ST. LOUIS - (BUSINESS WIRE) - Aug. 26, 2021 - Build-A-Bear Workshop, Inc. (NYSE: BBW) today reported results for the second quarter and six months ended July 31, 2021. The Company noted that its historically best second quarter profit results followed a record performance in the fiscal 2021 first quarter leading to the Company’s strongest first six months performance in its nearly 25-year history.
Sharon Price John, Build-A-Bear Workshop President and Chief Executive Officer, commented, “Our positive trend continued in the second quarter as we once again delivered record-breaking profit as well as strong growth in total revenues over both the fiscal 2020 and 2019 second quarters. We believe these results reflect momentum that has been building from the execution of our stated strategy, agility to adapt to a rapidly evolving environment, and ability to accelerate key initiatives to drive sustained profitable growth, while recognizing that the business is also benefiting from pandemic-related factors such as pent-up demand and stimulus funds.
“We made progress in each area of strategic focus with the acceleration of our digital transformation including content and entertainment initiatives, the advancement of our retail capabilities and experiences, while maintaining a solid financial position to support our business and future growth. We look forward to continuing to leverage our strong brand appeal to a broad demographic base of consumers across multiple channels. Business trends have continued to be positive into the current third quarter and while we are navigating an environment with higher costs and a tight supply chain as well as monitoring the ongoing evolution of the pandemic, we are optimistic about our full-year performance and are again increasing our annual guidance,” Ms. John concluded.
Second Quarter Fiscal 2021 Results: (13 weeks ended July 31, 2021 compared to the 13 weeks ended August 1, 2020):
First Six Months Highlights (26 weeks ended July 31, 2021 compared to the 26 weeks ended August 1, 2020):
Store Activity:
As of July 31, 2021, the Company had 352 corporately-managed stores. The Company maintains a high level of lease optionality with over 70% of its corporately-managed stores having a lease event within the next three years.
The Company noted that its third-party retail model was showing a return to stability as locations associated with relationships that include Carnival Cruise Lines, Great Wolf Lodge Resorts, Landry’s and Beaches Family Resorts were mostly reopened. Separately, international franchise locations continued to be negatively impacted by COVID and experienced closures or operated under restrictions for a portion of the 2021 second quarter.
Balance Sheet:
At the end of the fiscal 2021 second quarter, the Company had cash and cash equivalents totaling $51.1 million compared to $25.3 million at the end of the fiscal 2020 second quarter. Inventory at quarter end was $47.3 million, compared to $55.5 million at the end of the fiscal 2020 second quarter.
In the fiscal 2021 second quarter, capital expenditures totaled $1.1 million compared to $0.5 million in the fiscal 2020 second quarter.
Outlook:
The Company believes its business performance has it positioned to exceed the expectations it previously issued with its first quarter earnings on May 26, 2021. The Company currently expects:
The Company notes that its updated guidance assumes no additional material COVID impact either in its supply chain or store operations.
In this press release, the Company’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures. In particular, the Company provides historic income and income per diluted share adjusted to exclude certain costs and accounting adjustments, which are non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying trends in the Company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the Company’s core operating results. These measures should not be considered a substitute for or superior to GAAP results. These non-GAAP financial measures are defined and reconciled to the most comparable GAAP measure later in this document.
Build-A-Bear Workshop will host a conference call and audio webcast to discuss its results today, August 26, 2021 at 9:00 a.m. Eastern Time.
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 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 April 15, 2021 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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(1) Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold - retail, cost of merchandise sold - commercial and cost of merchandise sold - international franchising that are expressed as a percentage of net retail sales, commercial revenue and international franchising, respectively. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales, commercial revenue or international franchising and immaterial rounding.
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(1)Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold - retail, cost of merchandise sold - commercial and cost of merchandise sold - international franchising that are expressed as a percentage of net retail sales, commercial revenue and international franchising, respectively. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales, commercial revenue or international franchising and immaterial rounding.
(2)Due to the charges primarily in the 26 weeks ended August 1, 2020, a separate line item was disclosed and expressed as a percentage of net retail sales.
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(1) Retail gross margin represents net retail sales less cost of merchandise sold - retail. Retail gross margin percentage represents retail gross margin divided by net retail sales. Store impairment is excluded from retail gross margin.
(2) Capital expenditures represents cash paid for property, equipment, and other assets.
(3) Excludes e-commerce. North American stores are located in the United States and Canada. In Europe, stores are located in the United Kingdom and Ireland. Seasonal locations not included in store count.
(4) Square footage for stores located in North America is leased square footage. Square footage for stores located in Europe is estimated selling square footage. Seasonal locations not included in the store count.
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(1) Represents the adjustment business and restart grants received from the United Kingdom government for business in the retail, hospitality and leisure sectors. These grants were provided on a per-property basis to support businesses through the latest lockdown restrictions as a result of the COVID-19 pandemic and to resume business when restrictions were eased.
(2) Represents COVID-19 related expenses at our stores, warehouse, and headquarters.
(3) Represents non-cash adjustments including asset impairment charges related to store fixed assets and right-of-use operating lease assets and bad debt expense or recoveries in the 13 weeks ending July 31, 2021 and August 1, 2020.
(4) Represents the consolidated impact of foreign exchange rates on the re-measurement of balance sheet items not denominated in functional currency recorded under the provisions of U.S. GAAP. This does not include any impact on margin associated with the translation of revenues or the foreign subsidiaries' purchase of inventory in U.S. dollars.
(5) As a result of the Company's full, global valuation allowance, the Company cannot realize an income tax benefit on these adjustments for the second quarters ending July 31, 2021 and August 1, 2020.
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(1) Represents the business and restart grants received from the United Kingdom government for business in the retail, hospitality and leisure sectors. These grants were provided on a per-property basis to support businesses through the latest lockdown restrictions as a result of the COVID-19 pandemic and to resume business when restrictions were eased.
(2) Represents COVID-19 related expenses at our stores, warehouse, and headquarters.
(3) Represents non-cash adjustments including asset impairment charges related to store fixed assets and right-of-use operating lease assets and bad debt expense or recoveries in the 13 and 26 weeks ending July 31, 2021 and August 1, 2020, and the 26 weeks ending August 3, 2019
(4) Represents the consolidated impact of foreign exchange rates on the re-measurement of balance sheet items not denominated in functional currency recorded under the provisions of U.S. GAAP. This does not include any impact on margin associated with the translation of revenues or the foreign subsidiaries' purchase of inventory in U.S. dollars.
(5) As a result of the Company's full, global valuation allowance, the Company cannot realize an income tax benefit on these adjustments for the year-to-date periods ending July 31, 2021 and August 1, 2020.
(6) Represents the impact of the technical correction related to qualified leasehold improvements resulting from the CARES Act occuring in the first quarter of fiscal 2020
(7) Represents the valuation allowance recorded on its net deferred tax assets in North America in the first quarter of fiscal 2020.
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SOURCE Build-A-Bear
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.