UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended ~~November 2, 2019~~August 1, 2020

☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from to

Commission file number: 001-32320

BUILD-A-BEAR WORKSHOP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

43-1883836

(State or Other Jurisdiction of

Incorporation or Organization)

(IRS Employer

Identification No.)

~~1954 Innerbelt Business Center Drive~~415 South 18th St.

St. Louis, Missouri

~~63114~~63103

(Address of Principal Executive Offices)

(Zip Code)

(314) 423-8000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock	BBW	New York Stock Exchange

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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒

Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 14(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~December 9, 2019,~~September 7, 2020, there were ~~15,219,877~~15,591,553 issued and outstanding shares of the registrant’s common stock.

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1. Basis of Presentation

The condensed consolidated financial statements included herein are unaudited and have been prepared by Build-A-Bear Workshop, Inc. and its subsidiaries (collectively, the “Company”) pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet of the Company as of February ~~2, 2019~~1, 2020 was derived from the Company’s audited consolidated balance sheet as of that date. All other condensed consolidated financial statements contained herein are unaudited and reflect all adjustments which are, in the opinion of management, necessary to summarize fairly the financial position of the Company and the results of the Company’s operations and cash flows for the periods presented. All of these adjustments are of a normal recurring nature. All significant intercompany balances and transactions have been eliminated in consolidation. Because of the seasonal nature of the Company’s operations, results of operations of any single reporting period should not be considered as indicative of results for a full year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended February ~~2, 2019,~~1, 2020, which were included in the Company’s Annual Report on Form ~~10-K~~10-K filed with the SEC on April ~~18, 2019.~~ 16, 2020.

~~Recent Accounting Pronouncements – Adopted in the~~ C~~urrent~~ Y~~ear~~COVID-19 Pandemic

~~Effective February 3, 2019,~~ In March 2020, the World Health Organization announced that COVID-19 is a global pandemic. On March 17, 2020, the Company ~~adopted~~announced the ~~Financial Accounting Standards Board ("FASB") new guidance~~temporary closure of all corporately-managed stores in the United States, Canada, the United Kingdom, Denmark and Ireland as a result of the pandemic. In addition, on ~~leases (“Topic 842”)~~March 26, 2020, the Company announced the temporary closure of its warehouse and e-commerce fulfillment center in Ohio as it reviewed its process related to workplace safety, including social distancing and sanitation practices recommended by the Centers for Disease Control and Prevention. The Ohio warehouse was reopened on April 1, 2020 following the review and reconfiguration of workflow and workspaces to further promote social distancing and minimize interaction as orders are fulfilled. The Company took various steps in response to COVID-19, such as furloughing employees, reducing compensation for all employees including executive officers, delaying payment of bonuses and 401(k) plan contributions, reducing planned capital expenditures to maintenance levels, deferring payments through extension of terms, and leveraging rent payments to landlords during negotiations for more favorable terms.

Operational and Distribution Network Update for the second quarter due to COVID-19:

	●	During the second quarter, the Company reopened almost all of its stores where allowable by local law and ended the quarter with approximately 90% of its corporately-managed store locations reopened.
	●	The Company’s e-commerce site was fully operational throughout the quarter. The Company continued to see strong digital demand with growth rates at triple-digit levels compared to the comparable period in 2019.
	●	The Company accelerated its omni-channel competencies of "Buy Online, Ship From Store" and "Buy Online, Pick Up In Store" allowing currently operating stores to serve as "mini distribution centers", which the Company believes is an efficient shift given the ongoing challenges in traditional retail traffic. Expanded omni-channel allows the Company to leverage the geographic proximity of stores as well as available labor to help fulfill continuing strong e-commerce demand.
	●	The Company continued disciplined expense management and cash preservation across all areas of the business including continued compensation reductions for all employees including executive officers, continued delayed payment of bonuses and 401(k) contribution plans; it also continued to limit its capital expenditures to maintenance levels;
	●	The Company completed a long-planned corporate reorganization that aligned key functions and leadership roles with strategic initiatives and allowing it to operate as a leaner, simpler organization;
	●	The Company reduced its workforce through furloughs, attrition and position eliminations;
	●	The Company’s supply chain experienced no significant disruptions in the quarter with the Company able to receive deliveries in a timely manner;
	●	The Company’s franchisees ended the quarter with 62 locations open and operating as permitted by law across Africa, Asia, Australia, the Middle East and South America, while 16 locations remain temporary closed due to COVID- 19;
	●	Select locations associated with the Company’s third-party retail model were operating at the end of the quarter.

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The Company's operating results for the thirteen and twenty-six weeks ended August 1, 2020may not be indicative of the results that may be expected for the fiscal year ending January 30, 2021 because of the impact of the COVID-19 pandemic. The pandemic has had, and will continue to have, a negative impact on the Company's business, financial condition, and cash flows, although the full extent is uncertain. As the pandemic continues to evolve, the extent of the impact will depend on future developments, including, but not limited to, the duration and extent of any temporary closing of certain of its stores, the duration of quarantines, shelter-in-place orders and other travel restrictions within the U.S. and other affected countries, the duration and spread of the pandemic (including any relapses), its severity, the actions to contain the virus and/or treat its impact, the duration, timing and severity of the impact on consumer spending (including the recession resulting from the pandemic), and how quickly and to what extent normal economic and operating conditions can resume, all of which are highly uncertain and cannot be predicted.

In addition, the Company’s business is subject to seasonal fluctuations, with significant portions of the Company’s revenues and net income being realized during the fourth quarter of the fiscal year due to the holiday selling season. Therefore, the results for the thirteen and twenty-six weeks ended August 1, 2020 are not necessarily indicative of the results to be expected for the fiscal year ending January 30,2021, or for any other future interim period or for any future year.

The Company had not borrowed on its credit facility as of September 8, 2020. On August 25, 2020, Build-A-Bear Workshop, Inc. entered into a Revolving Credit and Security Agreement with PNC Bank, National Association, as agent. The agreement provides for a senior secured revolving loan in aggregate principal amount of up to $25,000,000 (subject to a borrowing base formula), which ~~replaced most~~may be increased with the consent of the lenders by an amount not to exceed $25,000,000. Additionally, on August 25, 2020, upon execution of the agreement with PNC Bank, the Company terminated its existing ~~lease accounting guidance~~bank credit line with U.S. Bank. Inclusive of the new credit facility, the Company's liquidity may be negatively impacted if the pandemic results in ~~U.S. GAAP.~~the temporary closing of certain of its stores. The Company ~~elected~~believes that its current cash balance, access to its revolving credit facility, along with the ~~optional transition method~~actions taken as outlined above, provide it with sufficient current liquidity. The future impact of COVID-19may require further actions by the Company to improve its cash position, including but not limited to, monetizing Company assets including the Company-owned warehouse in Ohio, inventory, implementing additional employee furloughs or position eliminations, and foregoing capital expenditures and other discretionary expenses.

