Build-A-Bear drops doll stores

By Staff -- Playthings, 9/17/2008 8:27:00 AM

ST. LOUIS—Build-A-Bear Workshop is ending its foray into make-your-own dolls, announcing plans yesterday to close its nine Friends 2B Made concept stores.

The retailer expects to complete the move by the end of the third quarter of fiscal 2009, however it said the specific timing of the closures is dependent on finalizing third-party agreements, and is therefore subject to change.

“We have been pleased with the enthusiastic guest response to our Friends 2B Made products and locations, which makes our decision to close these locations even more difficult,” said Maxine Clark, Build-A-Bear Workshop’s chairman and chief executive bear. “However, to take this concept to the next level would require additional investment and the development of an online presence—which today is required to be a viable children’s-entertainment brand. With the slowdown in consumer spending, particularly for discretionary products, we believe the best strategic course for the company is to continue to focus our primary efforts on building Build-A-Bear Workshop … We will also continue to focus our efforts on the successful guest response we are receiving to our virtual world buildabearville.com. This plan allows us to address our goal of improving our sales while focusing on and investing in brand building strategies for long-term growth.”

Build-A-Bear anticipates a pre-tax charge related to the store closures of approximately $2.8 million, or $0.09 per diluted share, in the third quarter of fiscal 2008. This charge is primarily related to the non-cash impairment of store assets. In addition, the Company expects to incur pre-tax charges of approximately $1.9 to $2.3 million during the fourth quarter of fiscal 2008 and through the third quarter of fiscal 2009. The majority of these charges are attributable to potential lease termination costs and other potential costs associated with the closure plan.

In addition to closing the nine Friends 2B Made locations, the company will remove Friends 2B Made products from separate display fixtures in approximately 50 Build-A-Bear Workshop stores and discontinue product sales at www.friends2bmade.com.

Of the nine Friends 2B Made locations, all but one of is inside or adjacent to a Build-A-Bear Workshop store. The stores are located in Boston, Columbus, Ohio, Minneapolis, Myrtle Beach, S.C., New York, Ontario, Calif., Pittsburgh, St. Louis and Temecula, Calif. The company plans to convert several of the locations to expanded Build-A-Bear Workshop stores in 2009, at an expected cost of $2 million.

Plans call for the retailer to offer all Friends 2B Made associates similar positions at nearby Build-A-Bear Workshop store locations.