- Fourth quarter GAAP pre-tax income of $9.2 million, a 20.8%
increase compared to the prior year period
- Fourth quarter total revenue of $93.7 million, a 10.4%
decrease compared to the prior year period
- Fourth quarter e-commerce demand increases 104% compared to
the prior year period
- At year end, consolidated cash balance was $34.8 million, up
$8.1 million from fiscal 2019 year-end, with no borrowings on the
Company’s credit facility
Build-A-Bear Workshop, Inc. (NYSE: BBW) today reported results
for the fourth quarter and fiscal year 2020 ended January 30, 2021.
The Company noted that the actions that were taken to respond to
the COVID-19 pandemic combined with the disciplined execution of
its stated strategy, inclusive of the acceleration of its digital
transformation initiatives, led to growth in pre-tax income for the
fiscal 2020 fourth quarter as compared to the fiscal 2019 fourth
quarter.
The Company’s total revenues also exceeded guidance, although
still representing a decline compared to the prior year, largely
driven by ongoing negative impact of the pandemic on its retail
store operations as well as commercial and international
franchising revenue. The negative impact in corporately-managed
stores included a significant decline in traffic with an 18%
reduction in store operating days driven by the forced closure of
all of the Company’s locations in Europe for two-thirds of the
quarter and a reduction of approximately 25% in operating hours in
North America as compared to the fourth quarter of fiscal 2019.
Sharon Price John, Build-A-Bear Workshop President and Chief
Executive Officer commented, “During a year with great global
disruption, I am proud of our organization’s ability to rapidly
respond and make the changes needed to deliver $9.2 million in
pre-tax profit in the fourth quarter, an increase of over 20%
compared to the prior year and exceeding previously issued
guidance, as well as a stronger year-end cash position. Although
there were challenges, we were able to accelerate important
long-term strategic initiatives including moving forward with our
digital transformation and rapidly evolving our retail model and
capabilities while simultaneously managing our financial stability
and liquidity.
“As we begin fiscal 2021, our operations continue to be
negatively impacted by the pandemic with persistent temporary store
closures affecting direct-to-consumer as well as commercial and
international franchising revenue while e-commerce demand continues
to be very strong across geographies fueled by Valentine’s product
performance and the initial response to our Easter assortment. As
we look forward, we are excited to announce plans to launch a
product collection based on the highly popular Nintendo Switch
game, Animal Crossing™: New Horizons, later this quarter.
Separately, as announced yesterday, through our agreement with Sony
Picture Worldwide Acquisitions, we anticipate a fall release of
Honey Girls, a live-action film inspired by one of our popular
proprietary intellectual properties and product lines. We remain
focused on the advancement of our key strategies with the goal to
deliver profitable growth as the macro-environment stabilizes,”
concluded Ms. John continued.
Fourth Quarter 2020 Highlights (13 weeks ended January 30,
2021 compared to the 13 weeks ended February 1, 2020):
- Total revenues were $93.7 million compared to $104.6 million in
the fiscal 2019 fourth quarter reflecting:
- Net retail sales of $91.9 million, an 8.7% decline from the
fiscal 2019 fourth quarter with an 18% reduction in store operating
days driven by temporary store closures, fewer operating hours and
capacity limitations;
- Consolidated e-commerce demand (orders generated online to be
fulfilled from either the Company’s warehouse or its stores) rose
104% compared to the fiscal 2019 fourth quarter;
- Commercial and international franchise revenues were $1.8
million compared to $3.9 million in the 2019 fiscal fourth quarter
reflecting pandemic related operating closures; and
- Total revenues included positive impact of $1.1 million related
to the update of the Company’s gift card breakage rate due to lower
redemptions versus historical averages.
- Gross profit margin was 50.1% compared to 50.4% in the fiscal
2019 fourth quarter. These results include negative impact from
non-cash asset impairment costs and rent recorded for the Company’s
European stores for the full quarter despite the locations being
closed for two-thirds of the period. Positive benefits include the
impact related to gift card breakage with no associated costs and
reduced occupancy expenses due to prior renegotiations of lease
terms in the Company’s real estate portfolio;
- Selling, general and administrative expenses (“SG&A”) were
$37.8 million, a decrease of $7.4 million compared to the fiscal
2019 fourth quarter primarily due to lower payroll as a result of
reduced store operating hours, lower corporate expenses as part of
the Company’s cost containment initiatives, the positive impact of
currency fluctuations, and a significant reduction of store
marketing expense due to pandemic related store closures and
capacity limitations. The reduction in SG&A reflects
approximately $1.1 million in one-time benefits in the
quarter;
- GAAP pre-tax income was $9.2 million, a $1.6 million
improvement compared to the fiscal 2019 fourth quarter, or a $0.4
million increase over the prior period on an adjusted basis (see
reconciliation of GAAP to non-GAAP results);
- Income tax expense was $321,000, reflecting the Company’s
valuation allowance against net deferred tax assets. This compares
to income tax expense of $1.4 million in the fiscal 2019 fourth
quarter; and
- Net income was $8.8 million, or $0.57 per diluted share,
compared to net income of $6.2 million, or $0.42 per diluted share,
in the fiscal 2019 fourth quarter; on an adjusted basis, net income
increased $1.4 million to $0.47 per diluted share (see
reconciliation of GAAP to non-GAAP results).
