[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) This section provides an overview of the company's strong financial performance in Q2 and H1 FY2025 and highlights key strategic initiatives and future outlook [Record Q2 and H1 FY2025 Performance](index=1&type=section&id=Record%20Q2%20and%20H1%20FY2025%20Performance) Build-A-Bear Workshop reported record second quarter and first half fiscal year 2025 results, driven by strong store performance, Direct-to-Consumer segment contribution margins, and double-digit revenue growth in the Commercial segment, leading to an increase in annual revenue and profit guidance - The company achieved its most profitable second quarter and first half in its history, underscoring the durability of its evolved business model[3](index=3&type=chunk) Second Quarter Fiscal 2025 Key Financials (YoY Growth) | Metric | Value (Millions USD) | Growth | | :------------------- | :------------------- | :----- | | Total Revenues | $124.2 | +11.1% | | Pre-Tax Income | $15.3 | +32.7% | | Diluted EPS | $0.94 | +46.9% | First Half Fiscal 2025 Key Financials (YoY Growth) | Metric | Value (Millions USD) | Growth | | :------------------- | :------------------- | :----- | | Total Revenues | $252.6 | +11.5% | | Pre-Tax Income | $34.9 | +31.5% | | Diluted EPS | $2.11 | +44.5% | [Strategic Initiatives and Outlook Update](index=1&type=section&id=Strategic%20Initiatives%20and%20Outlook%20Update) Management highlighted continued commitment to long-term strategic initiatives, particularly the global expansion of its partner-operated model, which has resulted in a stronger-than-anticipated pace of new location openings and an increase in net new unit guidance - The company is focused on advancing long-term strategic initiatives, with a particular emphasis on global expansion of the partner-operated model[2](index=2&type=chunk) - Achieved a stronger-than-anticipated pace of new location openings, leading to raised net new unit guidance[2](index=2&type=chunk) - The company's solid balance sheet, robust cash flow generation, and strong returns on capital reinforce confidence in future performance[3](index=3&type=chunk) [Detailed Financial Results](index=1&type=section&id=Detailed%20Financial%20Results) This section provides a comprehensive breakdown of the company's financial performance for the second quarter and first half of fiscal year 2025, highlighting revenue, profitability, and key drivers [Second Quarter Fiscal 2025 Performance (13 Weeks)](index=1&type=section&id=Second%20Quarter%20Fiscal%202025%20Performance%20(13%20Weeks)) The second quarter of fiscal 2025 saw record revenues and significant growth in profitability, driven by strong retail sales, e-commerce demand, and commercial revenues, with gross margin improving due to reduced promotions and cost leverage, despite increased SG&A expenses Q2 FY2025 Revenue Breakdown (YoY Growth) | Revenue Type | Value (Millions USD) | Growth | | :----------------------------- | :------------------- | :----- | | Total Revenues | $124.2 | +11.1% | | Net Retail Sales | $114.6 | +10.8% | | Consolidated E-commerce Demand | N/A | +15.1% | | Commercial & International Franchise | $9.6 | +15.2% | Q2 FY2025 Profitability Metrics (YoY Growth/Change) | Metric | Value (Millions USD) | % of Total Revenues | YoY Change | | :------------------- | :------------------- | :------------------ | :--------- | | Pre-Tax Income | $15.3 | 12.3% | +32.7% (+200 bps) | | Diluted EPS | $0.94 | N/A | +46.9% | | EBITDA | $18.8 | 15.1% | +25.3% | | Gross Margin | N/A | N/A | +340 bps | | SG&A Expense | N/A | N/A | +140 bps | - Gross margin improvement was primarily from an expansion in Retail gross margin, driven by reduced promotional activity, leverage of fixed costs, and selective price increases, as well as an expansion in Commercial gross margin[6](index=6&type=chunk) - SG&A expense increase was mainly due to higher store-level compensation, corporate costs, and general inflationary pressures, partially offset by favorable marketing expense timing[6](index=6&type=chunk) [First Half Fiscal 2025 Performance (26 Weeks)](index=2&type=section&id=First%20Half%20Fiscal%202025%20Performance%20(26%20Weeks)) The first half of fiscal 2025 also demonstrated strong financial performance with record total revenues and significant increases in pre-tax income and diluted EPS, with gross margin expansion being a key driver, partially offset by higher SG&A H1 FY2025 Revenue Breakdown (YoY Growth) | Revenue Type | Value (Millions USD) | Growth | | :----------------------------- | :------------------- | :----- | | Total Revenues | $252.6 | +11.5% | | Net Retail Sales | $234.2 | +10.8% | | Consolidated E-commerce Demand | N/A | +6.8% | | Commercial & International Franchise | $18.4 | +21.1% | H1 FY2025 Profitability Metrics (YoY Growth/Change) | Metric | Value (Millions USD) | % of Total Revenues | YoY Change | | :------------------- | :------------------- | :------------------ | :--------- | | Pre-Tax Income | $34.9 | 13.8% | +31.5% (+210 bps) | | Diluted EPS | $2.11 | N/A | +44.5% | | EBITDA | $41.9 | 16.6% | +26.0% | | Gross Margin | N/A | N/A | +300 bps | | SG&A Expense | N/A | N/A | +80 bps | - Gross margin improvement was from an expansion in Retail gross margin, primarily from reduced promotional activity, leverage of fixed costs, and selective price increases, as well as an expansion in Commercial gross margin[6](index=6&type=chunk) - SG&A expense increase was mainly from higher store-level compensation, corporate costs, and general inflationary pressures, partially offset by favorable marketing expense timing, and a decline in interest income[6](index=6&type=chunk) [Financial Position and Capital Allocation](index=3&type=section&id=Financial%20Position%20and%20Capital%20Allocation) This section reviews the company's balance sheet, capital expenditures, and strategies for returning capital to shareholders, reflecting its financial health and resource deployment [Balance Sheet Highlights](index=3&type=section&id=Balance%20Sheet%20Highlights) The company maintained a strong balance sheet at the end of the second quarter, with a significant increase in cash and cash equivalents and no borrowings under its revolving credit facility, while inventory levels increased primarily due to tariffs and accelerated core product purchases Balance Sheet Snapshot (Q2 End FY2025 vs. Q2 End FY2024) | Metric | Q2 FY2025 (Millions USD) | Q2 FY2024 (Millions USD) | YoY Change | | :------------------- | :----------------------- | :----------------------- | :--------- | | Cash & Cash Equivalents | $39.1 | $25.2 | +55.4% | | Inventory | $81.8 | $67.0 | +22.1% | - The company finished the quarter with no borrowings under its revolving credit facility[7](index=7&type=chunk) - Inventory increase was primarily driven by added cost of tariffs and accelerated purchase of core products aligned with tariff-mitigation plans[8](index=8&type=chunk) [Capital Expenditures](index=3&type=section&id=Capital%20Expenditures) Capital expenditures for the second quarter and first half of fiscal 2025 were $3.4 million and $6.3 million, respectively Capital Expenditures | Period | Amount (Millions USD) | | :----- | :-------------------- | | Q2 FY2025 | $3.4 | | H1 FY2025 | $6.3 | [Shareholder Returns](index=3&type=section&id=Shareholder%20Returns) Build-A-Bear continued to return capital to shareholders through share repurchases and quarterly dividends, utilizing $13.1 million in the first half of fiscal 2025 Return of Capital to Shareholders (H1 FY2025) | Activity | Amount (Millions USD) | Shares Repurchased | | :---------------- | :-------------------- | :----------------- | | Share Repurchases | $7.3 | 167,585 | | Quarterly Dividends | $5.8 | N/A | | **Total** | **$13.1** | N/A | - As of August 27, the company has **$80.3 million** remaining under its board-authorized **$100.0 million** stock repurchase program[10](index=10&type=chunk) [Operational Overview](index=2&type=section&id=Operational%20Overview) This section details the company's operational activities, focusing on store expansion and the growth of its global experience locations through partner-operated and franchise models [Store Activity and Global Expansion](index=2&type=section&id=Store%20Activity%20and%20Global%20Expansion) The company achieved net new unit growth of 14 global experience locations during the quarter, primarily driven by partner-operated and franchise models, reflecting its strategic focus on global expansion Q2 FY2025 Net New Unit Growth | Type of Location | Number | | :--------------------- | :----- | | Partner-operated | 9 | | Franchise | 6 | | Corporately-managed | -1 | | **Total Net New Units** | **14** | Global Locations at Q2 End FY2025 | Type of Location | Number | | :--------------------- | :----- | | Corporately-managed | 368 | | Partner-operated | 157 | | Franchise | 102 | | **Total Global Locations** | **627** | [Fiscal Year 2025 Outlook](index=3&type=section&id=Fiscal%20Year%202025%20Outlook) This section outlines the company's updated financial and operational guidance for fiscal year 2025, reflecting increased confidence in its growth trajectory and strategic initiatives [Updated Financial and Operational Guidance](index=3&type=section&id=Updated%20Financial%20and%20Operational%20Guidance) Build-A-Bear