Press Release
Build-A-Bear Workshop, Inc. Reports First Quarter Fiscal 2018 Results
Ms. John continued, “At the same time, we saw ongoing improvements in
operational aspects of the business and progress in key areas of our
diversification strategy. Specifically, we generated improvements in
conversion along with record high levels in both dollars-per-transaction
and units-per-transaction while continuing the transformation of the
business from that of a traditional in-line, mall-based retailer to a
multi-faceted consumer brand. In addition, sales of proprietary product
increased, ecommerce business grew at a double-digit pace, and
international franchise revenue benefited from our recent
First Quarter 2018 Highlights (13 weeks ended
-
Total revenues were
$83.2 million compared to$91.2 million in the fiscal 2017 first quarter; -
Consolidated net retail sales were
$81.4 million compared to$88.7 million in the fiscal 2017 first quarter; - Retail gross margin declined 340 basis points to 44.3% and included a 30 basis point increase in merchandise margin offset by occupancy deleverage driven by lower sales;
-
Selling, general and administrative expenses (“SG&A”) were
$36.3 million , or 43.7% of total revenues, compared to$39.2 million , or 43.0% of total revenues, in the fiscal 2017 first quarter; -
GAAP pre-tax income decreased to
$0.6 million , including an estimated$0.6 million negative pre-tax impact from adoption of the new revenue recognition standard, compared to$4.4 million in the fiscal 2017 first quarter; -
Income tax expense was
$0.3 million with an effective tax rate of 45.2%, compared to$1.8 million with an effective tax rate of 40.6% in the fiscal 2017 first quarter. Further, the first fiscal quarters of 2018 and 2017 included the recognition of$0.1 million and$0.2 million , respectively, of net additional tax expense associated with vested share-based payments; and -
Net income was
$0.4 million , or$0.02 per diluted share, compared to$2.6 million , or$0.16 per diluted share, in the fiscal 2017 first quarter.
Store Activity:
In the first quarter of fiscal 2018, the Company opened 2 locations,
closed 4 locations and remodeled or reformatted 7 stores into a
Discovery format, ending the quarter with 32% of its store base in an
updated Discovery design. As of
Balance Sheet:
As of
Fiscal Year Change:
As previously disclosed, the Company's Board of Directors approved a
change in the Company’s fiscal year-end, which previously ended on the
Saturday closest to
Share Repurchase:
Since
Accounting Changes Impacting Revenue Recognition:
On
2018 Expectations (52 weeks ended
The Company is providing guidance for its expectations for fiscal year 2018. On a GAAP basis, the Company currently expects:
-
Total revenue for the year to be in the range of
$345 to $355 million . For the remainder of the fiscal year, the Company expects revenue to be flat to a slight increase compared to the unaudited recast fiscal year endedFebruary 3, 2018 excluding;- the balance of the negative impact of the previously mentioned accounting changes affecting second quarter through fourth quarter, and
- the revenue from the one extra week included in the recast 2017 fiscal year;
-
Pre-tax income to be in the range of
$8.0 million to $11.5 million . As a reminder, 2018 guidance reflects an estimated$3.9 million negative impact due to accounting changes in revenue recognition; -
Diluted earnings per share to be in the range of
$0.40 to $0.57 , using an effective tax rate of approximately 27%, excluding discrete items; -
Capital expenditures to be in the range of
$15 to $18 million with depreciation and amortization in the range of$16 to $17 million ; and -
To end the year with cash and cash equivalents in the range of
$25 to$30 million .
Today’s Conference Call Webcast:
A replay of the conference call webcast will be available in the
investor relations website for one year. A telephone replay will be
available beginning at approximately
About Build-A-Bear
Build-A-Bear is a global brand kids love and parents trust that seeks to
add a little more heart to life.
Forward-Looking Statements
This press release contains certain statements that are, or may be considered to be, “forward-looking statements” for the purpose of federal securities laws, including, but not limited to, statements that reflect our current views with respect to future events and financial performance. We generally identify these statements by words or phrases such as “may,” “might,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “future,” “potential” or “continue,” the negative or any derivative of these terms and other comparable terminology. All of the information concerning the potential outcome of exploring strategic alternatives, our future liquidity, future revenues, margins and other future financial performance and results, achievement of operating of financial plans or forecasts for future periods, sources and availability of credit and liquidity, future cash flows and cash needs, success and results of strategic initiatives and other future financial performance or financial position, as well as our assumptions underlying such information, constitute forward-looking information.
