Build-A-Bear Workshop’s future: More outlet stores, pop-ups — and cruise ships
Build-A-Bear Workshop on Tuesday said it will continue to diversify its store portfolio — including the opening of a branded experience on a cruise ship — as the chain announced disappointing results for its fourth quarter.
The retailer reported a better-than-expected profit of $20.6 million for the quarter, ended January 3, 2016, compared to net income of $11.8 million in the year ago period.
Revenue totaled $117.7 million for the quarter, down from $131.5 million. Same-store sales (stores and e-commerce) decreased 5.6% following a 9.8% increase in fiscal 2014. The company blamed the decline in sales on a calendar shift in 2014, store closures and the negative impact of foreign exchange.
Build-A-Bear outlined key strategic initiatives for 2016 in its earnings release, including the ongoing diversification of its real estate portfolio with the addition of outlet stores, shop-in-shops and seasonal pop-up locations. The chain also expects to offer a branded experience on board Carnival Cruise Lines ships through a wholesale agreement, beginning in the second half of 2016.
The company will add 10 corporate- owned and operated locations in 2016. Through a combination of remodels and new openings, it expects to end the year with between 45 and 55 stores in its updated and more interactive “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.
In addition, the company expects its franchisees to open between 20 and 25 new royalty-generating stores in a number of countries throughout the year.
Build-A-Bear also plans to grow its licensed products with companies, including Marvel, and introduce a proprietary product, Horses and Hearts, in the second quarter.
In fiscal 2015, Build-A-Bear's profit rose to $27.3 million, or $1.59 a share, up from $14.4 million in 2014, or 81 cents a share. Revenue came in at $377.7 million, down from $392.4 million in 2014.
Also in 2015, the company's average transaction value rose to $44.10, the highest since Build-A-Bear was founded in 1997.
“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," said Sharon Price John, CEO, Build-A-Bear Workshop.
The company operated 329 company-owned stores (269 in North American and 60 in Europe) at the end of 2015. Its international franchisees ended the year with 77 stores in 11 countries.