has increased its fiscal year 2025 guidance for revenue, pre-tax income, and net new unit growth, reflecting confidence in its business model and strategic initiatives, with the guidance considering various factors including tariffs, labor costs, and inflationary pressures - The company increases its 2025 revenue, pre-tax income, and net new unit guidance[11](index=11&type=chunk) Updated Fiscal Year 2025 Guidance | Metric | Guidance | | :-------------------------- | :------------------------------------ | | Total Revenues Growth | Mid-to-high-single-digit percentage | | Pre-Tax Income | $62 million to $70 million | | Net New Unit Growth | At least 60 experience locations (up from 50) | | Capital Expenditures | $20 million to $25 million | | Depreciation and Amortization | Approximately $16 million | | Income Tax Rate | 22% to 24% (excluding discrete items) | - Guidance considers current tariff rates, medical and labor costs, changes in freight expense, and ongoing inflationary challenges[12](index=12&type=chunk) [Supplemental Information](index=4&type=section&id=Supplemental%20Information) This section provides additional context about Build-A-Bear, clarifies the use of non-GAAP financial measures, addresses forward-looking statements, and details investor communication channels [About Build-A-Bear](index=4&type=section&id=About%20Build-A-Bear) Build-A-Bear is a multi-generational brand established in 1997, known for its interactive 'furry friend' creation experience, operating over 600 locations globally, alongside e-commerce and licensing agreements, and reported consolidated total revenues of $496.4 million for fiscal 2024 - Build-A-Bear is a multi-generational brand focused on its mission to 'add a little more heart to life,' allowing guests to create custom stuffed animals[17](index=17&type=chunk) - The company operates over **600** company-owned, partner-operated, and franchise experience locations worldwide, complemented by e-commerce and non-plush branded consumer categories via licensing[17](index=17&type=chunk) - Build-A-Bear Workshop, Inc. posted consolidated total revenues of **$496.4 million** for fiscal 2024[17](index=17&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) The press release includes financial results presented in accordance with GAAP and certain non-GAAP measures, which management uses to identify underlying business trends and provide useful information, emphasizing that these should not substitute GAAP results - Financial results are provided in accordance with GAAP and using certain non-GAAP financial measures, specifically historic income adjusted to exclude certain costs[14](index=14&type=chunk) - Management believes non-GAAP measures help identify underlying trends and provide useful information by excluding items not indicative of core operating results[14](index=14&type=chunk) - These non-GAAP measures should not be considered a substitute for or superior to GAAP results[14](index=14&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding future events and financial performance, which are based on current expectations and projections, involving risks and uncertainties that could cause actual results to differ materially, and the company does not undertake to publicly update them - The press release contains forward-looking statements reflecting current views on future events and financial performance, identified by words like 'expect,' 'plan,' 'anticipate,' 'believe,' 'estimate,' 'intend,' 'predict,' 'future,' 'potential' or 'continue'[18](index=18&type=chunk) - These statements are based only on current expectations and projections and involve risks and uncertainties that could cause actual results to differ materially[19](index=19&type=chunk) - The company does not undertake to publicly update or revise its forward-looking statements, except as required by law[20](index=20&type=chunk) [Webcast and Conference Call Details](index=4&type=section&id=Webcast%20and%20Conference%20Call%20Details) Build-A-Bear Workshop hosted a conference call on August 28, 2025, to discuss its financial results, with webcast and telephone replay options available for investors and financial analysts - A conference call was hosted on August 28, 2025, at 9:00 AM ET to discuss financial results[15](index=15&type=chunk) - The call was webcast on Build-A-Bear's Investor Relations website, and a replay will be available for one year[15](index=15&type=chunk)[16](index=16&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements, including statements of operations, balance sheets, and selected financial and store data for