Significant Accounting Policies

The Company's significant accounting policies are summarized in Note 2 to the consolidated financial statements included in its Form 10-K for the year ended February 1, 2020. An update and supplement to these policies is needed for the Company's accounting for government assistance, long-live asset impairment, and lease modifications as a result of activity during the second quarter of fiscal 2020.

Government Grants

The Company applied for reimbursement of payroll expenses in certain jurisdictions through COVID-19 related government programs for payroll paid to employees who were paid while not providing services to the Company during the first and second quarters of fiscal 2020. These programs require the Company to apply to the government for reimbursement of wages based on the applicable laws and programs within each jurisdiction. Through review of and application to these programs, the Company believes it qualifies for such reimbursement, and it is probable that ~~gives companies~~ the ~~option to use the effective date as the date of initial application on transition, and as~~expenses will be reimbursed. As a result, the Company ~~did not adjust its comparative~~recorded a reduction to expenses of approximately $1.5 million for the thirteen weeks ended August 1, 2020 and $3.0 million for the twenty-six weeks ended August 1, 2020 related to these wages within the Selling, general and administrative line in the Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income for the period ~~financial information or make the new required lease disclosures for periods before the effective date.~~ending August 1, 2020.

~~See Note 3 — Leases for additional information.~~

Long-live Assets, including right-of-use operating lease assets

Whenever facts and circumstances indicate that the carrying value of long-lived assets and right-of-use operating lease assets may not be recoverable, the carrying value of those assets is reviewed. If this review indicates that the carrying value of the asset will not be recovered, as determined based on projected undiscounted cash flows related to the asset over its remaining life, the carrying value of the asset is reduced to its estimated fair value. The Company typically performs an annual assessment of its store assets in the direct-to-consumer (“DTC”) segment, based on operating performance and forecasts of future performance. As a result of the COVID-19 pandemic, the Company experienced lower than projected revenues and identified indicators of impairment for its store fleet. The Company performed the recoverability test for these assets by comparing the estimated undiscounted future cash flows over the remaining useful life for its long-lived assets and right-of-use assets and determined that certain stores had long-lived and right-of-use assets with carrying values that exceeded their estimated undiscounted future cash flows for the remaining useful life of the respective assets..

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The Company estimated fair values of these long-lived assets based on its discounted future cash flows for the remaining useful life of the asset or market rent assessments. Our analysis indicated that the carrying values of certain of its long-lived assets exceeded their respective fair values determined by the discounted future cash flow analysis or the market rent assessment. As a result, the Company recognized an impairment charge of $2.1 million for the thirteen weeks ended August 1, 2020, with approximately $1.2 million for right-of-use operating lease assets and $0.9 million for fixed assets including leasehold improvements, fixtures, furniture and fixtures, machinery and equipment, and construction-in-progress. For the twenty-six weeks ended August 1, 2020 the Company has recognized impairment charges totaling $6.9 million, with approximately $3.6 million for right-of-use operating lease assets and $3.3 million for fixed assets including leasehold improvements, fixtures, furniture and fixtures, machinery and equipment, and construction-in-progress. These charges are recorded in Store asset impairment within the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) for the respective periods. These impairment charges were primarily driven by lower than projected revenues and the effect of store closures as a result of the COVID-19 pandemic. The majority of the impairment was recorded for assets associated with stores in North America. For the thirteen weeks ended August 3, 2019, the Company recorded 0 impairment charges and for the twenty-six weeks ended August 3, 2019 the Company recorded impairments charges of $5.9 million on right-of-use assets into retained earnings as a result of the adoption of ASC 842, Leases.

The determination of estimated market rent used in the fair value estimate of the Company’s operating lease assets included within the respective store asset group requires significant management judgment. Changes in these estimates could have a significant impact on whether long-lived store assets should be further evaluated for impairment and could have a significant impact on the resulting impairment charge. The significant estimates, all of which are considered Level 3 inputs, used in the fair value methodology include: the Company’s expectations for future operations and projected cash flows, including revenues, operating expenses including market rents, and market conditions.

Lease modifications

In April 2020, the FASB issued guidance indicating that entities may elect not to evaluate whether concessions provided by lessors are a lease modification. Under existing lease guidance, an entity would have to determine if a lease concession was the result of a new arrangement reached with the landlord, which would be accounted for under the lease modification framework, or if the concession was under the enforceable rights and obligations that existed in the original lease, which would be accounted for outside the lease modification framework. The FASB guidance provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. During the second quarter of 2020, the Company elected to not adopt this accounting guidance, but rather account for any lease changes under guidance previously issued for ASC 842,Leases. Refer to Note 3 to the consolidated financial statements for further discussion regarding the Company's accounting for leases.

2. Revenue

Nearly all the Company’s revenue is derived from retail sales (including from its e-commerce sites) and is recognized when control of the merchandise is transferred to the customer. The Company's disaggregated revenue is fully disclosed as net sales to external customers by reporting segment and by geographic area (See Note 11 — Segment Information for additional information). The Company's direct-to-consumer reporting segment represents ~~95%~~97% of consolidated ~~revenue.~~revenue for the second quarter of fiscal 2020. The majority of these sales transactions are single performance obligations that are recorded when control is transferred to the customer.

The following is a description of principal activities from which the Company generates its revenue, by reportable segment.

The Company’s direct-to-consumer segment includes the operating activities of corporately-managed stores, other retail-delivered operations and online sales. Direct-to-consumer revenue is recognized when control of the merchandise is transferred to the customer and for the Company's online sales, generally upon estimated delivery to the customer. Revenue is measured as the amount of consideration, including any discounts or incentives, the Company expects to receive in exchange for transferring the merchandise. Product returns have historically averaged less than ~~one-half~~one-half of one percent due to the personalized and interactive nature of sales, where consumers customize their own stuffed animal. The Company has elected to exclude from revenue all collected sales, value added and other taxes paid by its customers.

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For the Company’s gift cards, revenue, including any related gift card discounts, is deferred for single transactions until ~~redemption including any related gift card discounts.~~redemption. Historically, most gift card redemptions have occurred within three years of acquisition and approximately 75% of gift cards have been redeemed within the firsttwelve months. In addition, unredeemed gift cards or breakage revenue is recorded in proportion to the customer’s redemption period using an estimated breakage rate based on historical experience. For certain qualifying transactions, a portion of revenue transactions are deferred for the obligation related to the Company’s loyalty program or when a material right in the form of a future discount is granted. In these transactions, the transaction price is allocated to the separate performance obligations based on the relative standalone selling price. The standalone selling price for the points earned for the Company's loyalty program is estimated using the net retail value of the merchandise purchased, adjusted for estimated breakage based on historical redemption patterns. The revenue associated with the initial merchandise purchased is recognized immediately and the value assigned to the points is deferred until the points are redeemed, forfeited or expired. In regard to the consolidated balance sheet, contract liabilities for gift cards are classified as gift cards and customer deposits.

