For fiscal 2017:
ST. LOUIS - (BUSINESS WIRE) - Feb. 15, 2018 - Build-A-Bear Workshop, Inc. (NYSE:BBW) today reported results for the fourth quarter and fiscal year ended December 30, 2017.
Sharon Price John, Build-A-Bear Workshop President and Chief Executive Officer, commented, “During fiscal 2017, we advanced our strategy as additional groundwork was laid to further leverage the power of the Build-A-Bear brand while we simultaneously improved the profitability of our retail channel highlighted by expansion in retail gross margin, which contributed to pre-tax income that exceeded guidance. During the year, we made operational improvements enabling us to drive conversion and deliver our highest dollars-per-transaction in history, which partially offset the traditional mall traffic challenges. We also continued to evolve our real estate portfolio with more productive formats that have lower overall costs. In advance of the holiday season, we upgraded our e-commerce platform and relaunched our website, which contributed to growth of almost 12% from this channel for the quarter, and, when combined with our redeveloped store base, positions us to advance key omni-channel initiatives. Specifically, in the year ahead, we are planning to more fully participate in the changing patterns of shoppers and connect more closely with consumers through elevated social and digital marketing and a recently updated loyalty program. We remain focused on the continued execution of our strategy and ongoing effort to drive long-term profitable growth.”
Additional Fiscal Year 2017 Details (52 weeks ended December 30, 2017, compared to 52 weeks ended December 31, 2016):
Fourth Quarter 2017 Highlights (13 weeks ended December 30, 2017, compared to the 13 weeks ended December 31, 2016):
Store Activity:
In fiscal 2017, the Company opened 41 locations, closed 26 locations and remodeled or reformatted 23 stores into a Discovery format, ending the year with 29% of its store base in an updated Discovery format. As of December 30, 2017, the Company operated 361 corporately-managed locations, including 301 in North America and 60 outside of North America. The Company’s international franchisees ended the year with 102 stores in 12 countries.
Balance Sheet:
As of December 30, 2017, cash and cash equivalents totaled $30.4 million. The Company ended fiscal 2017 with no borrowings under its revolving credit facility. Total inventory at year-end was $53.1 million compared to $51.9 million at 2016 year-end, an increase of 2.4%. In fiscal 2017, capital expenditures totaled $18.1 million and depreciation and amortization was $16.2 million.
Share Repurchase:
The Company repurchased 401,400 shares of its common stock for $3.7 million in the fiscal 2017 fourth quarter bringing total shares repurchased to 513,725 for the fiscal year. At year-end, the Company had $15.3 million remaining on the share repurchase authorization that was adopted in August 2017. Since the end of its 2017 fiscal year, the Company purchased an additional 616,141 shares of common stock for $5.3 million.
Fiscal Year Change:
The Company's Board of Directors approved a change in the Company’s fiscal year-end, which previously ended on the Saturday closest to December 31, to the Saturday closest to January 31. This change was effective immediately following the end of the Company’s 2017 fiscal year. A one fiscal month transition period, December 31, 2017 through February 3, 2018, will be reported on the Company’s Form 10-Q along with results for the quarter ending May 5, 2018. The first 12-month fiscal year under the new calendar will encompass February 4, 2018 through February 2, 2019. Select recast unaudited historical financial information for the four quarterly periods of fiscal 2016 (which, based on the new fiscal year, would have ended on April 30, 2016; July 30, 2016; October 29, 2016; and January 28, 2017) and the first three quarterly periods of fiscal 2017 (which, based on the new fiscal year, would have ended on April 29, 2017; July 29, 2017; and October 28, 2017) is included in this press release as well as posted on the Company’s website under the Investor Relations link.
Accounting Changes Impacting Revenue Recognition:
In May 2014, the FASB issued Accounting Standards Codification (ASC) Topic 606, “Revenue from Contracts with Customers,” a replacement of Revenue Recognition Topic 605. The Company adopted Topic 606 on December 31, 2017. While the majority of the Company’s revenues are not impacted by Topic 606, the timing of the recognition of breakage revenue for certain gift cards changes. Previously, the Company recognized gift card breakage after 60 months for certain gift cards, while the new standard requires that gift card breakage be recognized based on actual redemption experience. Upon adoption, the Company recorded a pre-tax cumulative effect adjustment to retained earnings of approximately $12.3 million representing gift card breakage revenue not previously recognized that was accelerated due to Topic 606. The change will negatively impact the Company’s fiscal 2018 total revenue and pre-tax income by $3.9 million with the remaining balance of the cumulative effect adjustment predominantly impacting fiscal years 2019 and 2020.
Tax Implications of the Tax Cuts and Jobs Act (TCJA):
On December 22, 2017, the TCJA was enacted, which, among other items, reduced the U.S. federal corporate tax rate to 21% effective January 1, 2018. Due to the Company’s net deferred tax asset position at the end of fiscal year 2017, the Company recorded a provisional one-time, non-cash tax expense of $1.4 million increasing its tax rate by 15 percentage points and 10.5 percentage points for the fourth quarter 2017 and fiscal year 2017, respectively. Following this adjustment, the Company expects to have an ongoing benefit of a reduction in its federal tax rates.
2018 Preliminary Expectations:
The Company is providing guidance for its preliminary GAAP expectations for fiscal year 2018, (52 weeks ending February 2, 2019). On a GAAP basis, the Company currently expects:
Today’s Conference Call Webcast:
Build-A-Bear Workshop will host a live internet webcast of its quarterly investor conference call at 9 a.m. ET today. The audio broadcast may be accessed at the Company’s investor relations website, 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 website for one year. A telephone replay will be available beginning at approximately noon ET today until midnight ET on February 22, 2018. The telephone replay is available by calling (844) 512-2921. The access code is 13675714.
Build-A-Bear is a global brand kids love and parents trust that seeks to add a little more heart to life. Build-A-Bear Workshop has over 400 stores worldwide where guests can create customizable furry friends, including corporately-managed stores in the United States, Canada, China, Denmark, Ireland, Puerto Rico, and the United Kingdom, 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 ninth year in a row in 2017. Build-A-Bear Workshop, Inc. (NYSE:BBW) posted total revenue of $357.9 million in fiscal 2017. 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 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”) on March 16, 2017 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.
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Voin Todorovic
Investor Relations
Build-A-Bear Workshop
314-423-8000 x5221
Beth Kerley
Build-A-Bear Workshop
Media Relations
bethk@buildabear.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20180215005344/en/
SOURCE Build-A-Bear Workshop, Inc.
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.