various periods [Statements of Operations (13 Weeks Ended August 2, 2025)](index=6&type=section&id=Statements%20of%20Operations%20(13%20Weeks%20Ended%20August%202%2C%202025)) This section presents the unaudited condensed consolidated statements of operations for the 13 weeks ended August 2, 2025, compared to the same period in the prior year, detailing revenues, cost of merchandise sold, gross profit, operating expenses, and net income Unaudited Condensed Consolidated Statements of Operations (13 Weeks) | Metric | August 2, 2025 (Thousands USD) | August 3, 2024 (Thousands USD) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Total revenues | $124,247 | $111,798 | | Consolidated gross profit | $71,511 | $60,569 | | Selling, general and administrative expense | $56,399 | $49,212 | | Income before income taxes | $15,318 | $11,545 | | Net income | $12,367 | $8,778 | | Diluted EPS | $0.94 | $0.64 | [Statements of Operations (26 Weeks Ended August 2, 2025)](index=7&type=section&id=Statements%20of%20Operations%20(26%20Weeks%20Ended%20August%202%2C%202025)) This section provides the unaudited condensed consolidated statements of operations for the 26 weeks ended August 2, 2025, compared to the prior year's first half, outlining the company's revenue streams, cost structure, and overall profitability for the period Unaudited Condensed Consolidated Statements of Operations (26 Weeks) | Metric | August 2, 2025 (Thousands USD) | August 3, 2024 (Thousands USD) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Total revenues | $252,642 | $226,528 | | Consolidated gross profit | $144,497 | $122,734 | | Selling, general and administrative expense | $109,954 | $96,774 | | Income before income taxes | $34,949 | $26,574 | | Net income | $27,686 | $20,237 | | Diluted EPS | $2.11 | $1.46 | [Balance Sheets (August 2, 2025)](index=8&type=section&id=Balance%20Sheets%20(August%202%2C%202025)) This section presents the unaudited condensed consolidated balance sheets as of August 2, 2025, February 1, 2025, and August 3, 2024, detailing assets, liabilities, and stockholders' equity Unaudited Condensed Consolidated Balance Sheets (Thousands USD) | Metric | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :------------------------------------ | :------------- | :--------------- | :------------- | | Total Assets | $318,238 | $289,956 | $279,459 | | Total Current Assets | $144,418 | $126,298 | $117,473 | | Cash, cash equivalents and restricted cash | $39,108 | $27,758 | $25,163 | | Inventories, net | $81,758 | $69,775 | $66,977 | | Total Liabilities | $162,843 | $150,874 | $153,668 | | Total Stockholders' Equity | $155,395 | $139,082 | $125,791 | [Selected Financial and Store Data](index=9&type=section&id=Selected%20Financial%20and%20Store%20Data) This section provides selected unaudited financial and store data, including retail gross margin, capital expenditures, depreciation and amortization, and the number and square footage of corporately-managed, franchised, and third-party retail locations Selected Financial Data (Thousands USD) | Metric | Q2 FY2025 | Q2 FY2024 | H1 FY2025 | H1 FY2024 | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | | Retail gross margin ($) | $66,083 | $55,848 | $134,101 | $114,301 | | Retail gross margin (%) | 57.6% | 54.0% | 57.3% | 54.1% | | Capital expenditures | $3,421 | $3,270 | $6,328 | $5,700 | | Depreciation and amortization | $3,668 | $3,636 | $7,368 | $7,294 | Store Data (End of Period) | Metric | H1 FY2025 | H1 FY2024 | | :------------------------------------ | :-------- | :-------- | | Total corporately-managed retail locations | 368 | 361 | | Number of franchised stores | 102 | 89 | | Number of third-party retail locations | 157 | 107 | | Total corporately-managed store square footage | 788,713 | 785,943 | [Reconciliation of GAAP to Non-GAAP Figures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Figures) This section provides a reconciliation of GAAP income before income taxes to the non-GAAP measure of Earnings before interest, taxes, depreciation and amortization (EBITDA) for the 13 and 26 weeks ended August 2, 2025, and August 3, 2024 Reconciliation of GAAP to Non-GAAP Figures (Thousands USD) | Metric | Q2 FY2025 | Q2 FY2024 | H1 FY2025 | H1 FY2024 | | :------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Income before income taxes (pre-tax) | $15,318 | $11,545 | $34,949 | $26,574 | | Interest (income) expense, net | $(206) | $(188) | $(406) | $(614) | | Depreciation and amortization expense | $3,668 | $3,636 | $7,368 | $7,294 | | **EBITDA** | **$18,780** | **$14,993** | **$41,911** | **$33,254** |

