Build-A-Bear Workshop, Inc. (NYSE: BBW), an interactive
entertainment retailer, today reported results for the 2010 second
quarter and first six months ended July 3, 2010. Second quarter
2010 results were impacted by the timing shift of the Easter
holiday to the first quarter this year from the second quarter in
fiscal 2009.
“Our second quarter sales declined from a year ago driven by a
shift that moved Easter into our first quarter this year versus the
second quarter last year and later school dismissals that adversely
impacted our May results,” stated Build-A-Bear Workshop Chairman
and Chief Executive Bear Maxine Clark. “We finished the quarter
with an improvement in our comparable store sales trend in June
with the release of our Zoo collection and are pleased with the
start of the third quarter with double digit comparable store sales
growth in July coinciding with the Ice Cream bears launch. As we
begin the second half of the year, we remain focused on our number
one priority to profitably grow our sales. We will continue to
generate a sense of urgency to shop with more frequent and high
impact product introductions supported with enticing offers to
increase traffic and transactions in our stores.
We also made progress on our strategy to expand product sales
beyond our stores entering into a new license agreement with
Michaels Stores for the distribution of Build-A-Bear Craftshop kits
beginning in September,” Ms Clark added. “We continued to maintain
a strong balance sheet, ending the quarter with $31.2 million in
cash as we invested $3.3 million since the beginning of 2010 to
repurchase shares of our common stock. While we recognize that the
environment remains uncertain, we remain confident that our
strategies will result in improved performance and increased value
for all Build-A-Bear Workshop stakeholders.”
Fiscal 2010 Second-Quarter (13 weeks ended July 3,
2010):
- Total revenues were $74.1
million, a 10.5% decrease from $82.8 million in the fiscal 2009
second quarter (13 weeks ended July 4, 2009). Net retail sales were
$72.5 million, a decrease of $8.8 million, or 10.8% compared to
$81.3 million in last year’s second quarter. Excluding the impact
of foreign exchange, net retail sales decreased 10.2%.
- Consolidated comparable store
sales decreased 10.0%, including a 9.7% decrease in North America
and an 11.2% decrease in Europe.
- Net retail sales from European
operations totaled $12.1 million in the 2010 second quarter, a
decrease of $2.1 million, or 14.8% compared to $14.2 million in the
2009 second quarter. Excluding the impact of foreign exchange,
European operations net retail sales decreased 11.1%.
- Second quarter net loss was $8.5
million, or $0.45 per share, compared to the fiscal 2009 second
quarter net loss of $6.0 million, or $0.32 per share. Second
quarter fiscal 2010 net loss included a $0.3 million, or $0.02 per
share, non-cash impairment charge related to certain long-term
deposits. Second quarter fiscal 2009 net loss included $0.1
million, or $0.01 per share, charge for the Friends 2B Made concept
closure, and $0.3 million, or $0.02 per share, non-cash charge
resulting from the allocation of losses related to the company's
minority investment in Ridemakerz, LLC.
Fiscal 2010 First Six-Months (26 weeks ended July 3,
2010):
- Total revenues were $175.6
million, a 2.7% decrease from $180.5 million in the first six
months of fiscal 2009 (26 weeks ended July 4, 2009). Net retail
sales were $172.3 million, a decrease of $5.3 million, or 3.0%
compared to $177.6 million in the first six months of fiscal 2009.
Excluding the impact of foreign exchange, net retail sales
decreased 3.4%.
- Consolidated comparable store
sales decreased 3.3%, including a 3.3% decrease in North America
and a 3.6% decrease in Europe.
- Net retail sales from European
operations totaled $27.9 million in the first six months of fiscal
2010, a decrease of $0.4 million, or 1.4% compared to $28.3 million
in the first six months of fiscal 2009. Excluding the impact of
foreign exchange, European operations net retail sales decreased
3.6%.
