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Build-A-Bear's losses grow in Q2

By Staff -- Gifts and Dec, 7/30/2009 8:24:00 AM

ST. LOUIS—Build-A-Bear Workshop saw its losses increase in 2009's second quarter, driven upwards by a double-digit decline in U.S. same-store sales.

For the second quarter ended July 4, 2009, the retailer reported a net loss of $6.0 million, or $0.32 per diluted share, compared to its fiscal 2008 second quarter net loss of $4.8 million. The loss for this year’s period included a $0.1 million charge for closing the company's friends 2B made concept stores, and $0.3 million from the allocation of losses related to its minority investment in Ridemakerz.

Total revenues for the quarter were $82.4 million, down 13 percent from the corresponding period of 2008, with retail sales making up $81.3 million of overall revenue. Excluding the impact of foreign exchange, net retail sales declined 11.3 percent despite a 17.7 percent gain in net retail sales overseas. Same-store sales in North America were off 17.5 percent but up 8.2 percent in Europe.

On the bright side, “we ended the second quarter with a strong balance sheet and have expanded our cost containment initiatives, while not losing sight of the unique product, service and experience we bring to our guests,” said Maxine Clark, Build-A-Bear Workshop chairman and Chief Executive Bear. “While our North American sales continue to be impacted by the economic recession, we have assortment, pricing and marketing strategies in place to increase transactions and customer traffic to our stores.”

Among the retailer’s near-term initiatives include a back-to-school promotion that offers “any stuffed animal, plus any hanging outfit, plus any pair of shoes for $29.99” and a brand-building push centered on a proprietary holiday TV special, Holly and Hal Moose: Our Uplifting Christmas Adventure. The show will air twice on ABC Family during the holiday season.

The company also said cost savings initiatives are expected to result in approximately $18 million in annualized pre-tax savings, up from a prior estimate of $15 million, and that capital spending plans remain on track for expenditures of $9 million, down from $23 million in 2008. Such efforts boosted the company’s consolidated cash balance to $31 million at the end of the second quarter, approximately double what it was at the end of 2008’s second quarter.

Year-to-date for the first six months ended on July 4, the company swung to a net loss of $6.8 million, or $0.36 per diluted share, compared to the first half of 2008 when Build-A-Bear recorded a $1.6 million profit. Total revenues slipped 17.7 percent to $179.7 million. Consolidated comparable store sales declined 16 percent overall, with a 7.3 percent increase in Europe offset by a 19.2 decrease in North America. Revenue included net sales of $177.6 million, down 17.5 percent from 2008’s first half. Excluding the impact of foreign exchange, net retail sales declined 15.8 percent.

Build-A-Bear Workshop ended 2009’s second quarter with 345 company-owned stores (291 in North America and 54 in Europe). During the first six months of 2009, the company opened no new stores, as planned, and closed one store.

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