For the first quarter of fiscal 2019:
- Total Revenues increase to $84.4
million from $83.2 million in the first quarter of fiscal
2018
- Pre-Tax Income rises to $2.4 million
from $0.6 million in the first quarter of fiscal 2018
Build-A-Bear Workshop, Inc. (NYSE: BBW) today reported results
for the first quarter, 13-weeks ended May 4, 2019.
Sharon Price John, Build-A-Bear Workshop President and Chief
Executive Officer, commented, “We have had a solid start to the
year with growth in total revenues, expansion in gross margin and
disciplined expense management resulting in a $1.8 million increase
in first quarter pre-tax income compared to the same period in the
prior fiscal year. Other highlights in this year’s first quarter
include a significant increase in commercial revenue as strategies
to diversify revenue streams by leveraging the power of our brand
continued to gain traction. We also delivered our sixth consecutive
quarter of double-digit e-commerce growth as initiatives in both
gifting and affinity programs gained momentum. In addition, we
continue to focus on our Count Your Candles birthday program which
has consistently driven new guest acquisition and Bonus Club
membership. As we expected, a stronger slate of family-centric
movies had a positive impact on sales of products tied to the
films, and we saw traffic levels at Build-A-Bear Workshop stores
outpace national trends although still slightly negative versus the
prior year. Sales growth in North America was partially offset by
ongoing double-digit sales declines in our largest international
market, the United Kingdom, which is expected to have uncertainty
throughout the year.
“Although we will be up against heavy promotional activity that
occurred last year, we are encouraged by the positive trends thus
far in the second quarter and expect to benefit from additional
movie releases slated throughout the year. Furthermore, we are
actively working to expand a number of key relationships that are
expected to positively impact the business. Overall, we remain
confident that the ongoing implementation of our strategy to
leverage the power of the Build-A-Bear brand will result in
long-term profitable growth and enhanced value for our
shareholders,” concluded Ms. John.
First Quarter 2019 Highlights (13 weeks ended May 4, 2019
compared to the 13 weeks ended May 5, 2018):
- Total revenues were $84.4 million
compared to $83.2 million in the fiscal 2018 first quarter;
- Consolidated net retail sales were
$81.0 million compared to $81.4 million in the fiscal 2018 first
quarter;
- Retail gross margin expanded 90 basis
points to 45.2%, this increase was mainly driven by merchandise
margin expansion and lower occupancy costs;
- Selling, general and administrative
expenses (“SG&A”) were $35.8 million, or 42.4% of total
revenues, compared to $36.3 million, or 43.7% of total revenues, in
the fiscal 2018 first quarter;
- Pre-tax income was $2.4 million
compared to $0.6 million in the fiscal 2018 first quarter;
- Income tax expense was $1.2 million
with an effective tax rate of 50.3% compared to $0.3 million with
an effective rate of 45.2% in the fiscal 2018 first quarter. The
income tax expense in the first quarter of fiscal 2019 was higher
than the statutory rate primarily because no tax benefit was
recorded on losses in certain foreign jurisdictions; and
- Net income was $1.2 million, or $0.08
per diluted share, compared to $0.4 million, or $0.02 per diluted
share, in the fiscal 2018 first quarter.
Store Activity:
In the first quarter of fiscal 2019, the Company did not open
any new stores, reformatted two stores and closed 5 locations. As
of May 4, 2019, the Company operated 366 corporately-managed
locations, including 307 in North America and 59 outside of North
America. In addition, the Company ended the first quarter of fiscal
2019 with four seasonal locations compared to two seasonal
locations at the end of the first quarter of fiscal 2018. The
Company’s international franchisees ended the quarter with 90
stores in 12 countries.
Balance Sheet:
At quarter end, the Company had cash and cash equivalents of
$20.2 million, an increase of $1.4 million compared to the prior
year quarter end and had no borrowings under its revolving credit
facility. Total inventory at quarter-end was $56.0 million compared
to $49.4 million at the end of the fiscal 2018 first quarter due to
an increase in inventory related to the timing of new movie
launches as well as in-transit inventory to support new product
introductions. In the first quarter of fiscal 2019, capital
expenditures totaled $2.7 million and depreciation and amortization
totaled $3.5 million.
On February 3, 2019, the Company recorded lease liabilities of
$177.5 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
$150.8 million was recorded on the balance sheet which was net of
accrued and prepaid rent, deferred lease incentives and impairment
charges. Impairment charges of $7.4 million (net of tax) were
recorded as a reduction to retained earnings in adopting the new
standard. The recognition of rent expense and payments associated
with these lease assets and liabilities will not result in material
differences to operating income or cash flows compared to the
previous accounting rules, nor does it impact the Company’s bank
agreement covenants.