- Net loss for the first six
months was $6.8 million, or $0.36 per share, equal to the loss in
the first six months of fiscal 2009. The net loss for the first six
months of fiscal 2010 included a $0.3 million, or $0.02 per share,
non-cash impairment charge related to certain long-term deposits.
The net loss for the first six months of fiscal 2009 included $0.4
million, or $0.02 per share, charge for the Friends 2B Made concept
closure, and $0.3 million, or $0.02 per share non-cash charge
resulting from the allocation of losses related to the company's
minority investment in Ridemakerz, LLC.
Stores
Build-A-Bear Workshop ended the 2010 second quarter with 346
company-owned stores – 292 in North America and 54 in Europe. The
Company opened 1 new store in the second quarter 2010 and no new
stores in the 2009 second quarter.
Balance Sheet
The Company ended the 2010 second quarter with a strong balance
sheet. As of July 3, 2010, cash and cash equivalents totaled $31.2
million, over 60% of which was held in the United Kingdom, as
compared to $30.7 million in cash and cash equivalents at July 4,
2009. Inventory at quarter end increased 1.9% on a square footage
basis, excluding non-comparable Zhu Zhu pet inventory. Total
inventory at quarter-end was $57.1 million, representing a 20.0%
increase on a per square foot basis.
During the second quarter, the company repurchased 243,930
shares of its common stock at a total cost of $1.9 million. At
quarter end, the Company had $27.7 million of availability under
the current stock repurchase program.
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 our investor relations Web site,
http://IR.buildabear.com. The call is expected to conclude by 10
a.m. ET.
The replay of the conference call webcast will be available at
the investor relations Web site for one year. A telephone replay
will be available beginning at approximately noon ET on July 29,
2010, until midnight ET on August 12, 2010. The telephone replay is
available by calling (617) 801-6888. The access code is
83126016.
About Build-A-Bear Workshop, Inc.
Build-A-Bear Workshop, Inc. is the only global company that
offers an interactive make-your-own stuffed animal
retail-entertainment experience. The company currently operates
more than 400 Build-A-Bear Workshop stores worldwide, including
company-owned stores in the U.S., Puerto Rico, Canada, the United
Kingdom, Ireland and France, and franchise stores in Europe, Asia,
Australia, Africa and the Middle East. Founded in St. Louis in
1997, Build-A-Bear Workshop is the leader in interactive retail.
Brands include make-your-own Major League Baseball® mascot
in-stadium locations, and Build-A-Dino® stores. Build-A-Bear
Workshop extends its in-store interactive experience online with
its award winning virtual world Web site at
www.buildabearville.com. Build-A-Bear Workshop (NYSE: BBW) posted
total revenue of $394.4 million in fiscal 2009. For more
information, call 888.560.BEAR (2327) or visit the company’s
award-winning Web site at www.buildabear.com.
Forward-Looking Statements
This press release contains "forward-looking statements" (within
the meaning of the federal securities laws) which represent
Build-A-Bear Workshop expectations or beliefs with respect to
future events. Our actual results may differ materially from the
results discussed in the forward-looking statements. These risks
and uncertainties include, without limitation, those detailed under
the caption “Risk Factors” in our annual report on Form 10-K for
the fiscal year ended January 2, 2010, as filed with the SEC, and
the following: general economic conditions may continue to
deteriorate, which could lead to disproportionately reduced
consumer demand for our products, which represent relatively
discretionary spending; customer traffic may continue to decrease
in the shopping malls where we are located, on which we depend to
attract guests to our stores; we may be unable to generate interest
in and demand for our interactive retail experience, or to identify
and respond to consumer preferences in a timely fashion; our
marketing and on-line initiatives may not be effective in