The Company’s commercial segment includes transactions with other businesses and are mainly comprised of licensing the Company’s intellectual properties for ~~third-party~~third-party use and wholesale sales of merchandise, including supplies and fixtures. Revenue for wholesale sales is recognized when control of the merchandise or fixtures is transferred to the customer, which generally occurs upon delivery to the customer. The license agreements provide the customer with highly interrelated rights that are not distinct in the context of the contract and therefore, have been accounted for as a single performance obligation and recognized as licensee sales occur. If the contract includes a guaranteed minimum, the minimum guarantee is recognized on a straight-line basis over the guarantee term until such time as royalties earned through licensee sales exceed the minimum guarantee. The Company classifies these guaranteed minimum contract liabilities as deferred revenue on the consolidated balance sheet.

The Company’s international franchising segment includes the activities with franchisees who operate store locations in certain countries and includes development fees, sales-based royalties and merchandise, including supplies and fixture sales. The Company's obligations under the franchise agreement are ongoing and include operations and product development support and training, generally concentrated around new store openings. These obligations are highly interrelated rights that are not distinct in the context of the contract and, therefore, have been accounted for as a single performance obligation and recognized as franchisee sales occur. If the contract includes an initial, ~~one-time~~one-time nonrefundable development fee, this fee is recognized on a straight-line basis over the term of the franchise agreement, which may extend for periods up to 25 ~~years.~~years, or if the agreement is terminated prior to the end of the term. The Company classifies these initial, ~~one-time~~one-time nonrefundable franchise fee contract liabilities as deferred revenue on the consolidated balance sheet. Revenue from merchandise and fixture sales is recognized when control is transferred to the franchisee which generally occurs upon delivery to the customer.

The Company also incurs expenses directly related to the startup of new franchises, ~~including~~which may include finder’s fees, legal and travel costs as well as expenses related to its ongoing support of the franchisees, predominantly travel expense and employee compensation. Accordingly, the Company’s policy is to capitalize ~~the~~any finder’s fee, an incremental cost, and expense all other costs as incurred. Additionally, the Company amortizes these capitalized costs into expense in the same pattern as the development fee's recording of revenue as described previously.

3. Leases

Effective February 3, 2019, the Company adopted the FASB guidance on leases (“Topic 842”), which requires leases with durations greater than twelve months to be recognized on the balance sheet. The Company adopted Topic 842 using the modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. Prior year financial statements were not recast under Topic 842, and therefore those amounts are not disclosed. The Company has elected certain practical expedients, including the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs as well as an accounting policy to account for lease and non-lease components as a single component. The Company also elected the optional transition method that gives companies the option to use the effective date as the date of initial application on transition, and as a result, the Company will not adjust its comparative period financial information or make the new required lease disclosures for periods before the effective date. The Company has elected to make the accounting policy election for short-term leases. Consequently, short-term leases will be recorded as an expense on a straight-line basis over the lease term. The Company did not elect the hindsight practical expedient.

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The majority of the Company's leases relate to retail stores and corporate offices. For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term. Most retail store leases have an original term of a five to ~~ten-year~~ten-year base period and may include renewal options to extend the lease term beyond the initial base period and are typically much shorter than the original lease term giving the Company lease optionality. ~~The renewal options are not included in the measurement of the right of use assets and right of use liabilities unless the Company is reasonably certain to exercise the optional renewal periods.~~ Some leases also include early termination options, which can be exercised under specific conditions. Additionally, the Company may operate stores for a period of time on a month-to-month basis after the expiration of the lease term. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, certain leases contain incentives, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property. ~~These incentives reduce our right-of-use asset related to the lease and are amortized through the right-of-use asset as reductions of expense over the lease term.~~

The Company's leases typically contain rent escalations over the lease term and the Company recognizes expense for these leases on a straight-line basis over the lease term. Some of the Company's leases include rent escalations based on inflation indexes and fair market value adjustments. Certain leases contain contingent rental provisions that include a fixed base rent plus an additional percentage of the store’s sales in excess of stipulated amounts. Operating lease liabilities are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses.

For leases entered into or reassessed after the adoption of the new standard, the Company has elected the practical expedient allowed by the standard to account for all fixed consideration in a lease as a single lease component. Therefore, the lease payments used to measure the lease liability for these leases include fixed minimum rentals along with fixed operating costs such as common area maintenance and utilities.

Most of the Company’s leases do not provide a readily available implicit rate. Therefore, the Company estimates the incremental borrowing discount rate based on information available at lease commencement. The discount rates used are indicative of a synthetic credit rating based on quantitative and qualitative analysis and adjusted one notch higher to estimate a secured credit rating. For non-U.S. locations, a risk-free rate yield based on the currency of the lease is used to estimate the incremental borrowing rate.

Upon adoption and transition, the Company recognized a cumulative-effect charge of $7.4 million net of tax to the opening balance of retained earnings which represents impairment charges to the right-of-use assets associated with stores whose fixed assets have been previously impaired or had indicators of impairment, and whose right-of-use-assets were determined to be above fair market value.

~~Lease position as of February 3, 2019~~

~~The table below presents the lease-related assets and liabilities recorded on the balance sheet (in thousands).~~

February 3,

Classification on the Balance Sheet

2019

Assets

Operating lease right-of-use assets
Operating lease right-of-use assets
$ 151,513

Liabilities

Current - Operating
Operating lease liability short term
34,672
Noncurrent - Operating
Operating lease liability long term
141,519
Total lease liabilities
$ 176,191

910

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The table below presents certain information related to the lease costs for operating leases for the thirteen and ~~thirty-nine~~twenty-six weeks ended ~~November 2,~~August 1, 2020 and August 3, 2019 (in thousands).

Thirteen weeks ended

Thirty-nine weeks ended

November 2, 2019 November 2, 2019

Operating lease costs
10,260 31,030
Variable lease costs
514 1,828
Short term lease costs
255 940
Total Operating Lease costs
$ 11,029 $ 33,798

	*Thirteen weeks ended*				*Twenty-six weeks ended*
	*August 1, 2020*		*August 3, 2019*		*August 1, 2020*		*August 3, 2019*

Operating lease costs		9,928		9,273		19,584		20,770
Variable lease costs		148		694		422		1,314
Short term lease costs		6		298		94		685
Total Operating Lease costs	$	10,082	$	10,265	$	20,100	$	22,769

Other information

The table below presents supplemental cash flow information related to leases for the thirteen and ~~thirty-nine~~twenty-six weeks ended ~~November 2,~~August 1, 2020 and August 3, 2019 (in thousands).