Fiscal 2019 (52 weeks ended February 1, 2020 compared to the
52 weeks ended February 2, 2019) GAAP Expectations for the
Company currently include:
- Total revenues to increase in the range
of mid- to high-single digits;
- Pre-tax income to be slightly positive,
reflecting the increased sales as well as improved gross profit
margin;
- Capital expenditures to be in the range
of $13 to $15 million; and
- Depreciation and amortization to be in
the range of $15 to $17 million.
The Company notes that the above guidance assumes that there are
no material changes to current tariff rates or policies.
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 June 7, 2019. The telephone replay is available by calling
(844) 512-2921. The access code is 13691030.
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, 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 Statements of
Operations (dollars in thousands, except share and per share
data)
13 Weeks 13 Weeks Ended
Ended May 4, % of Total May 5,
% of Total
2019 Revenues (1) 2018 Revenues
(1) Revenues: Net retail sales $ 81,048 96.0 $ 81,425 97.9
Commercial revenue 2,754 3.3 1,019 1.2 International franchising
560 0.7 740 0.9 Total revenues 84,362 100.0
83,184 100.0 Cost of merchandise sold: Cost of merchandise
sold - retail (1) 44,421 54.8 45,385 55.7 Cost of merchandise sold
- commercial (1) 1,264 45.9 479 47.0 Cost of merchandise sold -
international franchising (1) 439 78.4 332 44.9 Total
cost of merchandise sold 46,124 54.7 46,196 55.5
Consolidated gross profit 38,238 45.3 36,988 44.5 Selling,
general and administrative expense 35,808 42.4 36,337 43.7 Interest
expense, net 20 0.0 5 0.0 Income (loss) before income
taxes 2,410 2.9 646 0.8 Income tax expense 1,213 1.4
292 0.4 Net income (loss) $ 1,197 1.4 $ 354 0.4 Income
(loss) per common share: Basic $ 0.08 $ 0.02 Diluted $ 0.08 $ 0.02
Shares used in computing common per share amounts: Basic 14,612,575
14,582,573 Diluted 14,738,240 14,722,989 (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.
BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES Unaudited Condensed Consolidated Balance
Sheets (dollars in thousands, except per share data)
May 4, February 2, May 5, 2019
2019 2018 ASSETS Current assets: Cash and cash
equivalents $ 20,238 $ 17,894 $ 18,881 Inventories, net 56,004
58,356 49,423 Receivables, net 8,836 10,588 8,968 Prepaid expenses
and other current assets 8,587 12,960
11,493 Total current assets 93,665 99,798 88,765
Operating lease right-of-use asset 145,025 - - Property and
equipment, net 65,357 66,368 76,410 Deferred tax assets 3,241 3,099
4,102 Other intangible assets, net 607 731 950 Other assets, net
2,224 2,050 2,427 Total
Assets $ 310,119 $ 172,046 $ 172,654
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 20,996 $ 22,551 $ 12,965 Accrued
expenses 7,608 10,047 8,739 Operating lease liability short term
29,769 - - Gift cards and customer deposits 19,026 21,643 17,007
Deferred revenue and other 2,006 1,936
1,893 Total current liabilities 79,405
56,177 40,604 Operating lease
liability long term 139,407 - - Deferred rent liability long term -
18,440 17,697 Deferred franchise revenue 1,580 1,625 1,142 Other
liabilities 1,287 1,490 1,794 Stockholders' equity:
Common stock, par value $0.01 per share 149 150 151 Additional
paid-in capital 69,550 69,088 66,908 Accumulated other
comprehensive loss (12,120 ) (12,018 ) (11,546 ) Retained earnings
30,861 37,094 55,904
Total stockholders' equity 88,440 94,314
111,417 Total Liabilities and Stockholders'
Equity $ 310,119 $ 172,046 $ 172,654
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Selected Financial and Store Data (dollars in
thousands)
13 Weeks 13 Weeks
Ended Ended May 4, May 5, 2019
2018 Other financial data: Retail gross
margin ($) (1) $ 36,627 $ 36,040 Retail gross margin (%) (1) 45.2 %
44.3 % Capital expenditures (2) $ 2,733 $ 3,030 Depreciation and
amortization $ 3,512 $ 4,115
Store data
(3): Number of corporately-managed retail locations
at end of period North America 307 292 Europe 58 57 Asia 1 1
Total corporately-managed retail locations 366 350
Number of franchised stores at end of period 90 96
Corporately-managed store square footage at end of period
(4) North America 712,782 715,197 Europe 83,344 79,236 Asia 1,750
1,750 Total square footage 797,876 796,183
(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,
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.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190531005108/en/
Investors:Voin TodorovicBuild-A-Bear Workshop(314) 423-8000
x5221
Media:PR@buildabear.com
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