Build-A-Bear Workshop, Inc. (NYSE: BBW) today reported results
for the third quarter and 39 weeks ended November 2, 2019. In the
fiscal 2019 third quarter:
- Total revenues were $70.4 million compared to $68.7 million in
the fiscal 2018 third quarter, inclusive of a 2.0% increase in net
retail sales and a 17.9% increase in commercial revenue;
- Retail gross margin expanded to 39.5%, a 400-basis point
improvement compared to the fiscal 2018 third quarter;
- Selling, general and administrative expenses (“SG&A”) were
$35.4 million; as a percent of total revenue, the Company showed an
80-basis point improvement compared to the fiscal 2018 third
quarter; and
- Pre-tax loss was $7.7 million, a $2.3 million improvement from
the fiscal 2018 third quarter, or a $1.0 million improvement over
the prior period when adjusted for costs primarily related to
non-cash asset impairment charges.
Sharon Price John, Build-A-Bear Workshop President and Chief
Executive Officer, commented, “We continued to advance our strategy
to leverage the power of the Build-A-Bear brand as we increased
revenue and improved our pre-tax performance in the third quarter,
which is the smallest quarter of our fiscal year and typically
results in a loss. Net retail sales saw growth across geographies
in North America and Europe inclusive of our eighth consecutive
quarter of double-digit ecommerce growth while our diversification
initiatives delivered an increase in our commercial revenue
segment. We remain focused on evolving our company and leveraging
our brand strength as we expand into additional categories reaching
more consumers beyond the traditional mall-based retail model.”
Additional Third Quarter 2019 Highlights (13 weeks ended
November 2, 2019 compared to the 13 weeks ended November 3,
2018):
- Net retail sales were $66.6 million compared to $65.3 million
in the fiscal 2018 third quarter;
- Income tax benefit was $1.8 million, compared to an income tax
benefit of $3.9 million in the fiscal 2018 third quarter; and
- Net loss was $5.9 million, or $0.40 per share, compared to a
net loss of $6.1 million, or $0.42 per share, in the fiscal 2018
third quarter.
Store Activity:
The Company maintains a high level of lease optionality with
nearly 70% of corporately-managed stores having a lease option
within the next three years; accordingly, the Company continues to
expect to selectively close up to 30 locations over the next two
years partially offset by selective openings. As of November 2,
2019, the Company operated 371 corporately-managed locations,
including 315 in North America inclusive of 22 shop-in-shops within
select Walmart locations, and 56 outside of North America. Through
its third-party retail model, there were 54 stores in operation
with relationships that included Carnival Cruise Line, Great Wolf
Lodge Resorts, Landry’s Inc. and Beaches Family Resorts. The
Company’s international franchisees ended the quarter with 104
stores in 13 countries.
Balance Sheet:
As of November 2, 2019, cash and cash equivalents totaled $6.2
million. The Company ended the third quarter with no borrowings
under its revolving credit facility.
Total inventory at quarter-end was $66.2 million compared to
$57.3 million at the end of the fiscal 2018 third quarter. The
fiscal 2019 third quarter inventory increase was a result of the
receipt of inventory supporting key product stories and
acceleration of some receipts of China-sourced goods due to
potential tariffs. In the third quarter of fiscal 2019, capital
expenditures totaled $5.2 million and depreciation and amortization
were $3.6 million.
As the Company previously noted, for comparison purposes, on
February 3, 2019, it recorded lease liabilities of $176.2 million
upon adoption of the new lease accounting standard, also referred
to as ASC Topic 842, based on the present value of remaining lease
payments. A corresponding right-to-use asset of $151.5 million was
recorded on the balance sheet upon adoption which was net of
accrued and prepaid rent, deferred lease incentives and impairment
charges.
2019 Expectations (52 weeks ending February 1, 2020 compared
to the 52 weeks ended February 2, 2019):
On a GAAP basis, the Company is updating guidance for fiscal
2019 total revenue and depreciation and amortization.