Thirteen weeks ended

Thirty-nine weeks ended

November 2, 2019 November 2, 2019
Operating cash flows for operating leases
10,872 33,061

Thirteen weeks ended

Twenty-six weeks ended

August 1, 2020

August 3, 2019

August 1, 2020

August 3, 2019

Operating cash flows for operating leases

8,474

10,990

15,929

22,188

As of ~~November 2,~~August 1, 2020 and August 3, 2019, the weighted-average remaining operating lease term was ~~5.8~~5 years and 6 years, respectively, and the weighted-average discount rate was 6.0% and 5.9%, respectively, for operating leases recognized on ~~our~~the Company's Condensed Consolidated Balance ~~Sheet.~~Sheets.

As discussed above, the Company incurred impairment charges during the thirteen and twenty-six weeks ended August 1, 2020, of $1.2 million and $3.6 million, respectively, against right-of-use operating lease assets.

During the quarter, the Company renegotiated a large portion of its store lease portfolio resulting in a combination of rent reductions, deferments, and abatements. These negotiations have increased the percentage of leases with variable rent structures to one-third of its North American fleet, which is intended to increase flexibility in an environment with expected high sales volatility and provide a natural hedge against potential sales declines. For these renegotiated leases, under ASC 842 Leases, the Company assessed if the renegotiated leases represented a new, separate contract or a modification of the existing lease. The Company concluded all renegotiated leases represented a modification of terms of each existing agreement. As such, the Company remeasured the lease liability and decreased the carrying amount of the right-of-use asset in proportion to the modification of the existing lease and recognized in profit or loss any difference between the reduction in the lease liability and the reduction in the right-of-us asset, which had an immaterial impact on the second quarter results. The Company remains in negotiations with certain landlords and expects further rent reductions, deferments or abatements to be recognized in the third quarter of the current fiscal year.

Undiscounted cash flows

The table below reconciles the undiscounted cash flows for each of the firstfive years and total of the remaining years to the operating lease liabilities recorded on the balance sheet (in thousands).

Operating Leases
2019		10,955
2020		37,766			28,837
2021		33,092			35,248
2022		30,318			29,824
2023		25,892			25,444
2024					21,427
Thereafter		53,941			35,593
Total minimum lease payments		191,964			176,373
Less: amount of lease payments representing interest		(30,033	)		(24,816	)
Present value of future minimum lease payments		161,931			151,557
Less: current obligations under leases		(31,537	)		(39,917	)
Long-term lease obligations	$	130,394		$	111,640

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As of ~~November 2, 2019~~August 1, 2020, the Company ~~has~~had an additional executed leases that ~~have~~ had not yet commenced with operating lease liabilities of ~~$0.8~~$0.1 million. ~~These leases will~~This lease is expected to commence in 2020 with a lease ~~terms ranging from two to five~~term of three years.

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6. Stock-based Compensation

On ~~March~~ April 14, ~~2017,~~2020, the ~~Company’s~~ Board of Directors (the “Board”) of Build-A-Bear Workshop, Inc. (the “Company”) adopted, subject to stockholder approval, the Build-A-Bear Workshop, Inc. ~~2017~~2020 Omnibus Incentive Plan (the ~~“2017~~��2020 Incentive Plan”). On ~~May~~June 11, ~~2017,~~ 2020, at the Company’s ~~2017~~2020 Annual Meeting of Stockholders (the “Annual Meeting”), the Company’s stockholders approved the ~~2017~~2020 Incentive Plan. The ~~2017~~2020 Incentive Plan, which is administered by the Compensation and Development Committee of the Board, permits the grant of stock options (including both incentive and non-qualified stock options), stock appreciation rights, ~~restricted stock, cash and~~ other stock-based awards, ~~some of which may be performance-based~~including restricted stock and restricted stock units, cash-based awards, and performance awards pursuant to the terms of the ~~2017~~2020 Incentive Plan. The ~~Board may amend, modify or terminate the 2017 Plan at any time, except as otherwise provided in the 2017 Plan. The 2017~~2020 Incentive Plan will terminate on ~~March~~April 14, ~~2027,~~ 2030, unless earlier terminated by the Board.

The number of shares of the Company’s common stock authorized for issuance under the ~~2017~~2020 Incentive Plan is 1,000,000, plus shares of stock that remained available for issuance under the Build-A-Bear Workshop, Inc. 2017 Omnibus Incentive Plan (the “2017 Incentive Plan”) at the time the 2020 Incentive Plan was approved by the Company’s stockholders, and shares that are subject to outstanding awards made under the ~~Company's Third Amended and Restated 2004 Stock~~2017 Incentive Plan that on or after ~~March 21, 2017~~ April 14, 2020 may be forfeited, expire or be settled for cash.

In accordance with its terms, as of the date the 2020 Incentive Plan was approved by the Company’s stockholders, the 2017 Incentive was frozen and no further awards will be issued thereunder. Awards issued pursuant to the 2017 Incentive Plan

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that were outstanding as of the date of stockholder approval of the 2020 Incentive Plan will remain outstanding and will be administered in accordance with the terms of the 2017 Incentive Plan and applicable award agreements thereunder. All of the stock-based incentive compensation activity for the period ended August 1, 2020 and August 3, 2019 was under the 2017 Incentive Plan.

For the thirteen ~~and thirty-nine~~ weeks ended ~~November 2,~~August 1, 2020 and August 3, 2019, ~~selling,~~Selling, general and administrative expense included ~~$0.4~~$0.5 million and ~~$1.8~~$0.7 million, respectively, of stock-based compensation ~~expense. For~~expense, and for the ~~thirteen and thirty-nine~~twenty-six weeks ended ~~November~~August 1, 2020 and August 3, ~~2018~~2019, ~~selling,~~Selling, general and administrative expense ~~includes $0.9~~included $0.7 million and ~~$2.6~~$1.5 million, ~~respectively, of stock-based compensation expense.~~ respectively. As of ~~November 2, 2019~~August 1, 2020, there w~~as $3.2~~was $2.0 million of total unrecognized compensation expense related to unvested restricted stock and option awards which is expected to be recognized over a weighted-average period of ~~1.3~~1.1 years.