generating sufficient levels of brand awareness and guest traffic;
we may be unable to generate comparable store sales growth; we may
be unable to renew or replace our store leases, or enter into
leases for new stores on favorable terms or in favorable locations,
or may violate the terms of our current leases; we may be unable to
effectively manage the operations and growth of our company-owned
stores; we may be unable to effectively manage our international
franchises or laws relating to those franchises may change; the
availability and costs of our products could be adversely affected
by risks associated with international manufacturing and trade,
including foreign currency fluctuation; we are susceptible to
disruption in our inventory flow due to our reliance on a few
vendors; high petroleum products prices could increase our
inventory transportation costs and adversely affect our
profitability; we may be unable to operate our European
company-owned stores profitably; fluctuations in our quarterly
results of operations could cause the price of our common stock to
substantially decline; we may be unable to repurchase shares at all
or at the times or in the amounts we currently anticipate or the
results of the share repurchase program may not be as beneficial as
we currently anticipate; we may improperly obtain or be unable to
protect information from our guests in violation of privacy or
security laws or expectations; we may suffer negative publicity or
be sued due to violations of labor laws or unethical practices by
manufacturers of our merchandise; we may suffer negative publicity
or negative sales if the non-proprietary toy products we sell in
our stores do not meet our quality or sales expectations; our
products could become subject to recalls or product liability
claims that could adversely impact our financial performance and
harm our reputation among consumers; we may lose key personnel, be
unable to hire qualified additional personnel, or experience
turnover of our management team; we may be unable operate our
company-owned distribution center efficiently or our third-party
distribution center providers may perform poorly; our market share
could be adversely affected by a significant, or increased, number
of competitors; we may fail to renew, register or otherwise protect
our trademarks or other intellectual property; we may have disputes
with, or be sued by, third parties for infringement or
misappropriation of their proprietary rights; poor global economic
conditions could have a material adverse effect on our liquidity
and capital resources; and we may be unable to recover amounts due
to us from our affiliate, Ridemakerz LLC. These risks,
uncertainties and other factors may adversely affect our business,
growth, financial condition or profitability, or subject us to
potential liability, and cause our actual results, performance or
achievements to be materially different from those expressed or
implied by our forward-looking statements. The company undertakes
no obligation to publicly update or revise any 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.
(Financial Tables Follow)
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 July 3, % of Total July 4, %
of Total 2010 Revenues 2009
Revenues Revenues: Net retail sales $ 72,488 97.8 $ 81,307
98.2 Licensing revenue 985 1.3 915 1.1 Franchise fees 661
0.9 612 0.7 Total revenues 74,134 100.0
82,834 100.0 Costs and expenses:
Cost of merchandise sold
50,334 67.9 55,017 66.4 Selling, general and administrative 36,403
49.1 37,508 45.3 Store preopening 77 0.1 17 0.0 Store closing — —
230 0.3 Equity losses from investment in affiliate — — 533 0.6
Interest expense (income), net (77 ) (0.1 ) (23 ) (0.0 ) Total
costs and expenses 86,737 117.0 93,282 112.6
Loss before income taxes (12,603 ) (17.0 ) (10,448 ) (12.6 )
Income tax benefit (4,126 ) (5.6 ) (4,479 ) (5.4 ) Net loss $
(8,477 ) (11.4 ) $ (5,969 ) (7.2 ) Loss per common share:
Basic $ (0.45 ) $ (0.32 ) Diluted $ (0.45 ) $ (0.32 ) Shares used
in computing common per share amounts: Basic 18,866,448 18,871,415
Diluted 18,866,448 18,871,415
BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES Unaudited Condensed Consolidated Statements of