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1][2]. Company Overview: Build-A-Bear (BBW) - Build-A-Bear currently holds a Momentum Style Score of B and a Zacks Rank of 2 (Buy), indicating strong potential for performance [3][4]. - The stock has shown significant price increases, with a 17.45% rise over the past quarter and a remarkable 93.9% increase over the last year, outperforming the S&P 500's gains of 11.26% and 15.64% respectively [7]. Price Performance - Over the past week, BBW shares increased by 1.78%, while the Zacks Retail - Miscellaneous industry saw a 1.71% rise. The monthly price change for BBW is 7.41%, compared to the industry's 2% [6]. - The average 20-day trading volume for BBW is 233,606 shares, which serves as a bullish indicator when combined with rising stock prices [8]. Earnings Outlook - In the last two months, one earnings estimate for BBW has been revised upwards, increasing the consensus estimate from $3.84 to $3.88. For the next fiscal year, one estimate has also moved higher with no downward revisions [10]. Conclusion - Given the positive price trends and earnings outlook, BBW is positioned as a strong momentum pick, making it a noteworthy option for investors seeking growth [12].

Company Performance - Build-A-Bear (BBW) has returned approximately 21% year-to-date, significantly outperforming the Retail-Wholesale sector, which has returned an average of 7.1% [4] - The Zacks Consensus Estimate for BBW's full-year earnings has increased by 1.9% over the past quarter, indicating improving analyst sentiment and a positive earnings outlook [4] Industry Ranking - Build-A-Bear is part of the Retail - Miscellaneous industry, which includes 16 stocks and currently ranks 99 in the Zacks Industry Rank. This industry has gained an average of 8.2% year-to-date, showing that BBW is performing better than its peers in this category [6] - In comparison, J. Sainsbury PLC (JSAIY), another outperforming stock in the Retail-Wholesale sector, belongs to the Retail - Supermarkets industry, which has a lower ranking at 185 and has increased by 15.2% year-to-date [6] Zacks Rank - Build-A-Bear holds a Zacks Rank of 2 (Buy), which is indicative of its potential to outperform the market over the next one to three months based on earnings estimate revisions and improving earnings outlooks [3]

Core Viewpoint - Build-A-Bear (BBW) is positioned well to continue its trend of beating earnings estimates in upcoming quarterly reports [1] Earnings Performance - Build-A-Bear has a strong history of surpassing earnings estimates, averaging a 20.33% beat over the last two quarters [2] - In the last reported quarter, the company achieved earnings of $1.17 per share, exceeding the Zacks Consensus Estimate of $0.86 per share by 36.05% [3] - For the previous quarter, Build-A-Bear reported earnings of $1.59 per share against an expected $1.52 per share, resulting in a 4.61% surprise [3] Earnings Estimates and Predictions - Estimates for Build-A-Bear have been trending higher, supported by its history of earnings surprises [6] - The company currently has an Earnings ESP of +11.00%, indicating a bullish outlook from analysts regarding its earnings prospects [9] - The combination of a positive Earnings ESP and a Zacks Rank of 2 (Buy) suggests a high likelihood of another earnings beat [9] Importance of Earnings ESP - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [7] - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [8] - Monitoring a company's Earnings ESP prior to quarterly releases is crucial for increasing the odds of successful investment decisions [10]

Core Viewpoint - The article emphasizes the importance of identifying sustainable trends in short-term investing to maximize profits, highlighting the challenges investors face in maintaining momentum in stock prices [1][2]. Group 1: Stock Performance - Build-A-Bear (BBW) has shown a solid price increase of 23.2% over the past 12 weeks, indicating strong investor interest [4]. - BBW has maintained a price increase of 1.3% over the last four weeks, suggesting that the upward trend is still intact [5]. - The stock is currently trading at 86.8% of its 52-week high-low range, indicating a potential breakout opportunity [5]. Group 2: Fundamental Strength - BBW holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7]. Group 3: Investment Strategy - The "Recent Price Strength" screen is a useful tool for investors to identify stocks like BBW that are on an uptrend supported by strong fundamentals [3]. - The article suggests that there are several other stocks passing through the "Recent Price Strength" screen, providing additional investment opportunities [8].