The following table is a summary of the balances and activity for stock options for the ~~thirty-nine~~twenty-six weeks ended ~~November 2, 2019~~August 1, 2020:

	Options					*Options*
	Shares			Weighted Average Exercise Price		*Shares*			*Weighted Average Exercise Price*
Outstanding, February 2, 2019		950,678		$	9.67
Outstanding, February 1, 2020							923,254		$	9.76
Granted		-			-		0			0
Exercised		(5,980	)		4.90		0			0
Forfeited		-			-		0			0
Canceled or expired		(20,983	)		7.21		(98,415	)		7.92
Outstanding, November 2, 2019		923,715		$	9.76
Outstanding, August 1, 2020							824,839		$	9.98

The following table is a summary of the balances and activity related to time-based and performance-based restricted stock for the ~~thirty-nine~~twenty-six weeks ended ~~November 2, 2019~~August 1, 2020:

	Time-Based Restricted Stock					Performance-Based Restricted Stock				*Time-Based Restricted Stock*					*Performance-Based Restricted Stock*
	Shares			Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value		*Shares*			*Weighted Average Grant Date Fair Value*		*Shares*			*Weighted Average Grant Date Fair Value*
Outstanding, February 2, 2019		379,778		$	9.31		167,153	$	8.73
Outstanding, February 1, 2020											453,403		$	6.71		262,964		$	7.59
Granted		319,831			5.64		95,811		5.61		398,681			2.15		0			0
Vested		(217,848	)		9.76		—		—		(260,317	)		6.98		(56,380	)		8.85
Forfeited		(14,345	)		6.15		—		—		0			0		0			0
Canceled or expired		—			—		—		—		0			0		(27,517	)		8.85
Outstanding, November 2, 2019		467,416		$	6.69		262,964	$	7.59
Outstanding, August 1, 2020											591,767		$	3.52		179,067		$	7.00

The total fair value of shares vested during the ~~thirty-nine~~twenty-six weeks ended ~~November 2,~~August 1, 2020 and August 3, 2019 ~~and~~ ~~November 3, 2018~~ was ~~$2.1~~$2.3 million and $2.2 million, respectively.

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In April 2019, the Company awarded three-year performance-based restricted stock subject to the achievement of pre-established consolidated pre-tax income growth objectives for fiscal 2019, 2020 and 2021. In 2018, the Company awarded three-year performance-based restricted stock subject to the achievement of pre-established consolidated total pre-tax income growth objectives for fiscal 2018, 2019 and 2020. In addition, the Company awarded three-year performance-based restricted stock subject to the achievement of pre-established consolidated revenue growth objectives for fiscal 2018, 2019 and 2020. In 2017, the Company awarded three-year performance-based restricted stock subject to the achievement of pre-established pre-tax income growth objectives for 2017, 2018 and 2019. The shares for all these awards if earned, have a payout opportunity ranging from 25% to 200% of the target number of shares.

The outstanding performance shares as of ~~November 2, 2019~~August 1, 2020 consist of the following:

	*Performance Shares*

Unearned shares subject to performance-based restrictions at target:
~~2017 - 2019 consolidated pre-tax income growth objectives~~		~~83,897~~
2018 - 2020 consolidated total revenue growth objectives		20,756
2018 - 2020 consolidated pre-tax income growth objectives		62,500
2019 - 2021 consolidated pre-tax income growth objectives		95,811
Performance shares outstanding, ~~November 2, 2019~~August 1, 2020		~~262,964~~179,067

8. Stockholders’ Equity

The following table sets forth the changes in stockholders’ equity (in thousands) for the thirteen weeks ended ~~November 2,~~August 1, 2020 and August 3, 2019 ~~and November 3, 2018~~ (in thousands):

	For the thirteen weeks ended November 2, 2019														For the thirteen weeks ended November 3, 2018															*For the thirteen weeks ended August 1, 2020*														*For the thirteen weeks ended August 3, 2019*

	Common								Retained						Common									Retained						*Common*								*Retained*						*Common*							*Retained*
	stock		APIC (1)			AOCI (2)			earnings			Total			stock			APIC (1)			AOCI (2)			earnings			Total			*stock*		*APIC (1)*			*AOCI (2)*			*earnings/(deficit)*			*Total*			*stock*		*APIC (1)*		*AOCI (2)*			*earnings/(deficit)*			*Total*
Balance, beginning	$	152	$	70,295		$	(11,579	)	$	29,637			88,505		$	150		$	67,383		$	(12,015	)	$	53,811		$	109,329		$	155	$	71,491		$	(11,909	)	$	8,720		$	68,457		$	149	$	69,550	$	(12,123	)	$	30,861		$	88,437
Share repurchase and retirement		-		-			-			-			-			(1	)		(267	)		-			(230	)		(498	)
Issuance of restricted/performance stock																														$	1	$	(1	)								0		$	3	$	11								14
Stock-based compensation		-		(340	)		-			-			(340	)		-			935			-			-			935					417									417					734								734
Shares issued under employee stock plans		-		(1	)		-			-			(1	)		1			223			-			-			224
Other comprehensive loss		-		-			(349	)		-			(349	)		-			-			(34	)		-			(34	)
Shares withheld in lieu of tax withholdings																																										-													0
Other		-		1			1			(1	)		1			-			-			-			-			0					(1	)		(1	)		1			(1	)												-
Net loss		-		-			-			(5,873	)		(5,873	)		-			-			-			(6,064	)		(6,064	)
Other comprehensive income (loss)																																				(429	)					(429	)						544						544
Net income (loss)																																							(13,909	)		(13,909	)									(1,224	)		(1,224	)
Balance, ending	$	152	$	69,955		$	(11,927	)	$	23,763		$	81,943		$	150		$	68,274		$	(12,049	)	$	47,517		$	103,892		$	156	$	71,906		$	(12,339	)	$	(5,188	)	$	54,535		$	152	$	70,295	$	(11,579	)	$	29,637		$	88,505

~~(1)~~(1) - Additional paid-in capital (“APIC”)

~~(2)~~(2) - Accumulated other comprehensive income (loss) (“AOCI”)

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The following table sets forth the changes in stockholders’ equity (in thousands) for the ~~thirty-nine~~twenty-six weeks ended ~~November 2,~~August 1, 2020 and August 3, 2019 ~~and~~ ~~November 3, 2018~~ (in thousands):

	For the thirty-nine weeks ended November 2, 2019														For the thirty-nine weeks ended November 3, 2018															*For the twenty-six weeks ended August 1, 2020*															*For the twenty-six weeks ended August 3, 2019*