For fiscal 2019, the Company currently expects:
- Fourth quarter total revenue to be in the range of slightly
positive to down low single-digit due to lower than expected
quarter-to-date traditional mall traffic and sales associated with
a key licensed movie property as well as the loss of revenue from
the developer’s delay in the opening of a planned flagship
location, resulting in total revenue for the fiscal year to be in
the flat to down low single-digit range;
- Pre-tax income to be slightly positive;
- Capital expenditures to be in the range of $12 to $14
million;
- Depreciation and amortization to be in the range of $14 to $15
million;
- Operating cash flow less capital expenditures to be positive
for the year; and
- To finish the year with $20 to $25 million in cash and cash
equivalents.
Although it does not expect its results to be impacted by the
following, the Company notes that the above guidance does not
include any potential end-of-year non-cash asset impairment charges
nor a significant variance in foreign currency exchange rates. The
Company has also noted that it continues to assume that there will
be no changes in the rate or effective date that have been
announced for the potential tariffs on China goods later this
year.
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 December 12, 2019. The telephone replay is available by
calling (844) 512-2921. The access code is: 13695127.
About Build-A-Bear
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
more than 450 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. Build-A-Bear Workshop, Inc.
(NYSE: BBW) posted total revenue of $336.6 million in fiscal 2018.
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 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
(including our ability to amend our credit facility on a timely
basis on terms acceptable to us or at all), 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 18, 2019 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.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES Unaudited
Condensed Consolidated Balance Sheets (dollars in thousands,
except per share data)
November 2, February 2,
November 3,
2019
2019
2018
ASSETS
Current assets: Cash and cash equivalents
$
6,167
$
17,894
$
8,631
Inventories
66,205
58,356
57,309
Receivables
10,250
10,588
12,962
Prepaid expenses and other current assets
6,327
12,960
16,848
Total current assets
88,949
99,798
95,750
Operating lease right-of-use asset
135,810
-
-
Property and equipment, net
65,954
66,368
73,343
Deferred tax assets
3,203
3,099
6,783
Other intangible assets, net
27
731
887
Other assets, net
2,734
2,050
2,091
Total Assets
$
296,677
$
172,046
$
178,854
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities: Accounts payable
$
18,390
$
22,551
$
18,179
Accrued expenses
9,985
10,047
7,559
Operating lease liability short term
31,537
-
-
Gift cards and customer deposits
19,141
21,643
18,580
Short-term borrowings
-
-
7,250
Deferred revenue and other
2,347
1,936
2,006
Total current liabilities
81,400
56,177
53,574
Operating lease liability long term
130,394
-
-
Deferred rent
-
18,440
18,066
Deferred franchise revenue
1,289
1,625
1,557
Other liabilities
1,651
1,490
1,765
Stockholders' equity: Common stock, par value $0.01
per share
152
150
150
Additional paid-in capital
69,955
69,088
68,274
Accumulated other comprehensive loss
(11,927)
(12,018)
(12,049)
Retained earnings
23,763
37,094
47,517
Total stockholders' equity
81,943
94,314
103,892
Total Liabilities and Stockholders' Equity
$
296,677
$
172,046
$
178,854
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income
(dollars in thousands, except share and per share data)
13 Weeks 13 Weeks Ended Ended
November 2, % of Total November 3, % of
Total
2019
Revenues (1)
2018
Revenues (1)
Revenues: Net retail sales
$
66,575
94.6
$
65,298
