2 million to nearly $11 million, impacted by approximately $4 million in negative tariff effects [5][20] - Year-to-date revenue increased over 8% to over $375 million, with pre-tax income rising by 15% to almost $46 million, also inclusive of about $5 million in negative tariff impact [5][20] - Gross margin was 53.7%, a decline of 40 basis points compared to last year, primarily due to tariffs, which reduced gross profit by about $4 million in the quarter [23][24] Business Line Data and Key Metrics Changes - Direct-to-consumer sales saw a decline of 10.8% in e-commerce demand, primarily due to challenging comparisons from a strong license product launch last year [22] - Commercial revenue, mainly from wholesale sales, grew 4.2% for the quarter and 15.3% year-to-date, with expectations of over 20% growth for the year [23][24] Market Data and Key Metrics Changes - Domestic store traffic outperformed the national benchmark, although there was a slight transaction decrease driven by a 1% decline in traffic [21] - The company opened 24 net new experience locations, with 70% of those outside the United States, bringing the total to 651 locations across 33 countries [7][8] Company Strategy and Development Direction - The company aims to expand its experiential retail footprint, advance digital transformation, and leverage brand equity beyond workshops while returning capital to shareholders [6][27] - The introduction of the Mini Beans collection has been successful, with nearly 3 million units sold and over 60% growth in Q3 alone, indicating a strategy to reach broader markets [15][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaffirming full-year guidance, expecting revenue to exceed $500 million for the first time in company history despite ongoing tariff headwinds [3][5] - The company is focused on executing strategic objectives while managing external challenges, including tariffs and inflationary pressures [27] Other Important Information - The company returned over $26 million to shareholders through dividends and buybacks, contributing to more than 24% EPS growth for the first three quarters of the fiscal year [5][24] - The company has maintained significant flexibility with about $70 million remaining under its board-approved repurchase authorization [24] Q&A Session Summary Question: What are the opportunities to reduce tariff impacts next year? - Management indicated that while tariffs will continue to impact, they are working on mitigating costs through partnerships and selective price increases [30][32] Question: How is the diversification in pricing affecting customer engagement? - Management noted that diversification allows for appealing to different customer segments, with 40% of sales coming from teens and adults, enhancing pricing flexibility [35][38] Question: What trends are seen with Mini Beans sales? - Mini Beans have shown strong sales growth, with plans to expand distribution beyond workshops, indicating a successful product line [45][46] Question: How does promotional activity compare year over year? - Management stated that promotional activity has been managed more stringently, resulting in lower discount rates while focusing on enhancing customer experience [43][44] Question: How does the company leverage its presence in malls? - Management highlighted that having multiple locations in major malls enhances foot traffic and strengthens partnerships with mall operators [57][59]

Core Insights - Build-A-Bear (BBW) reported quarterly earnings of $0.62 per share, exceeding the Zacks Consensus Estimate of $0.55 per share, but down from $0.73 per share a year ago, resulting in an earnings surprise of +12.73% [1] - The company posted revenues of $122.68 million for the quarter ended October 2025, missing the Zacks Consensus Estimate by 1.28%, compared to $119.43 million in the same quarter last year [2] - Build-A-Bear shares have increased approximately 24.7% year-to-date, outperforming the S&P 500's gain of 16.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.37 on revenues of $156.37 million, and for the current fiscal year, it is $4.03 on revenues of $533.26 million [7] - The estimate revisions trend for Build-A-Bear was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Retail - Miscellaneous industry, to which Build-A-Bear belongs, is currently ranked in the bottom 29% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Core Viewpoint - Build-A-Bear Workshop, Inc. (BBW) reaffirmed its revenue growth guidance for fiscal 2025, expecting mid-to-high-single-digit percentage growth and pre-tax income between $62 million and $70 million [1][2]. Financial Performance - For fiscal 2025, the company anticipates revenue growth in the range of 7.29 percent, with an expected total revenue of $532.57 million [1]. Guidance Considerations - The company's guidance takes into account various factors such as tariffs, medical and labor costs, changes in freight expenses, and ongoing inflationary challenges [2]. Strategic Focus - The company aims to advance its long-term strategic initiatives, particularly the global expansion of its partner-operated model, while navigating a dynamic economic environment [2].

