Build-A-Bear Workshop, Inc. (NYSE: BBW), an interactive
entertainment retailer, today reported results for the second
quarter and first six months ended July 2, 2011. Second quarter
2011 total revenue increased 9.0%, excluding the impact of foreign
currency. Consolidated comparable store sales increased 7.1% and
included an 8.3% increase in North America and a 1.3% increase in
Europe. The quarter’s results were positively impacted by the shift
of the Easter holiday, which moved into the second quarter this
year from the first quarter in 2010. Second quarter net loss of
$6.7 million or $0.37 per share included $0.05 per share in
consulting costs related to the Company’s continuing initiatives to
improve efficiencies and reduce expenses. This compares to the
second quarter fiscal 2010 net loss of $0.45 per share, which
included a $0.02 per share non-cash impairment charge related to
certain long-term deposits. For the full-year 2011, the Company
continues to anticipate savings from the consulting project of $4.0
million to $6.0 million, or $0.14 to $0.21 per diluted share, with
an expected annualized benefit of $10 million to $15 million.
“In the second quarter, we grew our total revenue, increased our
comparable store sales and achieved higher gross margin which
resulted in a significant improvement in our net loss, as compared
to the prior year,” stated Build-A-Bear Workshop Chairman and Chief
Executive Bear Maxine Clark. “While the quarter benefited from the
movement of Easter into the fiscal period, our consolidated comp
sales trends were also positive post-Easter reflecting strength in
our merchandise and marketing initiatives. Our consolidated
e-commerce sales rose 22.8% for the quarter giving us confidence in
our strategies throughout all channels of our business.
“We believe the ongoing execution of our strategies will put us
in a strong position to continue our positive sales performance
throughout the second half of the year,” Ms. Clark continued. “Our
summer product is strong, including the recent launch of the
Smurfs, which capitalized on the build-up to the theatrical
release. We continue to move aggressively on initiatives to improve
our cost structure. As such, we expect to achieve our annual
profitability goals and advance our number one objective to
increase shareholder value by profitably growing sales,” Ms. Clark
concluded.
Fiscal 2011 Second Quarter (13 weeks ended July 2,
2011):
- Total revenues were $81.8 million, a
10.4% increase from $74.1 million in the fiscal 2010 second quarter
or an increase of 9.0% excluding the impact of foreign
currency.
- Consolidated comparable store sales
increased 7.1%, including an 8.3% increase in North America and a
1.3% increase in Europe.
- Consolidated e-commerce sales rose
22.8%, excluding the impact of foreign currency.
- Net loss was $6.7 million, or $0.37 per
share, compared to the fiscal 2010 second quarter net loss of $8.5
million, or $0.45 per share. Second quarter fiscal 2011 net loss
included $0.9 million, or $0.05 per share, in consulting costs.
Second quarter 2010 net loss included a $0.3 million, or $0.02 per
share, non-cash impairment charge related to certain long-term
deposits.
Fiscal 2011 First Six Months (26 weeks ended July 2,
2011):
- Total revenues were $177.8 million, a
1.3% increase from $175.6 million in the first six months of fiscal
2010, or an increase of 0.8% excluding the impact of foreign
currency.
- Consolidated comparable store sales
decreased 2.0%, including a 2.0% decrease in North America and a
1.7% decrease in Europe.
- Consolidated e-commerce sales rose
9.5%, excluding the impact of foreign currency.
- Net loss was $8.9 million, or $0.50 per
share compared to net loss of $6.8 million, or $0.36 per share in
the first six months of fiscal 2010. The net loss for the first six
months of fiscal 2011 included $1.9 million, or $0.10 per share in
consulting costs. 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.
During the quarter, the Company opened one store in North
America and closed one store in Europe. At quarter end the Company
operated 342 company-owned stores – 289 in North America and 53 in
Europe, as compared to 292 in North America and 54 in Europe at the
end of fiscal 2010 second quarter. Additionally, as of the end of
the fiscal 2011 second quarter, the Company operated eight pop-up
locations in North America.
