- Consolidated comparable sales
increase 1.0% in fiscal 2015
- Retail gross margin expands 150
basis points to 47.1% in fiscal 2015
- Fiscal 2015 pre-tax income increases
to $17.9 million, an 11.7% improvement from fiscal 2014
- Reiterates expectation for a 15% to
25% increase in GAAP pre-tax income in fiscal 2016
Build-A-Bear Workshop, Inc. (NYSE:BBW) today reported results
for the fourth quarter and fiscal year ended January 2, 2016. The
Company noted that fiscal 2015 represented a 52-week year and
compares to a 53-week year in fiscal 2014 with the additional week
in fiscal 2014 included in the fourth quarter.
Fourth Quarter 2015 Highlights (13 weeks ended January 2,
2016 compared to the 14 weeks ended January 3, 2015):
- Consolidated comparable sales (stores
and e-commerce) decreased 5.6% following a 9.8% increase in fiscal
2014. The 2015 fourth quarter included a 4.2% decrease in North
America and a 10.0% decrease in Europe. (Fourth quarter comparable
sales are compared to the 13-week periods ended January 3, 2015 and
January 4, 2014.);
- Retail gross margin declined 100 basis
points to 51.2% compared to 52.2% in the fiscal 2014 fourth
quarter, as a 50 basis point expansion in merchandise margin was
more than offset by deleverage of fixed expenses;
- Pre-tax income was $9.9 million, or
$0.60 per diluted share compared to pre-tax income of $12.6
million, or $0.71 per diluted share in the 2014 fourth
quarter;
- Net income was $20.6 million, or $1.25
per diluted share compared to net income of $11.8 million, or $0.67
per diluted share in the 2014 fourth quarter; and
- Adjusted net income was $10.3 million,
or $0.62 per diluted share compared to adjusted net income of $13.1
million, or $0.74 per diluted share, in the 2014 fourth quarter.
(See Reconciliation of Net Income to Adjusted Net Income.)
Sharon Price John, Build-A-Bear Workshop’s Chief Executive
Officer commented, “In 2015, we delivered our third consecutive
year of improved profitability and increased consolidated
comparable sales. Our initiatives including remodeling stores in
our new Discovery format, which generated double-digit growth
compared to our heritage stores, focusing on key consumer segments
and investing in infrastructure continued to gain traction. We made
steady progress toward our stated long-term sales productivity
goals as we achieved the highest average transaction value in our
history and highest units per transaction since 2008. We remain
committed to the ongoing disciplined execution of our strategy
while we continue to leverage our powerful brand in order to
deliver both sales and profit improvement.”
Additional Fourth Quarter 2015 Details:
- Total revenues were $117.7 million for
the 13 weeks ended January 2, 2016, compared to $131.5 million in
the fiscal 2014 fourth quarter (14 weeks ended January 3,
2015);
- Consolidated net retail sales were
$116.5 million for the 13 weeks ended January 2, 2016, compared to
$130.0 million in the 2014 fourth quarter (14 weeks ended January
3, 2015). The decline in net retail sales is primarily attributable
to the impact of the comparable sales decrease, one less week of
sales due the calendar shift in 2014, permanent store closures
(inclusive of strategic closures of high sales volume stores that
did not meet profit targets), the negative impact of foreign
exchange, and the deferred revenue adjustment in the fiscal 2014
fourth quarter that did not repeat in fiscal 2015;
- Comparable e-commerce sales increased
16.4% (fourth quarter comparable sales are compared to the 13-week
period ended January 3, 2015); and
- Selling, general and administrative
expense (“SG&A”) decreased $5.7 million to $50.6 million, or
43.0% of total revenues compared 42.9% of total revenues in the
2014 fourth quarter. The majority of the decrease was attributable
to variable costs incurred in the 53rd week in the fiscal 2014
fourth quarter that did not repeat in fiscal 2015.