These statements are based only on our current expectations and
projections about future events. Because these forward-looking
statements involve risks and uncertainties, there are important factors
that could cause our actual results, level of activity, performance or
achievements to differ materially from the results, level of activity,
performance or achievements expressed or implied by these
forward-looking statements, including those factors discussed under the
caption entitled “Risks Related to Our Business” and “Forward-Looking
Statements” in our Annual Report on Form 10-K filed with the
All of our forward-looking statements are as of the date of this Press
Release only. In each case, actual results may differ materially from
such forward-looking information. We can give no assurance that such
expectations or forward-looking statements will prove to be correct. An
occurrence of or any material adverse change in one or more of the risk
factors or other risks and uncertainties referred to in this Press
Release or included in our other public disclosures or our other
periodic reports or other documents or filings filed with or furnished
to the
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 | 13 Weeks | 5 Weeks | |||||||||||||||
Ended | Ended | Ended | |||||||||||||||
May 5, | % of Total | April 29, | % of Total | February 3, | % of Total | ||||||||||||
2018 | Revenues (1) | 2017 | Revenues (1) |
2018 (2) |
Revenues (1) | ||||||||||||
Revenues: | |||||||||||||||||
Net retail sales | $ | 81,425 | 97.9 | $ | 88,743 | 97.3 | 29,586 | 97.9 | |||||||||
Commercial revenue | 1,019 | 1.2 | 2,038 | 2.2 | 358 | 1.2 | |||||||||||
International franchising | 740 | 0.9 | 422 | 0.5 | 279 | 0.9 | |||||||||||
Total revenues | 83,184 | 100.0 | 91,203 | 100.0 | 30,223 | 100.0 | |||||||||||
Cost of merchandise sold: | |||||||||||||||||
Cost of merchandise sold - retail (1) | 45,385 | 55.7 | 46,456 | 52.3 | 16,062 | 54.3 | |||||||||||
Cost of merchandise sold - commercial (1) | 479 | 47.0 | 1,101 | 54.0 | 259 | 72.3 | |||||||||||
Cost of merchandise sold - international franchising (1) | 332 | 44.9 | — | 0.0 | — | 0.0 | |||||||||||
Total cost of merchandise sold | 46,196 | 55.5 | 47,557 | 52.1 | 16,321 | 54.0 | |||||||||||
Consolidated gross profit | 36,988 | 44.5 | 43,646 | 47.9 | 13,902 | 46.0 | |||||||||||
Selling, general and administrative expense | 36,337 | 43.7 | 39,228 | 43.0 | 14,920 | 49.4 | |||||||||||
Interest expense (income), net | 5 | 0.0 | (6 | ) | (0.0) | 10 | 0.0 | ||||||||||
Income before income taxes | 646 | 0.8 | 4,424 | 4.9 | (1,028 | ) | (3.4) | ||||||||||
Income tax expense (benefit) | 292 | 0.4 | 1,795 | 2.0 | (183 | ) | (0.6) | ||||||||||
Net income | $ | 354 | 0.4 | $ | 2,629 | 2.9 | $ | (845 | ) | (2.8) | |||||||
Income per common share: | |||||||||||||||||
Basic | $ | 0.02 | $ | 0.17 | $ | (0.06 | ) | ||||||||||
Diluted | $ | 0.02 | $ | 0.16 | $ | (0.06 | ) | ||||||||||
Shares used in computing common per share amounts: | |||||||||||||||||
Basic | 14,582,573 | 15,561,804 | 14,860,511 | ||||||||||||||
Diluted | 14,722,989 | 15,695,322 | 14,860,511 |
(1) | Selected statement of income data expressed as a percentage of total revenues, except cost of merchandise sold - retail, cost of merchandise sold - commercial and cost of merchandise sold - international franchising that are expressed as a percentage of net retail sales, commercial revenue and international franchising, 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. | |
(2) | On January 4, 2018, the Company's Board of Directors approved a change in the Company’s fiscal year-end, which previously ended on the Saturday closest to December 31, to the Saturday closest to January 31. This change was effective beginning with the Company’s current 2018 fiscal year, which began on February 4, 2018 and will end on February 2, 2019. As a result of the change, the Company had a one fiscal month transition period, December 31, 2017 through February 3, 2018. | |
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||||||||
Unaudited Condensed Consolidated Balance Sheets | ||||||||||||
(dollars in thousands, except per share data) | ||||||||||||
May 5, | December 30, | April 29, | ||||||||||
2018 | 2017 | 2017 | ||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 18,881 | $ | 30,445 | $ | 30,189 | ||||||
Inventories | 49,423 | 53,136 | 55,202 | |||||||||
Receivables | 8,968 | 13,302 | 6,465 | |||||||||
Prepaid expenses and other current assets | 11,493 | 13,346 | 11,575 | |||||||||
Total current assets | 88,765 | 110,229 | 103,431 | |||||||||
Property and equipment, net | 76,410 | 77,751 | 73,937 | |||||||||
Deferred tax assets | 4,102 | 6,381 | 10,090 | |||||||||
Other intangible assets, net | 950 | 995 | 1,512 | |||||||||