Balance Sheet
The Company ended the 2011 second quarter with a strong balance
sheet and no borrowings under its revolving credit facility. As of
July 2, 2011, cash and cash equivalents totaled $34.7 million, over
30% of which was domiciled outside the U.S. Total inventory at
quarter end was $46.2 million. Inventory per square foot declined
20%, as compared to the prior year period.
The Company continues to expect capital expenditures of $12 to
$15 million in 2011, compared to capital spending of $15 million in
2010 and depreciation and amortization of approximately $25
million, compared to $27 million in 2010. Through the first half of
2011, the Company opened one store, closed three stores and
relocated four existing locations and, for the full fiscal year,
currently expects to open five stores and close five to ten
stores.
During fiscal 2011 second quarter, the Company repurchased
approximately 389,000 shares of its common stock at a total cost of
$2.6 million. At quarter end, the Company had $18.6 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 the Company’s investor relations Web
site, http://IR.buildabear.com. The call is expected to conclude by
10 a.m.
A replay of the conference call webcast will be available in the
investor relations Web site for one year. A telephone replay will
be available beginning at approximately noon ET today until
midnight ET on August 11, 2011. The telephone replay is available
by calling (617) 801-6888. The access code is 80107441.
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. There are more than 400
Build-A-Bear Workshop stores worldwide, including company-owned
stores in the U.S., Puerto Rico, Canada, the United Kingdom and
Ireland, and franchise stores in Europe, Asia, Australia, Africa,
the Middle East, Mexico and South America. 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 bearville.com®. The
company was named to the FORTUNE 100 Best Companies to Work For®
lists for the third year in a row in 2011. Build-A-Bear Workshop
(NYSE: BBW) posted total revenue of $401.5 million in fiscal 2010.
For more information, call 888.560.BEAR (2327) or visit the
company's award-winning Web site at 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 1, 2011, 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; 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 effectively manage our
international franchises or laws relating to those franchises may
change; 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; 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 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; 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; and poor global
economic conditions could have a material adverse effect on our
liquidity and capital resources. 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.
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 2, % of Total July 3, % of Total
2011 Revenues (1) 2010 Revenues
(1) Revenues: Net retail sales $ 80,391 98.2 $ 72,488 97.8
Commercial revenue 736 0.9 985 1.3 Franchise fees 714 0.9
661 0.9 Total revenues 81,841 100.0
74,134 100.0 Costs and expenses: Cost of
merchandise sold 51,926 64.0 50,334 68.5 Selling, general and
administrative 40,539 49.5 36,403 49.1 Store preopening 146 0.2 77
0.1 Interest expense (income), net (105 ) (0.1 ) (77 ) (0.1 ) Total
costs and expenses 92,506 113.0 86,737 117.0
Loss before income taxes (10,665 ) (13.0 ) (12,603 ) (17.0 )
Income tax benefit (3,990 ) (4.9 ) (4,126 ) (5.6 ) Net loss $
(6,675 ) (8.2 ) $ (8,477 ) (11.4 ) Loss per common share:
Basic $ (0.37 ) $ (0.45 ) Diluted $ (0.37 ) $ (0.45 ) Shares used
in computing common per share amounts: Basic 17,839,349 18,866,448
Diluted 17,839,349 18,866,448
(1)
Selected statement of operations data expressed as a percentage of
total revenues, except cost of merchandise sold which is expressed
as a percentage of net retail sales and commercial revenue.