Fiscal Year 2015 (52 weeks ended January 2, 2016 compared to
the 53 weeks ended January 3, 2015):
- Total revenues were $377.7 million for
the 52 weeks ended January 2, 2016, compared to $392.4 million in
fiscal 2014 (53 weeks ended January 3, 2015);
- Consolidated net retail sales were
$372.7 million for the 52 weeks ended January 2, 2016, compared to
$387.7 million in fiscal 2014 (53 weeks ended January 3,
2015);
- Consolidated comparable sales (stores
and e-commerce) increased 1.0%, including a flat performance in
North America and a 4.8% increase in Europe (full year comparable
sales are compared to the 52-week period ended January 3,
2015);
- Comparable e-commerce sales rose 11.8%
(full year comparable sales are compared to the 52-week period
ended January 3, 2015);
- Retail gross margin expanded 150 basis
points to 47.1% compared to 45.6% in fiscal 2014;
- SG&A decreased $3.0 million to
$161.5 million, or 42.7% of total revenues compared to 41.9% of
total revenues in fiscal 2014. The decrease was primarily
attributable to lower variable costs related to the 53rd week and
management transition expenses, partially offset by investments to
advance the Company’s long-term strategy;
- Pre-tax income improved 11.7% to $17.9
million, or $1.04 per diluted share compared to a pre-tax income of
$16.0 million in fiscal 2014;
- Tax benefit was $9.4 million driven by
the reversal of the remaining U.S. tax valuation allowance.
Adjusting for the impact of the reversal of the valuation
allowance, the effective tax rate for fiscal 2015 was 4.7%
resulting from foreign and state taxes;
- Net income improved to $27.3 million,
or $1.59 per diluted share compared to net income of $14.4 million,
or $0.81 per diluted share in fiscal 2014; and
- Adjusted net income was $19.6 million,
or $1.14 per diluted share, compared to adjusted net income of
$17.4 million, or $0.98 per diluted share in fiscal 2014. (See
Reconciliation of Net Income to Adjusted Net Income.)
Store Activity:
During the year, the Company closed 20 stores and opened 25
locations, including 11 in its new Discovery format, to end the
year with 329 Company-owned stores with 269 in North America and 60
in Europe. The Company’s international franchisees ended the year
with 77 stores in 11 countries.
Balance Sheet:
As of January 2, 2016, cash and cash equivalents totaled $45.2
million. In the fiscal 2015 fourth quarter, the Company had no
borrowings under its revolving credit facility. Total inventory at
year-end was $53.9 million compared to $51.9 million at 2014
year-end, an increase of 3.7%. In fiscal 2015, capital expenditures
were $24.4 million, and depreciation and amortization was $16.4
million.
Share Repurchase Activity:
On November 19, 2015, the Company’s Board of Directors adopted
an additional share repurchase program that authorized the Company
to repurchase an incremental $15 million of its common stock
bringing the total authorization in fiscal 2015 to $35 million.
During the fourth quarter the Company repurchased approximately 1.1
million shares of its common stock for an aggregate amount of $14.8
million, leaving approximately $9.1 million available under the
current share repurchase program at the end of the fiscal year. The
Company repurchased approximately 1.7 million shares of its common
stock for $25.9 million in fiscal 2015.
Fiscal 2016 Outlook:
For fiscal 2016, the Company continues to expect:
- Total revenue to increase in the low to
mid-single digit range compared to the prior year;
- Consolidated comparable sales to
increase in the low single digit range;
- Capital expenditures in the range of
$25 million to $30 million and depreciation and amortization in the
range of $17 million to $19 million;
- GAAP pre-tax income to grow 15% to 25%
compared to the prior year;
- A tax rate of approximately 30%;
and
- To end the year with 340 to 345 stores,
45 to 55 of which will be in its new Discovery format.
2016 Key Strategic Initiatives:
To increase shareholder value, the Company expects to continue
to execute its “MORE” strategic plan with key initiatives in four
areas outlined below:
Expanding into More Places
The Company expects to expand its owned and operated locations
in 2016 by adding approximately 10 stores, net of closures. Through
a combination of remodels and new openings, the Company expects to
end the year with between 45 and 55 stores in its Discovery format,
including flagship locations at Broadway at the Beach in Myrtle
Beach, South Carolina; Navy Pier in Chicago, Illinois; Tivoli
Gardens in Copenhagen, Denmark; and an added location in the new
Disneytown at the Shanghai Disney Resort in China, expected to open
in June 2016. The Company also expects to continue to diversify its
real estate portfolio with the addition of outlet format stores,
shop-in-shops and seasonal pop-up locations. The Company expects to
offer a branded experience on board Carnival Cruise Lines ships
through a wholesale agreement, beginning in the second half of
2016. Separately, as a result of its on-going efforts to evolve its
international franchise model and management, the Company expects
its franchisees to open between 20 and 25 new royalty-generating
stores in a number of countries throughout the year.
