For Second Quarter 2016:
ST. LOUIS - (BUSINESS WIRE) - August 4, 2016 - Build-A-Bear Workshop, Inc. (NYSE:BBW) today reported results for the 2016 second quarter and 26 weeks ended July 2, 2016. Second quarter results included expansion in merchandise margin with consolidated comparable sales and pre-tax loss in line with guidance, including a negative impact of $0.5 million in currency losses due to the re-measurement of the Company’s balance sheet driven by the unexpected weakening of the British pound sterling versus the U.S. dollar at quarter end.
Sharon Price John, Build-A-Bear Workshop President and Chief Executive Officer, commented, “In the quarter, we continued to focus on executing our strategy of positioning our stores and company to achieve our long term sales and profitability goals. With that in mind, our results included an anticipated decline in consolidated comparable sales given the strength of last year’s Minions collection and an expected pre-tax loss within our guidance, inclusive of the unexpected negative foreign exchange impact.
“Our Discovery format stores continued to deliver positive results compared to our heritage stores on key metrics including sales growth and contribution margin. This positive performance, along with our strong merchandise lineup in the second half, positions us to achieve pre-tax income expansion for fiscal 2016 of 15% to 25%, which excludes the impact of foreign exchange given that we are unable to predict future fluctuations,” concluded Ms. John.
Second Quarter Fiscal 2016 Highlights (13 weeks ended July 2, 2016, compared to the 13 weeks endedJuly 4, 2015):
First Six Months Fiscal 2016 Highlights (26 weeks ended July 2, 2016, compared to the 26 weeks endedJuly 4, 2015):
During the second quarter, the Company had six store openings, six closures and completed 13 store remodels. As of July 2, 2016, the Company operated 321 company-owned stores, including 31 in its new Discovery format, with 263 locations in North America, 57 in Europe and one in China. The Company’s international franchisees ended the period with 77 stores in 11 countries.
The Company ended the fiscal 2016 second quarter with cash and cash equivalents totaling $10.2 million and no borrowings under its revolving credit facility. Total inventory at quarter-end was $55.5 million compared to$50.4 million in the prior year, an increase of 10.1%. In the fiscal 2016 second quarter, capital expenditures were $5.7 million, and depreciation and amortization were $3.8 million.
In May 2016, the Company announced that its Board of Directors had authorized an exploration of a full range of strategic alternatives. The Company retained Guggenheim Securities, LLC as its financial advisor and Bryan Cave LLP as its legal counsel to assist with the strategic review.
No timetable has been set for the Company’s review process. The Company does not expect to comment further or update the market with any additional information on the process unless and until its Board of Directors deems disclosure appropriate or necessary. There is no assurance that this exploration will result in any strategic alternatives being announced or executed.
For fiscal 2016, the Company has adjusted certain expectations in consideration of the recent unexpected fluctuations of foreign exchange. The Company’s current expectations are as follows:
To increase shareholder value, the Company expects to continue to execute its “MORE” strategic plan with key initiatives in four areas outlined below:
The Company is focused on expanding its owned and operated locations in 2016 by adding approximately 15 to 20 stores, net of closures. Through a combination of remodels and new openings, the Company finished the quarter with 31 Discovery locations including the Company’s first store in mainland China at Disneytown at theShanghai Disney Resort which opened in June. The Company also plans to continue to diversify its real estate portfolio with the addition of outlet format stores, shop-in-shops and seasonal pop-up locations. The Company also launched a branded experience on board Carnival Cruise Line ships through a wholesale agreement. The Company expects Carnival to expand the Build-A-Bear branded experience to 10 ships by the end of 2016.
The Company plans to continue to develop and expand its offering of intellectual property concepts designed to appeal to key consumer segments. To that end, the Company’s new Horses & Hearts Riding Club collection was launched for its older girl segment delivering higher than average dollars per transaction. In addition, the Company recently launched another proprietary collection called Monster Mixters which allows consumers to add colorful arms and legs to cute monster bodies. Separately, as part of the Company’s expanding outbound licensing programs, Spin Master Corp. has launched a new Build-A-Bear branded toy line which is expected to be supported with national television advertising in the second half of 2016.
The Company expects to leverage its relationships with key licensors to reach more people through a compelling offering of affinity, collectible, entertainment, sports and fashion properties. The Company has key second half offerings of licensed products, including an updated Disney Princess collection, a product line tied to DreamWorks Animation’s film, Trolls, and updated Star Wars products in advance of the next film release expected in December. The Company also expects to build on its eight consecutive quarters of consolidated e-commerce growth with enhanced enterprise selling capabilities which will allow consumers to order in store for home delivery. This program is rolling out in stores across the U.S. in advance of the holiday season.
The Company expects to increase its 2016 pre-tax income by 10% to 20% compared to the prior year GAAP results, which reflects its current estimate of foreign exchange. Excluding the impact of foreign exchange, pre-tax income is expected to grow 15% to 25% by the disciplined execution of its stated strategies, including those initiatives detailed above as well as its on-going efforts in process improvement and organizational efficiency, system upgrades, value engineering and strategic pricing to enhance merchandise margins.
Build-A-Bear Workshop will host a live Internet webcast of its quarterly investor conference call at 9 a.m. ETtoday. The audio broadcast may be accessed at the Company’s investor relations Web site,http://IR.buildabear.com. The call is expected to conclude by 10 a.m. ET.
A replay of the conference call webcast will be available in the investor relations Web site for one year. A telephone replay will be available beginning at approximately noon ET today until midnight ET on August 11, 2016. The telephone replay is available by calling 885.384.5517. The access code is 13641175.
Founded in St. Louis in 1997, Build-A-Bear, a global brand kids love and parents trust, seeks to add a little more heart to life. Build-A-Bear Workshop has approximately 400 stores worldwide where guests can create customizable furry friends, including company-owned stores in the United States, Canada, Denmark, Ireland,Puerto Rico, the United Kingdom and China, and franchise stores in Africa, Asia, Australia, Europe, Mexico and the Middle East. The company was named to the FORTUNE 100 Best Companies to Work For® list for the eighth year in a row in 2016. Build-A-Bear Workshop, Inc. (NYSE:BBW) posted a total revenue of $377.7 million in fiscal 2015. For more information, visit the Investor Relations section of buildabear.com.
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 the potential outcome of exploring strategic alternatives, 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”) onMarch 17, 2016 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 theSEC 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.
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Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold - retail and cost of merchandise sold - commercial that are expressed as a percentage of net retail sales and commercial revenue, respectively. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales and commercial revenue and immaterial rounding.
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SOURCE Build-A-Bear Workshop, Inc.
Voin Todorovic
Investor Relations
Build-A-Bear Workshop
314-423-8000 x5221
Beth Kerley
Media Relations
Build-A-Bear Workshop
bethk@buildabear.com
Founded in St. Louis in 1997, Build-A-Bear, a global brand kids love and parents trust, seeks to add a little more heart to life.