Percentages will not total due to cost of merchandise sold being
expressed as a percentage of net retail sales and commercial
revenue 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)
26 Weeks 26
Weeks Ended Ended July 2, % of
Total July 3, % of Total 2011
Revenues (1) 2010
Revenues (1) Revenues: Net retail sales $ 174,550
98.2 $ 172,274 98.1 Commercial revenue 1,841 1.0 1,951 1.1
Franchise fees 1,440 0.8 1,344 0.8
Total revenues 177,831 100.0 175,569 100.0
Costs and expenses: Cost of merchandise sold 110,151 62.4
109,440 62.8 Selling, general and administrative 81,803 46.0 75,935
43.3 Store preopening 193 0.1 88 0.1 Interest expense (income), net
(1 ) (0.0 ) (108 ) (0.1 ) Total costs and expenses 192,146
108.0 185,355 105.6 Loss before income taxes
(14,315 ) (8.0 ) (9,786 ) (5.6 ) Income tax benefit (5,388 ) (3.0 )
(2,987 ) (1.7 ) Net loss $ (8,927 ) (5.0 ) $ (6,799 ) (3.9 )
Loss per common share: Basic $ (0.50 ) $ (0.36 ) Diluted $ (0.50 )
$ (0.36 ) Shares used in computing common per share amounts: Basic
17,964,763 18,920,494 Diluted 17,964,763 18,920,494
(1) Selected statement of operations data expressed
as a percentage of total revenues, except cost of merchandise sold
which is expressed as a percentage of net retail sales and
commercial revenue. Percentages will not total due to cost of
merchandise sold being expressed as a percentage of net retail
sales and commercial revenue and immaterial rounding.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES Unaudited
Condensed Consolidated Balance Sheets (dollars in thousands,
except share and per share data)
July 2, January 1, July 3,
2011 2011 2010 ASSETS Current assets:
Cash and cash equivalents $ 34,742 $ 58,755 $ 31,168 Inventories
46,156 46,475 57,115 Receivables 4,606 7,923 3,513 Prepaid expenses
and other current assets 22,580 18,425 17,370 Deferred tax assets
7,585 7,465 7,231 Total
current assets 115,669 139,043 116,397 Property and
equipment, net 81,225 88,029 92,634 Goodwill 33,542 32,407 31,742
Other intangible assets, net 1,043 1,444 2,813 Other assets, net
15,070 14,871 10,740
Total Assets $ 246,549 $ 275,794 $ 254,326
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 33,280 $ 36,325 $ 30,341 Accrued
expenses 6,818 15,488 6,597 Gift cards and customer deposits 23,487
28,880 22,891 Deferred revenue 6,852 6,679
9,131 Total current liabilities 70,437
87,372 68,960 Deferred
franchise revenue 1,571 1,706 1,792 Deferred rent 26,606 28,642
31,686 Other liabilities 375 361 806 Stockholders'
equity: Common stock, par value $0.01 per share 192 196 203
Additional paid-in capital 72,979 76,582 78,130 Accumulated other
comprehensive loss (7,580 ) (9,959 ) (11,244 ) Retained earnings
81,969 90,894 83,993
Total stockholders' equity 147,560 157,713
151,082 Total Liabilities and Stockholders'
Equity $ 246,549 $ 275,794 $ 254,326
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 2, July
3, July 2, July 3, 2011 2010
2011 2010 Other financial data: Retail
gross margin ($) (1) $ 28,774 $ 22,403 $ 65,351 $ 63,390 Retail
gross margin (%) (1) 35.8 % 30.9 % 37.4 % 36.8 % Capital
expenditures, net (2) $ 3,815 $ 3,154 $ 6,137 $ 6,410 Depreciation
and amortization $ 6,206 $ 6,762 $ 12,730 $ 13,629 E-commerce sales
$ 2,089 $ 1,667 $ 4,963 $ 4,489
Store data (3):
Number of company-owned stores at end of period North America 289
292 Europe 53 54 Total stores 342 346 Number
of franchised stores at end of period 70 60 Company-owned
store square footage at end of period North America 835,019 848,467
Europe (4) 76,481 77,520 Total square footage 911,500
925,987 Comparable store sales change (%) (5) North America
8.3 % (9.7 )% (2.0 )% (3.3 )% Europe 1.3 % (11.2 )% (1.7 )% (3.6 )%
Consolidated 7.1 % (10.0 )% (2.0 )% (3.3 )% (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 and Ireland and,
prior to 2011, 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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