Developing More Products
The Company plans to continue to develop and expand its offering
of intellectual property concepts such as Honey Girls, Promise Pets
and the holiday-specific Merry Mission collection that are
supported by digital content including music, videos and games. The
Company also expects to continue to expand its wholesale and
outbound licensed programs with the addition of relevant categories
throughout 2016.
Attracting More People
The Company expects to leverage its relationships with key
licensors to reach more people, particularly with the teen-plus
consumer, through a compelling offering of affinity, collectible,
entertainment, sports and fashion properties. The Company also
expects to continue to deliver new licensed and internally
developed programs to extend its core consumer base.
Driving More Profitability
The Company expects to increase its 2016 GAAP pretax profit by
15% to 25% over its 2015 fiscal results by the disciplined
execution of its stated strategies including those initiatives
detailed above as well as its on-going efforts in process
improvement, system upgrades, value engineering and strategic
pricing to enhance merchandise margins.
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. ET.
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 February 23, 2016. The telephone replay is available
by calling 885.384.5517. The access code is 13629401.
About Build-A-Bear Workshop, Inc.:
Founded in St. Louis in 1997, Build-A-Bear Workshop, Inc. is the
only global company that offers an interactive make-your-own plush
retail-entertainment experience. There are approximately 400
Build-A-Bear Workshop stores worldwide, including company-owned
stores in the U.S., Puerto Rico, Canada, the United Kingdom,
Ireland and Denmark, and franchise stores in Europe, Asia,
Australia, Africa, the Middle East, and Mexico. The Company was
named to the FORTUNE 100 Best Companies to Work For list for the
seventh year in a row in 2015. Build-A-Bear Workshop (NYSE:BBW)
posted total revenue of $392.4 million in fiscal 2014. For more
information, call 888.560.BEAR (2327) or visit the Investor
Relations section of its Web site at buildabear.com.
Forward-Looking Statements:
This press release contains forward looking statements that
involve risks and uncertainties and the Company’s 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 the Company’s annual report on Form 10-K for the year ended
January 3, 2015, as filed with the SEC, and the following:
- general global economic conditions may
deteriorate, which could lead to disproportionately reduced
consumer demand for our products, which represent relatively
discretionary spending;
- customer traffic may 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 improperly obtain or be unable
to adequately protect customer information in violation of privacy
or security laws or customer expectations;
- we may be unable to generate comparable
store sales growth;
- we may be unable to effectively operate
or manage the overall portfolio of our company-owned stores;
- 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 not be able to operate our
international company-owned profitably;
- the availability and costs of our
products could be adversely affected by risks associated with
international manufacturing and trade, including foreign currency
fluctuation;
- 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 are susceptible to disruption in our
inventory flow due to our reliance on a few vendors;
- we may be unable to effectively manage
our international franchises or laws relating to those franchises
may change;
- we may fail to renew, register or
otherwise protect our trademarks or other intellectual
property;
- we are subject to risks associated with
technology and digital operations;
- we may suffer negative publicity or be
sued due to violations of labor laws or unethical practices by
manufacturers of our merchandise;
- we may be unable to operate our
company-owned distribution center efficiently or our third-party
distribution center providers may perform poorly;
- high petroleum products prices could
increase our inventory transportation costs and adversely affect
our profitability;
- our plans to leverage the Build-A-Bear
brand to drive strategic expansion may not be successful;
- our market share could be adversely
affected by a significant, or increased, number of
competitors;
- 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;
- poor global economic conditions could
have a material adverse effect on our liquidity and capital
resources;
- fluctuations in our quarterly results
of operations could cause the price of our common stock to
substantially decline; and
- we may be unable to repurchase shares
of our common stock 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.