95.0
Commercial revenue
2,560
3.6
2,171
3.2
International franchising
1,249
1.8
1,225
1.8
Total revenues
70,384
100.0
68,694
100.0
Cost of merchandise sold:
Cost of merchandise sold - retail (1)
40,284
60.5
42,129
64.5
Cost of merchandise sold - commercial (1)
1,412
55.2
773
35.6
Cost of merchandise sold - international franchising (1)
962
77.0
731
59.7
Total cost of merchandise sold
42,658
60.6
43,633
63.5
Consolidated gross profit
27,726
39.4
25,061
36.5
Selling, general and administrative expense
35,412
50.3
35,069
51.1
Interest expense (income), net
8
0.0
(16)
(0.0)
Income (loss) before income taxes
(7,694)
(10.9)
(9,992)
(14.5)
Income tax expense (benefit)
(1,821)
(2.6)
(3,928)
(5.7)
Net income (loss)
$
(5,873)
(8.3)
$
(6,064)
(8.8)
Income (loss) per common share: Basic
$
(0.40)
$
(0.42)
Diluted
$
(0.40)
$
(0.42)
Shares used in computing common per share amounts: Basic
14,752,307
14,590,614
Diluted
14,752,307
14,590,614
(1)
Selected statement of income 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.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income
(dollars in thousands, except share and per share data)
39 Weeks 39 Weeks Ended Ended
November 2, % of Total November 3, % of
Total
2019
Revenues (1)
2018
Revenues (1)
Revenues: Net retail sales
$
222,837
95.3
$
227,760
96.9
Commercial revenue
8,507
3.6
4,245
1.8
International franchising
2,616
1.1
3,051
1.3
Total revenues
233,960
100.0
235,056
100.0
Costs and expenses:
Cost of merchandise sold - retail (1)
126,722
56.9
134,115
58.9
Cost of merchandise sold - commercial (1)
3,887
45.7
1,843
43.4
Cost of merchandise sold - international franchising (1)
2,417
92.4
1,650
54.1
Total cost of merchandise sold
133,026
56.9
137,608
58.5
Consolidated gross profit
100,934
43.1
97,448
41.5
Selling, general and administrative expense
106,940
45.7
109,334
46.5
Interest expense (income), net
21
0.0
5
0.0
Income (loss) before income taxes
(6,027)
(2.6)
(11,891)
(5.1)
Income tax expense (benefit)
(126)
(0.1)
(4,381)
(1.9)
Net income (loss)
$
(5,901)
(2.5)
$
(7,510)
(3.2)
Income (loss) per common share: Basic
$
(0.40)
$
(0.51)
Diluted
$
(0.40)
$
(0.51)
Shares used in computing common per share amounts: Basic
14,697,592
14,597,255
Diluted
14,697,592
14,597,255
(1)
Selected statement of income 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.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Selected Financial and Store Data (dollars in
thousands)
13 Weeks 13 Weeks 39 Weeks
39 Weeks Ended Ended Ended Ended
November 2, November 3, November 2,
November 3,
2019
2018
2019
2018
Other financial data: Retail gross margin ($) (1)
$
26,291
$
23,169
$
96,115
$
93,645
Retail gross margin (%) (1)
39.5%
35.5%
43.1%
41.1%
Capital expenditures (2)
$
5,155
$
1,742
$
10,099
$
8,853
Depreciation and amortization
$
3,561
$
4,048
$
10,359
$
12,186
Store data (3): Number of corporately-managed retail
locations at end of period North America
315
312
Europe
55
58
Asia
1
1
Total corporately-managed retail locations
371
371
Number of franchised stores at end of period
104
94
Corporately-managed store square footage at end of period
(4) North America
719,277
729,445
Europe
78,786
81,198
Asia
1,750
1,750
Total square footage
799,813
812,393
(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.
(2)
Capital expenditures represents cash paid for property, equipment,
other assets and other intangible assets.
(3)
Excludes e-commerce. North American stores are located in the
United States, Canada and Puerto Rico. In Europe, stores are
located in the United Kingdom, Ireland and Denmark. In Asia, the
store is located in China.
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191205005289/en/
Investors: Voin Todorovic Build-A-Bear Workshop 314.423.8000
x5221
Media: Public Relations PR@buildabear.com
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