Build-A-Bear's Q2 Earnings Soar on Robust Sales Growth

TL;DR

BBW is crushing it, proving experiential retail isn't dead and their growth story is just getting started.

AI Summary

BUILD-A-BEAR WORKSHOP INC (BBW) reported a strong financial performance for the thirteen weeks ended August 2, 2025, with total revenues increasing by 11.1% to $124.2 million from $111.8 million in the prior year period. Net income surged by 40.9% to $12.4 million, up from $8.8 million in the same period last year. Basic income per common share rose to $0.94 from $0.64. For the twenty-six weeks ended August 2, 2025, total revenues grew by 11.5% to $252.6 million, and net income increased by 36.8% to $27.7 million compared to $20.2 million in the prior year. The company's direct-to-consumer segment accounted for 92% of consolidated revenue for the second quarter of fiscal 2025. Cash and cash equivalents significantly increased to $39.1 million as of August 2, 2025, from $27.8 million at February 1, 2025. Operating lease right-of-use assets increased to $101.0 million from $94.2 million in the prior year, driven by new store leases and longer-term extensions. The company also noted a hypothetical 1% change in its gift card breakage rate in fiscal 2024 would have resulted in a $1.1 million change in breakage revenue, indicating sensitivity in this area.

Why It Matters

This strong performance from Build-A-Bear indicates a successful pivot and sustained consumer interest in experiential retail, which is crucial for investors evaluating the company's long-term viability in a competitive market dominated by online shopping and other entertainment options. The significant increase in net income and cash flow suggests efficient operations and effective strategic initiatives, potentially signaling a healthy return on investment for shareholders. For employees, continued growth could mean job security and expansion opportunities. Customers benefit from new store leases and extensions, enhancing accessibility and the in-store experience, while the broader market sees a traditional retailer successfully adapting and thriving.

Risk Assessment

Risk Level: medium — While BBW shows strong growth, the filing highlights a sensitivity to gift card breakage rates, where a hypothetical 1% change in fiscal 2024 would have impacted breakage revenue by $1.1 million. Additionally, the company's reliance on its direct-to-consumer segment for 92% of consolidated revenue for Q2 2025, while a strength, also represents a concentration risk if consumer preferences or retail traffic patterns shift significantly.

Analyst Insight

Investors should consider BBW's strong financial performance and increased cash position as a positive indicator. Given the company's successful navigation of the retail landscape and growth in net income, it may be an opportune time to evaluate adding BBW to a growth-oriented portfolio, especially considering its strategic lease expansions.

Financial Highlights

debt To Equity

N/A

revenue

$124.2M

operating Margin

N/A

total Assets

$318.2M

total Debt

N/A

net Income

$12.4M

eps

$0.94

gross Margin

57.6%

cash Position

$39.1M

revenue Growth

+11.1%

Revenue Breakdown

Key Numbers

• $124.2M — Total Revenues (Q2 2025) (Up 11.1% from $111.8M in Q2 2024)
• $12.4M — Net Income (Q2 2025) (Up 40.9% from $8.8M in Q2 2024)
• $0.94 — Basic EPS (Q2 2025) (Up from $0.64 in Q2 2024)
• $252.6M — Total Revenues (YTD 2025) (Up 11.5% from $226.5M in YTD 2024)
• $27.7M — Net Income (YTD 2025) (Up 36.8% from $20.2M in YTD 2024)
• $39.1M — Cash and Cash Equivalents (Increased from $27.8M at February 1, 2025)
• 92% — Direct-to-Consumer Revenue Share (Represents 92% of consolidated revenue for Q2 2025)
• $101.0M — Operating Lease Right-of-Use Asset (Increased from $94.2M as of August 3, 2024)