Core Viewpoint - Build-A-Bear Workshop (NYSE: BBW) is experiencing revenue growth and expanding its physical and digital presence, leading to a positive outlook for the company [1]. Group 1 - The company was previously rated as a "Buy" due to its well-known retail brand and growth trajectory [1]. - Build-A-Bear Workshop is rewarding investors through dividends and share buybacks, indicating a commitment to returning value to shareholders [1].

Store Operations and Growth - As of May 3, 2025, the company operated 369 corporately-managed stores globally, 148 partner-operated locations, and 87 international franchised stores[71]. - The company expects net new unit growth of at least 50 locations in fiscal 2025, focusing on non-traditional locations including family-centric tourist sites[77]. - 52% of corporately-managed stores were in an updated Discovery format as of May 3, 2025, with plans to close certain stores in accordance with lease events[78]. - The company has made a concerted effort to shift to asset-light partner-operated and franchise locations, with over a third of total stores now in non-traditional settings[77]. - The number of third-party retail locations increased from 97 to 148, with partnerships including Carnival Cruise Line and Great Wolf Lodge Resorts[79]. - The number of franchised stores grew from 83 to 87, with plans for additional master franchise agreements in the future[81]. Financial Performance - The company reported growth in total revenues and pretax profit in fiscal years 2022, 2023, and 2024, driven by strategic initiatives implemented prior to and during the pandemic[77]. - Total revenues increased by $13.7 million or 11.9% to $129.5 million for the thirteen weeks ended May 3, 2025, compared to the same period in 2024[84]. - Net retail sales rose by $11.7 million or 10.9% to $119.6 million, driven by growth at existing stores and the opening of 51 third-party retail stores[84][85]. - Commercial revenue increased by $1.6 million or 27% to $7.6 million, primarily due to higher sales volume from wholesale accounts[87]. - Retail gross margin increased by $9.5 million to $68.0 million, with the retail gross margin rate improving by 270 basis points to 56.9%[89]. - EBITDA for the thirteen weeks ended May 3, 2025, increased by $4.9 million or 26.7% to $23.1 million, driven by increased retail and commercial margins[93]. Cash Flow and Capital Management - The company’s cash flows have improved significantly, allowing for increased support for key initiatives and returning capital to shareholders through dividends and share repurchases[77]. - Cash provided by operating activities increased by $17.4 million to $27.8 million, attributed to a decrease in accounts receivable and an increase in accounts payable[99]. - As of May 3, 2025, the company had a consolidated cash balance of $44.3 million, with no outstanding borrowings under its $25 million revolving credit agreement[98][102]. - Total capital spending for the thirteen weeks ended May 3, 2025, was $2.9 million, with an expected capital expenditure of approximately $20 to $25 million for fiscal 2025[105]. - Cash utilized for share repurchases was $4.2 million for 108,502 shares during the thirteen weeks ended May 3, 2025, compared to $9.2 million for 343,406 shares during the same period in the previous year[108]. Inventory and Purchase Obligations - Total inventory at quarter end was $72.3 million, reflecting an increase of $8.3 million or 13% from the end of the fiscal 2024 first quarter[106]. - Purchase obligations totaled approximately $100.7 million as of May 3, 2025, with $26.7 million due in the next 12 months[107]. Strategic Initiatives - The company aims to accelerate its digital transformation, enhancing marketing and loyalty programs to increase consumer engagement and expand its total addressable market[77]. - The company’s strategy includes expanding its e-commerce business and developing engaging content to broaden its consumer base beyond children[70]. - The company operates through three segments: Direct-to-Consumer, Commercial, and International franchising, leveraging its brand strength across these channels[73]. - The company’s retail stores serve as mini distribution centers, providing efficient omnichannel support for growing digital demand[74]. Economic and Operational Challenges - Inflation impacted business operations in fiscal 2024, primarily through rising store labor costs, with expectations for continued inflationary pressures into fiscal 2025[110]. - Leases in the U.K. and the Republic of Ireland require rent reviews every five years, with base rents adjusted to current market rates, potentially leading to higher operational costs[104]. - The company has secured longer-term leases with more favorable terms beginning in fiscal 2023, providing flexibility in aligning stores with market trends[103]. - Operating cash flows are believed to be sufficient to meet material cash requirements for at least the next 12 months[107]. - The company accelerated the acquisition of core products in anticipation of cost uncertainties due to potential tariffs[106]. - There have been no material changes to critical accounting estimates disclosed in the 2024 Form 10-K[113].