Other assets, net | 2,427 | 2,633 | 2,407 | |||||||||
Total Assets | $ | 172,654 | $ | 197,989 | $ | 191,377 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 12,965 | $ | 18,942 | $ | 23,442 | ||||||
Accrued expenses | 8,739 | 15,189 | 12,099 | |||||||||
Gift cards and customer deposits | 17,007 | 33,926 | 31,596 | |||||||||
Deferred revenue and other | 1,893 | 1,806 | 1,943 | |||||||||
Total current liabilities | 40,604 | 69,863 | 69,080 | |||||||||
Deferred rent | 17,697 | 17,906 | 16,458 | |||||||||
Deferred franchise revenue | 1,142 | 1,208 | 516 | |||||||||
Other liabilities | 1,794 | 1,697 | 1,911 | |||||||||
Stockholders' equity: | ||||||||||||
Common stock, par value $0.01 per share | 151 | 155 | 160 | |||||||||
Additional paid-in capital | 66,908 | 68,962 | 69,187 | |||||||||
Accumulated other comprehensive loss | (11,546 | ) | (11,562 | ) | (12,061 | ) | ||||||
Retained earnings | 55,904 | 49,760 | 46,126 | |||||||||
Total stockholders' equity | 111,417 | 107,315 | 103,412 | |||||||||
Total Liabilities and Stockholders' Equity | $ | 172,654 | $ | 197,989 | $ | 191,377 | ||||||
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||||
Unaudited Selected Financial and Store Data | ||||||||
(dollars in thousands, except for per square foot data) | ||||||||
13 Weeks | 13 Weeks | |||||||
Ended | Ended | |||||||
May 5, | April 29, | |||||||
2018 | 2017 | |||||||
Other financial data: | ||||||||
Retail gross margin ($) (1) | $ | 36,040 | $ | 42,287 | ||||
Retail gross margin (%) (1) | 44.3 | % | 47.7 | % | ||||
Capital expenditures (2) | $ |
3,030 |
$ | 3,808 | ||||
Depreciation and amortization | $ | 4,115 | $ | 3,907 | ||||
Store data (3): | ||||||||
Number of corporately-managed retail locations at end of period | ||||||||
North America | 294 | 276 | ||||||
Europe | 57 | 60 | ||||||
Asia | 1 | 1 | ||||||
Total corporately-managed retail locations | 352 | 337 | ||||||
Number of franchised stores at end of period | 96 | 88 | ||||||
Corporately-managed store square footage at end of period (4) | ||||||||
North America | 716,007 | 731,427 | ||||||
Europe | 79,236 | 85,177 | ||||||
Asia | 1,750 | 1,750 | ||||||
Total square footage | 796,993 | 818,354 |
(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 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, Ireland and Denmark. In Asia, the store is located in China. | |
(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. | |
Build-A-Bear Workshop, Inc. and subsidiaries | ||||||||||||||||||||
Selected recast historical financial information (unaudited) | ||||||||||||||||||||
(dollars in millions) | ||||||||||||||||||||
Fiscal 2017 | ||||||||||||||||||||
13 weeks ended |
13 weeks ended |
13 weeks ended |
14 weeks ended |
53 weeks ended |
||||||||||||||||
Net retail sales | $ | 88,743 | $ | 76,383 | $ | 74,441 | $ | 115,478 | $ | 355,045 | ||||||||||
Commercial revenue | 2,038 | 2,086 | 1,196 | 1,025 | 6,345 | |||||||||||||||
International franchising | 422 | 711 | 514 | 923 | 2,570 | |||||||||||||||
Total revenues | 91,203 | 79,180 | 76,151 | 117,426 | 363,960 | |||||||||||||||
Cost of merchandise sold - retail | 46,456 | 42,339 | 43,267 | 55,406 | 187,468 | |||||||||||||||
Cost of merchandise sold - commercial | 1,101 | 1,235 | 558 | 767 | 3,661 | |||||||||||||||
Cost of merchandise sold - int'l franchising | - | - | - | - | - | |||||||||||||||
Total cost of merchandise sold ($) | 47,557 | 43,574 | 43,825 | 56,173 | 191,129 | |||||||||||||||
Total cost of merchandise sold (%) 1 | 52.1 | % | 55.0 | % | 57.6 | % | 47.8% | 52.5 | % | |||||||||||
Selling, general and administrative | 39,228 | 35,780 | 36,196 | 47,633 | 158,837 | |||||||||||||||
Interest expense/(income) | (6 | ) | (10 | ) | 7 | 33 | 24 | |||||||||||||
Income/(loss) before income taxes | 4,424 | (164 | ) | (3,877 | ) | 13,587 | 13,970 | |||||||||||||
Income/(loss) before income taxes (%) 1 | 4.9 | % | (0.2 | )% | (5.1 | )% | 11.6% | 3.8 | % | |||||||||||
Retail gross margin ($) 2 | 42,287 | 34,044 | 31,174 | 60,072 | 167,577 | |||||||||||||||
Retail gross margin (%) 2 | 47.7 | % | 44.6 | % | 41.9 | % | 52.0% | 47.2 | % | |||||||||||
Store count | 337 | 353 | 351 | 354 | 354 | |||||||||||||||
Selected balance sheet information: | ||||||||||||||||||||
Cash | $ | 30,189 | $ | 12,236 | $ | 11,381 | $ | 21,499 | $ | 21,499 | ||||||||||
Inventory | $ | 55,202 | $ | 59,368 | $ | 62,854 | $ | 58,100 | $ | 58,100 | ||||||||||
(1) | Selected statement of income data expressed as a percentage of total revenues. | |
(2) | 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. | |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180531005383/en/
Source:
Build-A-Bear Workshop
Investors:
Voin Todorovic, 314-423-8000
x5221
or
Media:
Beth Kerley
bethk@buildabear.com