Build-A-Bear's comps crumble in Q2

By Staff -- Playthings, 7/25/2008 8:35:00 AM

ST. LOUIS—Build-A-Bear Workshop lost $4.8 million in the second quarter as revenue fell 6 percent for the make-your-own plush retailer.

Fiscal 2008 second quarter revenue was $94.7 million, down from $100.4 million in its fiscal 2007 second quarter. Its loss $4.8 million loss for the period, worth 25 cents per share, was a turnaround from the same period of 2007, when Build-A-Bear earned a $1.6 million profit.

“The slowdown in consumer spending is having a significant impact on our current business,” said Maxine Clark, Build-A-Bear Workshop’s chairman and chief executive bear. “In response to this environment, we are carefully allocating capital and managing cash, while aggressively reducing expenses. Foremost, our goal is to improve our sales trend while selectively investing in our unique brand for long-term growth.

Also impacting the company’s second quarter results was this year’s earlier Easter holiday, which pushed sales related to that holiday into the company’s first quarter results instead of being tallied as part of the second quarter.

Net retail sales during the quarter fell 5.7 percent to $93.5 million. The change was attributed to a decrease in comparable store sales in North America, partially offset by new stores opened during the past year and an increase in comparable store sales in European operations.

Overall, consolidated comparable store sales worldwide fell 17.9 percent. Comparable stores sales in North America declined 20.5 percent. Comparable stores sales in Europe increased 2.2 percent.

Net retail sales from European operations rose 39 percent to $15.3 million. The loss from European operations totaled $1 million in the 2008 second quarter, down from a loss of $1.7 million in the same period of 2007.

During the second quarter, Build-A-Bear opened four stores in North America, as planned, compared with opening 15 new stores during the 2007 second quarter. In Europe, the company opened one new store, in Liverpool, England, the same number as it opened in 2007’s Q2.

At the end of the quarter, Build-A-Bear had 330 company-owned locations—278 in North America and 52 in Europe. During the course of 2008, the company plans to open 20 stores in North America (versus 39 new stores in 2007) and five company-owned stores in Europe (11 new stores in 2007). In addition to its five new European locations, international franchisees opened six stores during the quarter, bringing its total number of international franchise locations to 58 in 14 countries.

For 2009, Clark said the retailer plans “a significant reduction in new store openings”—just six stores worldwide.

In addition to its Q2 results, the Build-A-Bear this week announced it was raising its total equity investment in RidemakerZ LLC to $7.3 million, funded by a combination of cash and contributed services. RidemakerZ is an interactive retail concept that allows children and families to build and customize their own personalized cars. It currently has a dozen locations, mostly in the Midwest.