Key Players & Entities

• BUILD-A-BEAR WORKSHOP INC (company) — Registrant
• SEC (regulator) — United States Securities and Exchange Commission
• $124.2 million (dollar_amount) — Total revenues for thirteen weeks ended August 2, 2025
• $111.8 million (dollar_amount) — Total revenues for thirteen weeks ended August 3, 2024
• $12.4 million (dollar_amount) — Net income for thirteen weeks ended August 2, 2025
• $8.8 million (dollar_amount) — Net income for thirteen weeks ended August 3, 2024
• $0.94 (dollar_amount) — Basic income per common share for thirteen weeks ended August 2, 2025
• $0.64 (dollar_amount) — Basic income per common share for thirteen weeks ended August 3, 2024
• $39.1 million (dollar_amount) — Cash and cash equivalents as of August 2, 2025
• $1.1 million (dollar_amount) — Impact of a hypothetical 1% change in gift card breakage rate in fiscal 2024

FAQ

Risk Factors

• Supply Chain Disruptions [medium — operational]: The company relies on a global supply chain for its merchandise. Disruptions due to geopolitical events, natural disasters, or labor issues could impact inventory availability and increase costs.
• Changing Consumer Preferences [medium — market]: The success of Build-A-Bear is tied to current trends in children's entertainment and toy preferences. Failure to adapt to evolving tastes could lead to decreased demand.
• Gift Card Breakage Revenue Sensitivity [low — financial]: A hypothetical 1% change in the gift card breakage rate in fiscal 2024 would have resulted in a $1.1 million change in breakage revenue. This indicates a sensitivity to assumptions used in recognizing this revenue stream.
• Lease Obligations [medium — operational]: Operating lease right-of-use assets have increased to $101.0 million. While indicative of expansion, significant lease obligations represent a fixed cost that could be burdensome during economic downturns.
• Data Privacy and Security [medium — regulatory]: As a company collecting customer data, Build-A-Bear is subject to data privacy regulations. Breaches or non-compliance could result in significant fines and reputational damage.
• Competition [high — market]: The toy and entertainment industry is highly competitive, with both large established players and emerging niche brands. Maintaining market share requires continuous innovation and effective marketing.

Industry Context

Build-A-Bear operates in the highly competitive toy and entertainment retail sector, facing pressure from both traditional toy companies and digital entertainment platforms. The industry is characterized by seasonal sales, evolving consumer preferences driven by digital trends, and a need for engaging, experiential retail. Companies like Build-A-Bear must continuously innovate their product offerings and in-store experiences to remain relevant.

Regulatory Implications

Build-A-Bear is subject to standard retail regulations, including consumer protection laws, gift card regulations (e.g., dormancy periods and fees), and data privacy laws (like CCPA/GDPR) for its e-commerce operations. Compliance with these regulations is crucial to avoid fines and maintain customer trust.

What Investors Should Do

1. Monitor DTC performance and growth drivers.
2. Analyze inventory levels and cost of goods sold.
3. Assess the impact of lease obligations on cash flow.
4. Evaluate the growth in cash and cash equivalents.

Key Dates

• 2025-08-02: End of Second Quarter Fiscal Year 2025 — Reporting period for strong revenue and net income growth, demonstrating positive business momentum.
• 2025-02-01: End of First Quarter Fiscal Year 2025 — Starting point for cash and cash equivalents increase, showing improved liquidity.
• 2024-08-03: End of Second Quarter Fiscal Year 2024 — Prior year comparison period for revenue and net income, highlighting significant year-over-year improvements.

Glossary

Operating lease right-of-use asset

An asset representing the right to use an leased item (like a store location) over the lease term. It's recognized on the balance sheet under lease accounting standards. (Shows the company's investment in its physical store footprint, with an increase indicating expansion or longer lease terms.)

Gift card breakage rate

The rate at which unredeemed gift card balances are recognized as revenue by the company, typically after a period of inactivity defined by state laws and company policy. (Highlights a specific revenue stream that is sensitive to assumptions and could be impacted by changes in customer redemption behavior.)

Direct-to-consumer (DTC)

Sales channels where a company sells its products directly to end consumers, bypassing intermediaries like wholesalers or retailers. For BBW, this includes their own stores and e-commerce. (Indicates the overwhelming importance of BBW's own sales channels, particularly online and in-store, to its overall business performance.)