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 Income
(dollars in thousands, except share and per share data)
13 Weeks
14 Weeks Ended Ended January 2, % of
Total January 3, % of Total 2016
Revenues (1) 2015 Revenues (1)
Revenues: Net retail sales $ 116,469 99.0 $ 129,973 98.8 Franchise
fees 572 0.5 815 0.6 Commercial revenue 624 0.5 714
0.5 Total revenues 117,665 100.0 131,502 100.0 Costs
and expenses: Cost of merchandise sold - retail (1) 56,813 48.8
62,102 47.8 Cost of merchandise sold - commercial (1) 282 45.2 308
43.1 Selling, general and administrative 50,648 43.0 56,383 42.9
Interest expense (income), net 5 0.0 89 0.1 Total
costs and expenses 107,748 91.6 118,882 90.4 Income
before income taxes 9,917 8.4 12,620 9.6 Income tax (benefit)
expense (10,168 ) (8.6 ) 800 0.6 Net income $ 20,085 17.1 $
11,820 9.0 Income per common share: Basic $ 1.23 $
0.68 Diluted $ 1.21 $ 0.67 Shares used in computing common
per share amounts: Basic 16,064,173 16,932,393 Diluted 16,255,329
17,206,636
(1) Selected statement of
income data expressed as a percentage of total revenues, except
cost of merchandise sold - retail and cost of merchandise sold -
commercial that are expressed as a percentage of net retail sales
and commercial revenue, respectively. 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 Income
(dollars in thousands, except share and per share data)
52 Weeks
53 Weeks Ended Ended January 2, % of
Total January 3, % of Total 2016
Revenues (1) 2015 Revenues
(1) Revenues: Net retail sales $ 372,715 98.7 $ 387,725 98.8
Franchise fees 2,196 0.6 2,531 0.6 Commercial revenue 2,783
0.7 2,098 0.5 Total revenues 377,694 100.0
392,354 100.0 Costs and expenses: Cost of merchandise sold - retail
(1) 197,101 52.9 210,887 54.4 Cost of merchandise sold - commercial
(1) 1,375 49.4 945 45.0 Selling, general and administrative 161,463
42.7 164,445 41.9 Interest expense (income), net (143 ) (0.0 ) 53
0.0 Total costs and expenses 359,796 95.3 376,330
95.9 Income before income taxes 17,898 4.7 16,024 4.1 Income tax
(benefit) expense (9,447 ) (2.5 ) 1,662 0.4 Net income $ 27,345
7.2 $ 14,362 3.7 Income per common share: Basic $
1.61 $ 0.82 Diluted $ 1.59 $ 0.81 Shares used in
computing common per share amounts: Basic 16,642,269 16,908,001
Diluted 16,867,356 17,133,811
(1)
Selected statement of income data expressed as a percentage of
total revenues, except cost of merchandise sold - retail and cost
of merchandise sold - commercial that are expressed as a percentage
of net retail sales and commercial revenue, respectively.
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 per
share data)
January 2, January 3, 2016
2015 ASSETS Current assets: Cash and
cash equivalents $ 45,196 $ 65,389 Inventories 53,877 51,939
Receivables 13,346 11,461 Prepaid expenses and other current assets
16,312 15,611 Total current assets
128,731 144,400 Property and equipment, net 67,741 62,766
Deferred tax assets 17,451 2,807 Other intangible assets, net 1,738
304 Other assets, net 4,260 1,777 Total
Assets $ 219,921 $ 212,054
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 42,551 $ 38,107 Accrued expenses 19,286 24,058
Gift cards and customer deposits 35,391 34,268 Deferred revenue
2,633 2,654 Total current liabilities
99,861 99,087 Deferred rent
12,156 13,353 Deferred tax liability 6,587 - Deferred franchise
revenue 728 945 Other liabilities 1,175 1,044
Stockholders' equity: Common stock, par value $0.01 per share 158
174 Additional paid-in capital 45,095 69,362 Accumulated other
comprehensive loss (9,971 ) (8,698 ) Retained earnings
64,132 36,787 Total stockholders' equity
99,414 97,625 Total Liabilities and
Stockholders' Equity $ 219,921 $ 212,054
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Selected Financial and Store Data (dollars in
thousands, except for per square foot data)
13 Weeks 14 Weeks 52
Weeks 53 Weeks Ended Ended Ended
Ended January 2, January 3, January 2,
January 3, 2016 2015 2016 2015
Other financial data: Retail gross margin ($) (1) $
59,656 $ 67,871 $ 175,614 $ 176,838 Retail gross margin (%) (1)
51.2 % 52.2 % 47.1 % 45.6 % Capital expenditures, net (2) $ 11,524