Financial Performance - Total revenues for Q3 fiscal 2025 reached a record $122.7 million, an increase of 2.7% compared to $119.4 million in Q3 fiscal 2024[4] - Pre-tax income for Q3 was $10.7 million, down from $13.1 million in the prior year, impacted by approximately $4 million in tariffs and related costs[4] - Diluted earnings per share (EPS) for Q3 decreased by 15.1% to $0.62, compared to $0.73 in the same quarter last year[5] - For the first nine months of fiscal 2025, total revenues were $375.3 million, an increase of 8.5% from $346.0 million in the prior year[5] - Net income for the 13 weeks ended November 1, 2025, was $8.122 million, down 17.8% from $9.870 million in the prior year[26] - Income before income taxes for the 39 weeks ended November 1, 2025, was $45.678 million, compared to $39.655 million for the same period in 2024[31] Shareholder Returns - The company returned $26.1 million to shareholders through share repurchases and dividends in the first nine months of fiscal 2025[4] Future Guidance - The company expects pre-tax income for fiscal 2025 to be in the range of $62 million to $70 million, accounting for approximately $11 million in tariffs[13] - The company reaffirms its guidance for fiscal 2025, considering various economic factors including tariffs and inflation[11] Expansion Plans - The company plans to open at least 60 new experience locations in fiscal 2025, including corporately-managed, partner-operated, and franchise models[13] Inventory and Assets - Inventory at quarter-end totaled $83.3 million, an increase of 17.7% compared to the previous year, primarily due to tariffs[8] - Total assets as of November 1, 2025, were $326.499 million, up from $285.862 million a year earlier[28] - Total stockholders' equity increased to $150.617 million as of November 1, 2025, compared to $128.573 million in the prior year[28] - The total current liabilities as of November 1, 2025, were $83.522 million, an increase from $79.394 million in the previous year[28] Capital Expenditures - Capital expenditures for fiscal 2025 are expected to be between $20 million and $25 million[12] - Capital expenditures for the 13 weeks ended November 1, 2025, were $6.544 million, an increase from $3.871 million in the prior year[29] Retail Operations - Retail gross margin for the 13 weeks ended November 1, 2025, was $60.490 million, representing 53.9% of net retail sales, compared to 54.2% in the same period of 2024[29] - The number of corporately-managed retail locations increased to 375 as of November 1, 2025, from 362 in the previous year[29]

Financial Performance - Build-A-Bear's total revenue in 2024 was $496 million, a 47% increase compared to 2019[16] - Net retail sales reached $460 million in 2024, up 42% from 2019[16] - Third-party revenue grew significantly by 140% to $36 million in 2024 compared to 2019[16] - EBITDA surged by 430% to $81 million in 2024, with a margin of 163%[16] - Free cash flow increased by 199% to $28 million in 2024[16] - The company's ROIC was 33% in 2024[16] Business Diversification and Expansion - Approximately 40% of sales are to teens and adults[20] - Web demand has grown by approximately 110% from 2019 to 2024[20] - Birthdays account for approximately 30% of sales[23] Store Footprint Evolution - The company had 375 corporate stores and 276 third-party locations in 33 countries as of Q3 2025[23] - Partner-operated stores have increased from 39 in 2017 to 138 in 2024[25] - Franchise stores accounted for 17% of the store count mix in 2024[27] Future Outlook - Fiscal year 2025 guidance projects mid-single-digit to high-single-digit revenue growth[87] - The company anticipates pre-tax income between $62 million and $70 million in fiscal year 2025[87] - Build-A-Bear plans to add at least 60 net new units in fiscal year 2025[87]