Fiscal Year 2020 Highlights (52 weeks ended January 30, 2021
compared to the 52 weeks ended February 1, 2020):
- Total revenues were $255.3 million compared to $338.5 million
in the 2019 fiscal year, reflecting:
- Net retail sales of $249.2 million, a 23.0% decrease from the
2019 fiscal year with a 33.4% decline in store operating days
driven by temporary store closures, reduced operating hours and
capacity limitations;
- E-commerce demand rose 133% compared to 2019 fiscal year;
and
- Commercial and international franchise revenues were $6.1
reflecting pandemic related operating closures.
- Pre-tax loss was $21.8 million, compared to pre-tax income of
$1.6 million in the 2019 fiscal year;
- Income tax expense was $2.8 million, compared to income tax
expense of $1.3 million in the 2019 fiscal year; and
- Net loss was $24.6 million, or ($1.65) per share, as compared
to net income of $0.3 million, or $0.02 per diluted share in the
2019 fiscal year.
Store Activity: As of January 30, 2021, the Company had
354 corporately-managed stores with select locations continuing to
be temporarily closed by government mandated restrictions. While
the Company’s response to the pandemic included renegotiating over
90% of its corporately-managed store leases in fiscal 2020, it
maintains a high level of lease optionality with over 75% of
locations having a lease event within the next three years.
Separately, locations associated with the Company’s third-party
retail model with relationships that include Carnival Cruise Lines,
Great Wolf Lodge Resorts, Landry’s, and Beaches Family Resorts, as
well as international franchise locations, were either closed or
operated under restrictions for a portion of the 2020 fiscal
year.
Balance Sheet: As of January 31, 2021, total cash totaled
$34.8 million, a 30% increase over the prior year-end. The Company
ended the fiscal year with no borrowings under its revolving credit
facility.
Total inventory at year-end was $46.9 million, down 12.1% from
fiscal 2019 year-end. For fiscal 2020, capital expenditures totaled
$5.0 million and depreciation and amortization were $13.2
million.
Fiscal Year 2021 Expectations: For fiscal 2021, the
Company currently expects EBITDA to be higher than fiscal 2019
EBITDA of $15.3 million. The Company also expects to achieve EBITDA
in the range of $20-$30 million by fiscal 2023. This outlook
assumes the reopening of the Company’s European locations by the
end of the first quarter and no additional significant closures due
to government mandates in fiscal 2021 as well as a more stable
economic and retail environment in fiscal 2022 and beyond.
In addition, for fiscal 2021, the Company currently expects
capital expenditures to approximate $5 - $10 million and for
depreciation and amortization to be in the range of $13 - $14
million.
Note Regarding Non-GAAP Financial Measures 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.
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 March 17, 2021. The telephone replay is available by calling
(844) 512-2921. The access code is: 13716491.
About Build-A-Bear Build-A-Bear is a multi-generational
global brand focused on its mission to “add a little more heart to
life” appealing to a wide array of consumer groups who enjoy the
personal expression in making their own “furry friends” to
celebrate and commemorate life moments. Nearly 500 interactive
brick-and-mortar retail locations operated through a variety of
formats provide guests of all ages a hands-on entertaining
experience, which often fosters a lasting and emotional brand
connection. The company also offers an engaging e-commerce/digital
purchasing experience called the “Bear-Builder” at
www.buildabear.com. In addition, extending its brand power beyond
retail, Build-A-Bear Entertainment, a subsidiary of Build-A-Bear
Workshop, Inc., is dedicated to creating engaging content for kids
and adults that fulfills the company’s mission, while the company
also offers products at wholesale and in non-plush consumer
categories via licensing agreements with leading manufacturers.
