Build-A-Bear Workshop(BBW) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for fiscal 2022 were $468 million, a 14% increase over fiscal 2021, with pretax income rising by 22% to$ 62 million, marking the most profitable year in the company's history [5][6][30] - In Q4 2022, total revenues reached $145.1 million, an 11.6% increase compared to$ 130 million in Q4 2021, with net retail sales increasing by 10% to $138.2 million [30][31] - Gross profit margin improved to 55%, up 150 basis points from the previous year, driven by lower freight costs and better leverage of fixed occupancy expenses [31] Business Line Data and Key Metrics Changes - E-commerce sales rose by 0.9% in Q4 2022, showing sequential improvement from Q3 [30][31] - The commercial revenue segment, which includes third-party retail and licensing, increased by over 60% in 2022 compared to the prior year [17] Market Data and Key Metrics Changes - The company reported that approximately 40% of its end users are now teens and adults, expanding its addressable market beyond families with younger children [10][11] - The company opened over 20 new experience locations in 2022, contributing to organic growth from existing locations [15][19] Company Strategy and Development Direction - The company aims to continue its digital transformation, evolve experience location formats, and leverage solid financial management to drive growth and shareholder value [10][11][12] - The strategy includes expanding its licensing portfolio with popular properties and enhancing its omnichannel capabilities to improve customer engagement [24][25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth for 2023, expecting total revenues to increase by 5% to 7% and pretax income to grow by 10% to 15% compared to fiscal 2022 [36][37] - The company is optimistic about the impact of new experience locations and the ongoing recovery of the party business, which is expected to contribute positively to revenue [18][19][58] Other Important Information - The company ended fiscal 2022 with over$ 42 million in cash and no borrowings on its revolving credit facility, positioning it well for future investments [6][34] - A special cash dividend of $1.50 per share was declared, reflecting the company's commitment to returning value to shareholders [35] Q&A Session Summary Question: Discussion on party business ramp-up - Management noted that the party business started in April of the previous year and has not yet reached its anniversary, indicating potential for further growth [41] Question: Licensing opportunities for children's movies - Management highlighted ongoing relationships with companies expecting to premiere feature films and expressed optimism about cross-promotional opportunities with theaters [44][45] Question: Inventory management amidst licensing growth - Management emphasized the importance of controlling product from inception to sale and diversifying sourcing to manage inventory effectively [50][53] Question: Same-store sales growth expectations - Management indicated that growth in 2023 is expected to come from existing store productivity and new store openings, with a favorable comparison to the previous year [57][58]