Accumulated other comprehensive loss

A component of equity that includes unrealized gains and losses on certain investments, foreign currency translation adjustments, and pension adjustments that have not yet been realized in net income. (Represents potential future impacts on equity that are not currently reflected in the company's net income.)

Retained earnings

The cumulative amount of net income that a company has kept over time, rather than distributing it to shareholders as dividends. (Shows the company's ability to generate profits and reinvest them back into the business or build equity.)

Year-Over-Year Comparison

Build-A-Bear Workshop Inc. has demonstrated robust year-over-year growth. Total revenues for the thirteen weeks ended August 2, 2025, increased by 11.1% to $124.2 million, and net income surged by 40.9% to $12.4 million. This contrasts with the prior year's performance, indicating successful execution and market reception. The company's cash position has also strengthened significantly, rising to $39.1 million from $25.2 million in the prior year period, reflecting improved liquidity and financial management.

Filing Documents

• bbw20250723_10q.htm (10-Q) — 1222KB
• ex_860539.htm (EX-10.1) — 85KB
• ex_842593.htm (EX-31.1) — 15KB
• ex_842594.htm (EX-31.2) — 14KB
• ex_842595.htm (EX-32.1) — 5KB
• ex_842596.htm (EX-32.2) — 5KB
• 0001437749-25-028810.txt ( ) — 6252KB
• bbw-20250802.xsd (EX-101.SCH) — 44KB
• bbw-20250802_cal.xml (EX-101.CAL) — 41KB
• bbw-20250802_def.xml (EX-101.DEF) — 272KB
• bbw-20250802_lab.xml (EX-101.LAB) — 265KB
• bbw-20250802_pre.xml (EX-101.PRE) — 303KB
• bbw20250723_10q_htm.xml (XML) — 1301KB

Financial Information

Part I Financial Information Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 4 Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) 5 Condensed Consolidated Statements of Cash Flows 6 Notes to Condensed Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 25 Item 4.

Controls and Procedures

Controls and Procedures 25

Other Information

Part II Other Information Item 1A.

Risk Factors

Risk Factors 26 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26 Item 5. Other Information 26 Item 6. Exhibits 27

Signatures

Signatures 28 3 Table of Contents

-FINANCIAL INFORMATION

PART I-FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share and per share data) August 2, February 1, August 3, 2025 2025 2024 (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 39,108 $ 27,758 $ 25,163 Inventories, net 81,758 69,775 66,977 Receivables, net 13,526 16,096 12,075 Prepaid expenses and other current assets 10,026 12,669 13,258 Total current assets 144,418 126,298 117,473 Operating lease right-of-use asset 100,950 90,200 94,158 Property and equipment, net 58,804 59,761 53,303 Deferred tax assets 8,045 7,596 8,694 Other assets, net 6,021 6,101 5,831 Total Assets $ 318,238 $ 289,956 $ 279,459 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 16,659 $ 16,538 $ 17,542 Accrued expenses 19,110 16,209 13,343 Operating lease liability short term 26,996 26,841 30,110 Gift cards and customer deposits 14,343 15,791 15,828 Deferred revenue and other 3,964 4,015 3,490 Total current liabilities 81,072 79,394 80,313 Operating lease liability long term 80,365 70,155 71,993 Other long-term liabilities 1,406 1,325 1,362 Stockholders' equity: Preferred stock, par value $ 0.01 , Shares authorized: 15,000,000 ; No shares issued or outstanding at August 2, 2025, February 1, 2025 and August 3, 2024 - - - Common stock, par value $ 0.01 , Shares authorized: 50,000,000 ; Issued and outstanding: 13,159,408 , 13,257,131 , and 13,590,945 shares, respectively 132 133 136 Additional paid-in capital 61,701 61,987 62,831 Accumulated other comprehensive loss ( 11,304 ) ( 12,554 ) ( 11,913 ) Retained earnings 104,866 89,516 74,737 Total stockholders' equity 155,395 139,082 125,791 Total Liabilities and Stockholders' Equity $ 318,238 $ 289,956 $ 279,459 See accompanying notes to condensed consolidated financial statements. 4 Table of Contents BUILD

View Full Filing

View this 10-Q filing on SEC EDGAR