	Common								Retained						Common									Retained						*Common*									*Retained*						*Common*								*Retained*
	stock		APIC (1)			AOCI (2)			earnings			Total			stock			APIC (1)			AOCI (2)			earnings			Total			*stock*			*APIC (1)*			*AOCI (2)*			*earnings/(deficit)*			*Total*			*stock*		*APIC (1)*			*AOCI (2)*			*earnings/(deficit)*			*Total*
Balance, beginning	$	150	$	69,088		$	(12,018	)	$	37,094		$	94,314		$	150		$	66,843		$	(10,800	)	$	55,909		$	112,102		$	152		$	70,633		$	(12,079	)	$	29,925		$	88,631		$	150	$	69,088		$	(12,018	)	$	37,094		$	94,314
Adoption of new accounting standard		-		-			-			(7,430	)		(7,430	)		-			-			-			-			-			-			-			-			-			-			-		-			-			(7,430	)		(7,430	)
Subtotal	$	150	$	69,088		$	(12,018	)	$	29,664		$	86,884		$	150		$	66,843		$	(10,800	)	$	55,909		$	112,102		$	152		$	70,633		$	(12,079	)	$	29,925		$	88,631		$	150	$	69,088		$	(12,018	)	$	29,664		$	86,884
Share repurchase and retirement		-		-			-			-			-			(2	)		(1,058	)		-			(867	)		(1,927	)
Issuance of restricted/performance stock																															4			495									499			2		(246	)								(244	)
Stock-based compensation		-		1,114			-			-			1,114			-			2,624			-			-			2,624						892									892					1,454									1,454
Shares issued under employee stock plans		2		(248	)		-			-			(246	)		2			(154	)		-			-			(152	)
Shares withheld in lieu of tax withholdings																															(1	)		(114	)								(115	)													0
Other																															1						(1	)					0					(1	)		(1	)		1			(1	)
Other comprehensive income (loss)		-		-			92			-			92			-			-			(1,249	)		-			(1,249	)								(259	)					(259	)							440						440
Other		-		1			-			-			1						19						(15	)		4
Net loss		-		-			-			(5,901	)		(5,901	)		-			-			-			(7,510	)		(7,510	)											(35,113	)		(35,113	)										(28	)		(28	)
Balance, ending	$	152	$	69,955		$	(11,927	)	$	23,763		$	81,943		$	150		$	68,274		$	(12,049	)	$	47,517		$	103,892		$	156		$	71,906		$	(12,339	)	$	(5,188	)	$	54,535		$	152	$	70,295		$	(11,579	)	$	29,637		$	88,505

~~(1)~~(1) - Additional paid-in capital (“APIC”)

~~(2)~~(2) - Accumulated other comprehensive income (loss) (“AOCI”)

In August 2017, the Company’s Board of Directors authorized a share repurchase program of up to $20.0 million. From the date of such authorization through ~~November 2, 2019~~August 1, 2020, the Company ~~has~~had repurchased approximately 1.3 million shares at an average price of $8.75 per share for an aggregate amount of approximately $11.2 million, leaving approximately $8.8 million authorized under the program as of that date. The Company does not plan to utilize cash to resume share repurchases in fiscal 2020. In addition, the Company's ability to repurchase shares is limited by conditions set forth by its lender in its credit agreement, as described below.

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11. Segment Information

The Company’s operations are conducted through three operating segments consisting of direct-to-consumer (“DTC”), commercial and international franchising. The DTC segment includes the operating activities of corporately-managed locations and other retail delivery operations in the U.S., Canada, China, Denmark, Ireland and the United Kingdom (“U.K.”), including the Company’s e-commerce sites and temporary stores. The commercial segment includes the Company’s transactions with other businesses, mainly comprised of licensing the Company’s intellectual properties for third party use and wholesale activities. The international franchising segment includes the licensing activities of the Company’s franchise agreements with store locations in ~~Europe (outside of the U.K., Ireland and Denmark),~~ Asia, Australia, Mexico, the Middle East, Africa, and ~~Mexico.~~South America. The operating segments have discrete sources of revenue, different capital structures and different cost structures. These operating segments represent the basis on which the Company’s chief operating decision maker regularly evaluates the business in assessing performance, determining the allocation of resources and the pursuit of future growth opportunities. Accordingly, the Company has determined that each of its operating segments represent a reportable segment. The three reportable segments follow the same accounting policies used for the Company’s consolidated financial statements.

Following is a summary of the financial information for the Company’s reportable segments (in thousands):

	Direct-to-				International				*Direct-to-*					*International*
	Consumer		Commercial		Franchising		Total		*Consumer*			*Commercial*		*Franchising*			*Total*
Thirteen weeks ended November 2, 2019
Thirteen weeks ended August 1, 2020
Net sales to external customers		$ 66,575		$ 2,560		$ 1,249		$ 70,384	$	39,339		$	865	$	149		$	40,353
Income (loss) before income taxes		(8,578)		753		131		(7,694)
(Loss) Income before income taxes										(14,145	)		239		(77	)		(13,983	)
Capital expenditures		5,155		-		-		5,155		529			0		0			529
Depreciation and amortization		3,560		-		1		3,561		3,246			8		0			3,254
Thirteen weeks ended November 3, 2018
Thirteen weeks ended August 3, 2019
Net sales to external customers		$ 65,298		$ 2,171		$ 1,225		$ 68,694	$	75,214		$	3,193	$	807		$	79,214
Income (loss) before income taxes		(11,406)		1,054		360		(9,992)
(Loss) Income before income taxes										(1,900	)		1,520		(362	)		(742	)
Capital expenditures		1,742		-		-		1,742		2,505			0		0			2,505
Depreciation and amortization		4,022		-		26		4,048		3,283			0		2			3,285

Thirty-nine weeks ended November 2, 2019
Twenty-six weeks ended August 1, 2020
Net sales to external customers		$ 222,837		$ 8,507		$ 2,616		$ 233,960	$	84,986		$	1,198	$	793		$	86,977
Income (loss) before income taxes		(9,384)		3,488		(130)		(6,027)
(Loss) Income before income taxes										(32,515	)		194		(326	)		(32,647	)
Capital expenditures		10,099		-		-		10,099		3,378			0		0			3,378
Depreciation and amortization		10,354		-		5		10,359		6,696			15		0			6,711
Thirty-nine weeks ended November 3, 2018
Twenty-six weeks ended August 3, 2019
Net sales to external customers		$ 227,760		$ 4,245		$ 3,051		$ 235,056	$	156,262		$	5,947	$	1,367		$	163,576
Income (loss) before income taxes		(14,577)		1,705		981		(11,891)		(806	)		2,735		(261	)		1,668
Capital expenditures		8,853		-		-		8,853		4,945			0		0			4,945
Depreciation and amortization		12,159		1		26		12,186		6,793			0		4			6,797
Total Assets as of:
November 2, 2019 (1)		281,365		7,508		7,804		$ 296,677
November 3, 2018		166,833		6,625		5,396		178,854
August 1, 2020										253,684			6,852		7,727		$	268,263
August 3, 2019										285,196			7,796		6,202			299,194