$ 5,209 $ 24,388 $ 10,890 Depreciation and amortization $ 4,157 $
4,743 $ 16,419 $ 18,128
Store data (3):
Number of company-owned retail locations at end of period North
America 269 265 Europe 60 59 Total company-owned
retail locations 329 324 Number of franchised
stores at end of period 77 73 Company-owned store square
footage at end of period (4) North America 719,535 725,942 Europe
85,908 84,789 Total square footage 805,443
810,731 Net retail sales per gross square foot -
North America (5) $ 394 $ 409 Net retail sales per selling square
foot - Europe (6) £ 551 £ 567 Comparable sales change (7)
North America (4.2 )% 8.3 % (0.0 )% 1.4 % Europe (10.0 )% 14.5 %
4.8 % 2.6 % Consolidated (5.6 )% 9.8 % 1.0 % 1.7 % Stores
(6.9 )% 9.9 % 0.5 % 1.6 % E-commerce 16.4 % 9.0 % 11.8 % 3.5 %
Consolidated (5.6 )% 9.8 % 1.0 % 1.7 % (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,
net 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 and Ireland and,
beginning in 2015, Denmark. (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. (5)
Net retail sales per gross square foot represents net retail sales
from stores open throughout the entire period divided by the total
gross square footage of such stores in North America. Calculated on
an annual basis only. (6) Net retail sales per selling square foot
for Europe represents net retail sales in local currency from
stores open throughout the entire period in Europe divided by the
total selling square footage of such stores. Calculated on an
annual basis only. (7) Comparable sales percentage changes are
based on net retail sales and exclude the impact of foreign
exchange. Stores are considered comparable beginning in their
thirteenth full month of operation. Comparable sales percentage
changes for 2015 are based on net retail sales as compared to the
thirteen and fifty-two-week periods ended January 3, 2015.
* 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.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Reconciliation of Net Income to Adjusted Net Income (dollars
in thousands, except per share data)
13 Weeks 14
Weeks 52 Weeks 53 Weeks Ended Ended
Ended Ended January 2, January 3,
January 2, January 3, 2016
2015 2016
2015 Net income $ 20,085 $ 11,820 $ 27,345 $ 14,362
Income tax benefit from reversal of valuation allowances (1)
(10,296 ) (451 ) (10,296 ) (451 ) Foreign exchange losses (2) 544
719 1,684 1,301 Management transition costs (3) (9 ) 724 864 1,886
Other asset impairment (4) - 304 - 304
Adjusted net income $ 10,324 $ 13,116 $ 19,597
$ 17,402
13 Weeks 14 Weeks 52
Weeks 53 Weeks Ended Ended Ended
Ended January 2, January 3, January 2,
January 3, 2016 2015
2016 2015
Net income per diluted share $ 1.21 $ 0.67 $ 1.59 $ 0.81
Income tax benefit from reversal of valuation allowances (1) (0.62
) (0.03 ) (0.60 ) (0.03 ) Foreign exchange losses (2) 0.03 0.04
0.10 0.08 Management transition costs (3) (0.00 ) 0.04 0.05 0.10
Other asset impairment (4) - 0.02 - 0.02
Adjusted net income per diluted share $ 0.62 $ 0.74
$ 1.14 $ 0.98 (1)
Represents the income tax benefit due to
the reversal of valuation allowance on domestic deferred tax assets
in 2015 and foreign deferred tax assets in 2014. After the
adjustment, the effective tax rate was 1.3% and 2.8% for the fiscal
fourth quarter of 2015 and 2014, respectively, and 4.7% and 7.6%
for fiscal 2015 and fiscal 2014, respectively.
(2) Represents the impact of foreign exchange rates on the
re-measurement of balance sheet items not denominated in functional
currency. Amounts are presented net of applicable income tax. (3)
Represents transition costs related to changes in executive
management. Costs include severance, along with benefits and
related taxes, relocation, executive search fees, signing bonus and
professional fees. Amounts are presented net of applicable income
tax. (4) Represents a non-cash charge to impair trade credits.
Amounts are presented net of applicable income tax.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160216005611/en/
Build-A-Bear WorkshopInvestors:Voin Todorovic, 314-423-8000
x5221orMedia:Beth Kerley, 314-423-8000 x5430
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