Build-A-Bear Workshop, Inc. (NYSE: BBW) posted total revenue of
$255.3 million in fiscal 2020. 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 16, 2020 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 Ended
January 30, 2021
% of TotalRevenues (1)
13 Weeks Ended
February 1, 2020
% of TotalRevenues (1) Revenues: Net retail sales
$
91,856
98.1
$
100,654
96.3
Commercial revenue
1,370
1.5
3,385
3.2
International franchising
434
0.4
544
0.5
Total revenues
93,660
100.0
104,583
100.0
Cost of merchandise sold:
Cost of merchandise sold - retail (1)
45,606
49.6
49,930
49.6
Store asset impairment
302
0.3
—
0.0
Cost of merchandise sold - commercial (1)
528
38.5
1,545
45.6
Cost of merchandise sold - international franchising (1)
299
68.9
419
77.0
Total cost of merchandise sold
46,735
49.9
51,894
49.6
Consolidated gross profit
46,925
50.1
52,689
50.4
Selling, general and administrative expense
37,757
40.3
45,107
43.1
Interest (income) expense, net
4
0.0
(6
)
(0.0
)
(Loss) income before income taxes
9,164
9.8
7,588
7.3
Income tax expense
321
0.3
1,426
1.4
Net (loss) income
$
8,843
9.4
$
6,162
5.9
(Loss) Income per common share:
Basic $ 0.59 $ 0.42 Diluted $ 0.57 $ 0.42 Shares used in computing
common per share amounts: Basic
14,999,786
14,752,560
Diluted
15,524,340
14,808,984
(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 Statements of
Operations(dollars in thousands, except share and per share
data)
52 Weeks Ended
January 30, 2021
% of TotalRevenues (1)
52 Weeks Ended
February 1, 2020
% of TotalRevenues (1) Revenues: Net retail sales
$
249,210
97.6
$
323,491
95.6
Commercial revenue
4,426
1.7
11,892
3.5
International franchising
1,674
0.7
3,160
0.9
Total revenues
255,310
100.0
338,543
100.0
Costs and expenses:
Cost of merchandise sold - retail (1)
147,906
59.3
176,652
54.6
Store asset impairment (2)
7,346
2.9
—
—
Cost of merchandise sold - commercial (1)
1,837
41.5
5,432
45.7
Cost of merchandise sold - international franchising (1)
935
55.9
2,836
89.7
Total cost of merchandise sold
158,024
61.9
184,920
54.6
Consolidated gross profit
97,286
38.1
153,623
45.4
Selling, general and administrative expense
119,089
46.6
152,047
44.9
Interest expense, net
10
0.0
15
0.0
Income (loss) before income taxes
(21,813
)
(8.5
)
1,561
0.5
Income tax expense (benefit)
2,797
1.1
1,300
0.4
Net income (loss)
$
(24,610
)
(9.6
)
$
261
0.1
Income (loss) per common share:
Basic
$
(1.65
)
$
0.02
Diluted
$
(1.65
)
$
0.02
Shares used in computing common per share amounts:
Basic
14,923,304
14,711,334
Diluted
14,923,304
14,759,810
(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 52 weeks ended January 30,
2021, a separate line item was disclosed and expressed as a
percentage of net retail sales.
BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES Unaudited Condensed Consolidated Balance
Sheets(dollars in thousands, except per share data)
January 30,2021 February 1,2020
ASSETS Current assets: Cash and cash equivalents
$
34,840
$
26,726
Inventories, net
46,947
53,381
Receivables, net
8,295
11,526
Prepaid expenses and other current assets
10,111
7,117
Total current assets
100,193
98,750
Operating lease right-of-use asset
104,825
126,144
Property and equipment, net
52,973
65,855
Deferred tax assets
-
3,411
Other assets, net
3,381
3,102
Total Assets
$
261,372
$
297,262
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable
$
17,784
$
15,680
Accrued expenses
20,326
16,536
Operating lease liability short term
32,402
30,912
Gift cards and customer deposits
19,029
20,231
Deferred revenue and other
2,445
2,605
Total current liabilities
91,986
85,964
Operating lease liability long term
101,462
119,625
Deferred franchise revenue
920
1,325
Other liabilities
1,323
1,717
Stockholders' equity: Common stock, par value $0.01 per
share
159
152
Additional paid-in capital
72,822
70,633
Accumulated other comprehensive loss
(12,615
)
(12,079
)
Retained earnings
5,315
29,925
Total stockholders' equity
65,681
88,631
Total Liabilities and Stockholders' Equity
$
261,372
$
297,262
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES Unaudited
Selected Financial and Store Data(dollars in thousands)
13 Weeks Ended
January 30, 2021
13 Weeks Ended
February 1, 2020
52 Weeks Ended
January 30, 2021
52 Weeks Ended
February 1, 2020
Other financial data:
Retail gross margin ($) (1)
$
46,250
$
50,724
$
101,304
$
146,839
Retail gross margin (%) (1)
50.4
%
50.4
%
40.7
%
45.4
%
Capital expenditures (2)
$
1,017
$
2,285
$
5,046
$
12,384
Depreciation and amortization
$
3,332
$
3,346
$
13,237
$
13,705
Store data (3):
Number of corporately-managed retail locations at end of period
North America
305
316
Europe
48
55
Asia
1
1
Total corporately-managed retail locations
354
372
Number of franchised stores at end of period
71
92
Corporately-managed store square footage at end of period (4)
North America
712,287
719,078
Europe
71,609
78,786
Asia
1,750
1,750
Total square footage
785,646
799,614
(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.