~~For purposes of this table only:~~

~~(1) The increase in total assets when comparing~~ ~~November 2, 2019~~ to ~~November 3, 2018~~ ~~is mainly the result of the adoption of Topic 842 on leases effective February 3, 2019.~~

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The Company’s reportable segments are primarily determined by the types of products and services that they offer. Each reportable segment may operate in many geographic areas. Revenues are recognized in the geographic areas based on the location of the customer or franchisee. The following schedule is a summary of the Company’s sales to external customers and long-lived assets by geographic area (in thousands):

	North								*North*
	America (1)		Europe (2)		Other (3)		Total		*America (1)*		*Europe (2)*		*Other (3)*		*Total*
Thirteen weeks ended November 2, 2019
Thirteen weeks ended August 1, 2020
Net sales to external customers	$	57,503	$	11,557	$	1,324	$	70,384	$	34,985	$	5,141	$	227	$	40,353
Thirteen weeks ended November 3, 2018
Thirteen weeks ended August 3, 2019
Net sales to external customers	$	56,440	$	11,575	$	679	$	68,694	$	68,456	$	10,195	$	563	$	79,214

Thirty-nine weeks ended November 2, 2019
Twenty-six weeks ended August 1, 2020
Net sales to external customers	$	198,900	$	32,639	$	2,421	$	233,960	$	74,636	$	11,806	$	535	$	86,977
Property and equipment, net		60,481		5,462		11		65,954		53,735		4,350		0		58,085
Thirty-nine weeks ended November 3, 2018
Twenty-six weeks ended August 3, 2019
Net sales to external customers	$	198,372	$	35,005	$	1,679	$	235,056	$	141,397	$	21,082	$	1,097	$	163,576
Property and equipment, net		64,249		9,075		19		73,343		59,008		5,170		13		64,191

For purposes of this table only:

~~(1)~~(1) North America includes corporately managed locations in the United States, Canada, Puerto ~~Rico and franchise business in Mexico~~ Rico.

~~(2)~~(2) Europe includes corporately managed locations in the U.K., Ireland, Denmark and franchise businesses in Europe

~~(3)~~(3) Other includes franchise businesses outside of North America and Europe and includes a corporately-managed location in China

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties, and we undertake no obligation to update these statements except as required by the federal securities laws. Our actual results may differ materially from the results discussed in the forward-looking statements. These risks and uncertainties include, without limitation, those detailed under the caption “Risk Factors” in ~~the Company’s~~our Annual Report on Form 10-K for the fiscal year ended February ~~2, 2019,~~1, 2020, as filed with the SEC, and include the following:

We are the only global company that offers an interactive “make your own stuffed animal” retail entertainment experience under the Build-A-Bear Workshop brand, in which guests participate in the stuffing, dressing, accessorizing and naming of their own teddy bears and other stuffed animals. As of ~~November 2, 2019~~,August 1, 2020, we ~~operated~~ ~~371~~ had 359 corporately-managed stores globally and had ~~104~~78 internationally franchised stores ~~operating internationally~~ under the Build-A-Bear Workshop ~~brand.~~brand, with select locations temporarily closed due to restrictions brought on by the COVID-19 pandemic. In addition to our stores, we sell products on our company-owned e-commerce sites, our franchisees sell through sites that they manage and ~~franchisee sites and through~~our third parties sell products on their sites under wholesale agreements.

We operate in three segments that share the same infrastructure, including management, systems, merchandising and marketing, and generate revenues as follows:

Our results of operations for the thirteen and twenty-six weeks ended August 1, 2020, were significantly impacted by the effects of COVID-19, reflected by the 60% fewer operating days in the second quarter driven by the significant impact of temporary store closures. As of August 1, 2020, we had reopened approximately 90% of our corporately-managed store locations, many with shortened hours of operations and lower traffic levels. This drove consumer spending to our e-commerce site, which were fully operational throughout the quarter, and which experienced significant digital demand. We ~~expect~~embraced this trend and worked to ~~improve consolidated sales~~capitalize and ~~profit through the following key initiatives:~~

In response to COVID-19, we continued our disciplined expense management and cash preservation across all areas of the business by continuing compensation reductions for all employees including our executive officers, continuing the delay of payment of bonuses and 401(k) contribution plans, and continuing to limit capital expenditures to maintenance levels. During the quarter, the we completed a long-planned corporate reorganization that aligned key functions and leadership roles with our strategic plan allowing us to operate as a leaner simpler organization as a result of attrition and position eliminations.

During the quarter, due to our strong lease flexibility, we renegotiated approximately 95% of the leases within our store lease portfolio resulting in a combination of rent reductions, deferments, and abatements. After these negotiations, the we still maintain strong lease flexibility with over 70% of our leases still coming up for renewal in the next three years. In addition, these negotiations have increased the percentage of our leases with variable rent structures to one-third of our North American fleet, which is intended to increase flexibility in an environment with high sales volatility and provide a natural hedge against potential sales declines.

Our supply chain experienced no significant disruptions during the quarter and we were able to receive deliveries in a timely manner.

As disclosed in the “Liquidity and Capital Resources” section herein, as of August 1, 2020, we had total cash and cash equivalents of $25.3 million and no borrowings under our prior credit agreement. We believe that the above measures we have taken to increase and maintain our liquidity have provided us with sufficient cash flows to operate our business for at least the next 12 months.

The ultimate health and economic impact of the COVID-19 pandemic remains highly uncertain, including the duration and severity of the COVID-19 outbreak, actions taken to contain its spread as well as its impact to consumer discretionary spending and the pace of economic recovery when the pandemic subsides. Therefore, we currently are not able to estimate the full impact of COVID-19 on our financial condition and future results of operations. In the near term, we expect that this situation will have an adverse effect on our reported results for the third fiscal quarter of 2020 and possibly beyond. We will continue to actively monitor the effects of COVID-19 on our business. Imposition of new shelter in place orders or quarantines resulting in periods of store closures, changes in consumer behaviors and reductions of consumer discretionary spending would require us to continue to evaluate our business assumptions and estimates. Such conditions would likely result in lower future net sales and cash flow, which could lead to impairment of our store and other assets, as well as increase the risks associated with excess inventory and bad debt.

The table below sets forth the number of Build-A-Bear Workshop corporately-managed stores in North America, Europe and Asia for the periods presented:

~~During~~ ~~2019, we will continue to make improvements to our aged store fleet by leveraging the Discovery format in conjunction with select natural lease events.~~ As of ~~November 2, 2019, 38%~~August 1, 2020, 40% of our store base was in an updated Discovery ~~design.~~format. We also expect to close certain stores in accordance with natural lease events as an ongoing part of our real estate management and day-to-day operational plans. ~~Current plans~~The future of our retail store fleet may include expansion into more non-traditional locations, including concourse format shops and by expansion in other locations outside traditional malls.