Operations (dollars in thousands, except share and per share
data)
26 Weeks 26
Weeks Ended Ended July 3, % of
Total July 4, % of Total 2010
Revenue 2009 Revenue Revenues: Net
retail sales $ 172,274 98.1 $ 177,623 98.4 Licensing revenue 1,951
1.1 1,666 0.9 Franchise fees 1,344 0.8 1,209
0.7 Total revenues 175,569 100.0 180,498
100.0 Costs and expenses: Cost of merchandise sold
109,440 62.3 116,392 64.5 Selling, general and administrative
75,935 43.3 74,427 41.2 Store preopening 88 0.1 17 0.0 Store
closing — — 731 0.4 Equity losses from investment in affiliate — —
533 0.3 Interest expense (income), net (108 ) (0.1 ) (47 ) (0.0 )
Total costs and expenses 185,355 105.6 192,052
106.4 Loss before income taxes (9,786 ) (5.6 ) (11,554 )
(6.4 ) Income tax benefit (2,987 ) (1.7 ) (4,760 ) (2.6 ) Net loss
$ (6,799 ) (3.9 ) $ (6,794 ) (3.8 ) Loss per common share:
Basic $ (0.36 ) $ (0.36 ) Diluted $ (0.36 ) $ (0.36 ) Shares used
in computing common per share amounts: Basic 18,920,494 18,827,665
Diluted 18,920,494 18,827,665
BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES Unaudited Condensed Consolidated Balance
Sheets (dollars in thousands, except share and per share data)
July 3, January 2,
2010 2010 ASSETS Current assets: Cash and cash
equivalents $ 31,168 $ 60,399 Inventories 57,115 44,384 Receivables
3,513 5,337 Prepaid expenses and other current assets 17,370 19,329
Deferred tax assets 7,231 6,306 Total
current assets 116,397 135,755 Property and equipment, net
92,634 101,044 Goodwill 31,742 33,780 Other intangible assets, net
2,813 3,601 Other assets, net 10,740 10,093
Total Assets $ 254,326 $ 284,273
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 30,341 $ 32,822 Accrued expenses 6,597 11,185
Gift cards and customer deposits 22,891 29,301 Deferred revenue
9,131 8,582 Total current liabilities
68,960 81,890 Deferred franchise
revenue 1,792 2,027 Deferred rent 31,686 34,760 Other liabilities
806 816 Stockholders' equity: Common stock, par value
$0.01 per share 203 204 Additional paid-in capital 78,130 80,122
Accumulated other comprehensive loss (11,244 ) (6,336 ) Retained
earnings 83,993 90,790 Total
stockholders' equity 151,082 164,780
Total Liabilities and Stockholders' Equity $ 254,326 $
284,273
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Selected Financial and Store Data (dollars in
thousands, except square foot data)
13 Weeks 13 Weeks 26 Weeks 26
Weeks Ended Ended Ended Ended
July 3, July 4, July 3, July 4,
2010 2009 2010 2009 Other
financial data: Retail gross margin ($) (1) $ 22,403 $ 26,721 $
63,390 $ 61,985 Retail gross margin (%) (1) 30.9 % 32.9 % 36.8 %
34.9 % Capital expenditures, net (2) $ 3,154 $ 1,563 $ 6,410 $
3,713 Depreciation and amortization $ 6,762 $ 7,050 $ 13,629 $
14,089 Sales over the Internet $ 1,667 $ 1,730 $ 4,489 $ 4,234
Store data (3): Number of company-owned stores at end
of period North America 292 291 Europe 54 54 Total
stores 346 345 Number of franchised stores at end of period
60 61 Company-owned store square footage at end of period
North America 848,467 847,330 Europe (4) 77,520 77,520
Total square footage 925,987 924,850 Comparable store
sales change (%) (5) North America (9.7 )% (17.5 )% (3.3 )% (19.2
)% Europe (11.2 )% 8.2 % (3.6 )% 7.3 % Consolidated (10.0 )% (13.9
)% (3.3 )% (16.0 )% (1 )
Retail gross margin represents net
retail sales less retail cost of merchandise sold. Retail gross
margin percentage represents retail gross margin divided by net
retail sales.
(2 ) Capital expenditures, net represents cash paid for property,
equipment, other assets and other intangible assets. (3 ) Excludes
our webstore and seasonal and event-based locations. North American
stores are located in the United States, Canada and Puerto Rico. In
Europe, stores are located in the United Kingdom, Ireland and
France. (4 ) Square footage for stores located in Europe is
estimated selling square footage. (5 ) Comparable store sales
percentage changes are based on net retail sales and stores are
considered comparable beginning in their thirteenth full month of
operation.
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