Core Points - Build-A-Bear launched the "Play It Forward" initiative, donating one plush animal for each make-your-own plush sold, with a goal of donating up to 10,000 bears to children in need [1][2] - The initiative aligns with the International Day of Play, which promotes children's right to play and supports their overall well-being [2][3] - Build-A-Bear Foundation is partnering with First Book, committing over $80,000 to provide educational resources and books focused on health and wellness for children in need [3] Company Overview - Build-A-Bear, established in 1997, is a multi-generational brand that allows guests to create their own stuffed animals, fostering emotional connections with consumers [5] - The company reported consolidated total revenues of $496.0 million for fiscal 2024 [5] - Build-A-Bear Foundation has donated over $25 million and 2 million furry friends to charitable causes since its inception [6]

Core Viewpoint - Build-A-Bear Workshop (NYSE: BBW) may not be the first stock that comes to mind for investors looking for great holding opportunities [1] Group 1 - The company is often overlooked in the investment community despite its potential [1]

Financial Data and Key Metrics Changes - The company reported record revenue of over $128 million, an increase of 11.9% year-over-year [6][20] - Pretax income grew by 30.6% to nearly $20 million, with an EPS increase of 42.7% to $1.17 [6][20] - The pretax margin rate for Q1 was 15%, compared to 3% in Q1 2019, indicating significant improvement [6][8] Business Line Data and Key Metrics Changes - Net retail sales increased by 10.9% to $119.6 million, with strong performance across all segments [20] - E-commerce demand rose by 0.5%, while commercial revenue, primarily from wholesale sales, grew by 28.3% [22][20] - The Mini Beans collectibles line expanded by 30% year-over-year, with total sales reaching nearly 2 million units [16] Market Data and Key Metrics Changes - Domestic store traffic increased by 3%, significantly outperforming the U.S. national traffic, which declined by 3% [21][20] - The company ended the quarter with over 600 locations, with 30% of those outside the United States [9][10] Company Strategy and Development Direction - The company is focused on three strategic initiatives: expanding experiential retail footprint, advancing digital transformation, and leveraging brand strength through investments [9][14] - Plans include opening at least 50 net new locations in 2025, primarily operated by international partners [25][13] - The company aims to enhance inventory management systems to better respond to market trends and consumer demands [14][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic and geopolitical challenges, reiterating revenue guidance for 2025 [8][18] - The company expects to report record revenue for the year, maintaining strong profitability with double-digit pretax margins [18][26] - Management highlighted the importance of a clean balance sheet and strong cash flow in supporting long-term growth initiatives [9][18] Other Important Information - The company returned over $7 million in capital to shareholders through dividends and share repurchases [6][20] - Inventory at quarter-end was $72.3 million, reflecting an increase due to accelerated purchases of core products [25] Q&A Session Summary Question: How will the company capitalize on movie-related events? - Management noted strong relationships with major film creators and the ability to leverage popular characters like Stitch for broader appeal beyond children [34][35] Question: How will the new inventory management system improve responsiveness to trends? - The new system will enhance real-time inventory visibility and allow for better movement of stock between e-commerce and physical stores, improving responsiveness to demand spikes [38][39] Question: How did the retail stores perform compared to expectations? - Retail stores exceeded expectations with positive traffic, conversion rates, and average unit retail, indicating effective execution by the team [47][48] Question: Who are the partners for operated stores and are there plans for more? - Partners include well-known firms in various markets, and the company is in negotiations for new partnerships while maintaining high standards for partner operations [51][54] 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 [62][63]