* Non-GAAP Financial Measures
BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIESReconciliation of GAAP to Non-GAAP Results
(dollars in thousands, except per share data)
13
WeeksEnded January 30,2021 13
WeeksEnded February 1,2020 52
WeeksEnded January 30,2021 52
WeeksEnded February 1,2020 Income (loss)
before income taxes (pre-tax)
$
9,164
$
7,588
$
(21,813
)
$
1,561
Income (loss) before income tax adjustments: United Kingdom
Lockdown Business Grants (1)
(756
)
-
(756
)
-
COVID-19 activity (2)
30
-
142
-
Ohio Bureau of Workers' Compensation dividend (3)
(332
)
-
(332
)
-
Impairment, bad debt, and lease modification (4)(5)
328
(244
)
7,956
(1,016
)
Foreign exchange (gains) losses (6)
(798
)
(261
)
(601
)
71
Other (7)
2
202
336
370
Adjusted income (loss) before income taxes (adjusted pre-tax)
7,638
7,285
(15,068
)
986
Income tax (expense) benefit
(321
)
(1,426
)
(2,797
)
(1,300
)
Tax adjustments: Income tax impact: adjustments (8)(9)
-
64
-
121
Income tax impact: CARES Act (10)
-
-
(773
)
-
Valuation allowance (11)
-
-
3,272
449
Adjusted income tax (expense) benefit
(321
)
(1,362
)
(298
)
(730
)
Net (loss) income
8,843
6,162
(24,610
)
261
Adjustments
(1,526
)
(239
)
9,244
(5
)
Adjusted net (loss) income
$
7,317
$
5,923
$
(15,366
)
$
256
Net (loss) income per diluted share (EPS)
$
0.57
$
0.42
$
(1.65
)
$
0.02
Adjusted net (loss) income per diluted share (adjusted EPS)
$
0.47
$
0.40
$
(1.03
)
$
0.02
Fiscal 2023 forecast reconciliation of Non-GAAP
figure(dollars in millions) Income before income taxes
(pre-tax) $7 - $17 Interest
-
Depreciation and Amortization
13
Earnings before interest, taxes, depreciation and amortization
(EBITDA) $20 - $30
(1)
Represents the business 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.
(2)
Represents COVID-19 related expenses at our stores,
warehouse, and headquarters.
(3)
Represent a dividend distribution received from the Ohio
Bureau of Workers' Compensation in the fourth quarter.
(4)
Represents non-cash adjustments including asset impairment
charges related to store fixed assets and right-of-use operating
lease assets and bad debt expense in the 13 and 52 weeks ending
January 30, 2021 and February 1, 2020.
(5)
Represents the lease modification impacts of exercising
early termination options in leases offset by non-cash impairment
charges related to store fixed assets, receivables, and inventory
in the 13 and 52 weeks ended February 1, 2020
(6)
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.
(7)
Represents severance and other non-recurring changes in
reserves and charges.
(8)
As a result of the Company's full, global valuation
allowance, the Company cannot realize an income tax benefit on
these adjustments for the fourth quarter or full year fiscal 2020.
(9)
Represents the aggregate tax impact of the pre-tax
adjustments for the fourth quarter and full year fiscal 2019.
(10)
Represents the impact of the technical correction related to
qualified leasehold improvements resulting from the CARES Act
occurring in the first quarter of fiscal 2020
(11)
Represents the valuation allowance recorded on its net
deferred tax assets in North America in the first quarter of fiscal
2020 and the United Kingdom in the fourth quarter of fiscal 2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210310005241/en/
Investors: Voin Todorovic Build-A-Bear Workshop 314.423.8000
x5221
Media: Public Relations PR@buildabear.com
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