Our first franchisee location was opened in November 2003. All franchised stores have similar signage, store layout, merchandise characteristics and guest experience as our corporately-managed stores. As of ~~November 2, 2019~~,August 1, 2020, we had nine master franchise agreements, which typically grant franchise rights for a particular country or group of countries, covering an aggregate of 13 countries.

The number of franchised stores opened and closed for the periods presented below are summarized as follows:

As of August 1, 2020, 62 franchised stores were operating and 16 remained temporarily closed due to COVID-19. In the ordinary course of business, we anticipate signing additional master franchise agreements in the future and terminating other such agreements. We believe there is a total market potential for approximately 300 international stores outside of the ~~United States,~~U.S., Canada, the U.K., Ireland and Denmark. We ~~continue~~source fixtures and other supplies for our franchisees from China which significantly reduces the capital and lowers the expenses required to ~~expect franchisees to leverage the~~open franchises. We are leveraging new formats that have been developed for our corporately-managed ~~operations~~locations such as concourses and ~~sourcing changes that have significantly reduced the capital and expenses required to open stores. We expect to continue to develop market expansion through both new and existing~~shop-in-shops with our franchisees.

The following table sets forth, for the periods indicated, selected income statement data expressed as a percentage of total revenues, except where otherwise indicated. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales, commercial revenue, international franchising, respectively, as well as immaterial rounding:

~~Total revenues.~~ ~~Consolidated revenues increased 2.5~~%~~, including a 1.9% increase in North America, a 0.2% decrease in Europe, and a double digit increase in consolidated e-commerce sales.~~

Net retail sales for the thirteen weeks ended ~~November 2, 2019~~August 1, 2020 were ~~$66.6~~ $39.3 million, compared to ~~$65.3~~$75.2 million for the thirteen weeks ended ~~November~~August 3, ~~2018~~,2019, a ~~increase~~decrease of ~~$1.3~~$35.9 million, or ~~2.0~~%.47.7% compared to the prior year period. The components of this ~~increase~~decrease are as follows (dollars in millions):

The retail revenue ~~increase~~decrease was ~~driven primarily by strong e-commerce growth and new shop-in-shops at select Walmart~~the result of the continued temporary closure of our corporately-managed store locations which started in ~~comparison~~the first quarter. These locations slowly reopened as the second quarter progressed, resulting in less overall operating days compared to the same period in the prior ~~year third quarter.~~year.

Commercial revenue was ~~$2.6~~$0.9 million for the thirteen weeks ended ~~November 2, 2019~~August 1, 2020 compared to ~~$2.2~~$3.2 million for the thirteen weeks ended ~~November~~August 3, ~~2018~~.2019. The ~~$0.4~~$2.3 million ~~increase includes wholesale merchandise and furniture/fixture~~decrease is the result of decreased sales ~~and outbound licensing fees, reflecting~~volume from our commercial customers as a result of COVID-19, which we believe is principally because the ~~results~~third-party retail locations serviced by our commercial customers were either closed or operated under restrictions for a portion or all of ~~our efforts to evolve~~ the ~~business model beyond traditional retail.~~second quarter.

International franchising revenue was ~~$1.2~~$0.1 million for the thirteen weeks ended ~~November 2, 2019~~August 1, 2020 compared to ~~$1.2~~$0.8 million for the thirteen weeks ended ~~November~~August 3, ~~2018~~.2019. The $0.7 million decrease is primarily due to closures of franchise locations due to the COVID-19 pandemic and a reduction in new store openings resulting in a lack of inventory and fixture purposes to support these openings.

Retail gross margin. Retail gross margin dollars ~~increased $3.1~~decreased $24.1 million to ~~$26.3~~$9.1 million compared to the thirteen weeks ended ~~November~~August 3, ~~2018~~.2019. The retail gross margin rate ~~increased 400~~decreased 2,099 basis points ~~to 39.5% mainly~~primarily driven by fixed occupancy costs recorded through the end of the second quarter despite temporary store closures beginning on March 18, 2020, increased warehouse and distribution costs, both partially offset by an increase in merchandise ~~margin expansion~~margin.

Impairment of long-live assets, including right-of-use assets. As a result of the COVID-19 pandemic, we experienced lower than projected revenues and ~~leverage~~identified indicators of impairment for our store fleet. We performed an undiscounted future cash flow analysis over the long-lived assets and right-of-use assets for the remaining useful life of the assets and determined that certain stores had long-lived and right-of-use assets with carrying values that exceeded their estimated undiscounted future cash flows. We estimated fair values of these long-lived assets based on ~~occupancy costs.~~our discounted future cash flows or market rent assessments. Our analysis indicated that the carrying values of our long-lived assets exceeded their respective fair values. As a result, we recognized an impairment charge of $2.1 million for the thirteen weeks ended August 1, 2020. with approximately $1.2 million for right-of-use operating lease assets and $0.9 million for fixed assets including leasehold improvements, fixtures, furniture and fixtures, machinery and equipment, and construction-in-progress. These charges are recorded in Store asset impairment within the Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income for the respective periods. These impairment charges were primarily driven by lower than projected revenues and the effect of store closures as a result of the COVID-19 pandemic. The majority of the impairment was recorded for assets associated with stores in North America. For the thirteen weeks ended August 3, 2019, we recorded no impairment charges.

Selling, general and administrative. Selling, general and administrative expenses were ~~$35.4~~$21.5 million for the thirteen weeks ended ~~November 2, 2019, an increase~~August 1, 2020, a decrease of ~~$0.3~~$14.2 million compared to the thirteen weeks ended ~~November~~August 3, ~~2018. Cost savings in advertising~~2019. The decline was primarily due to lower labor costs resulting from temporary store closures and ~~foreign currency gains were offset by an increase in accrued incentive compensation.~~employee furloughs due to the COVID-19 pandemic, salary reductions, position eliminations, and reduced marketing costs.

Benefit/Provision for income taxes. ~~The income~~Income tax provision was a benefit ~~was $1.8~~of less than $0.1 million with a tax rate of ~~23.7%~~0.5% for the thirteen weeks ended ~~November 2, 2019~~August 1, 2020 as compared to ~~a benefit~~income tax expense of ~~$3.9~~$0.5 million with a tax rate of ~~39.3%~~-65.1% for the thirteen weeks ended ~~November~~August 3, ~~2018~~.2019. In the second quarter of fiscal ~~2018~~,2020, the effective tax rate differed from the statutory rate of 21% primarily due to no tax benefit being recorded on the ~~jurisdictional mix of earnings.~~

~~Total revenues.~~ ~~Consolidated revenues decreased 0.5%, includin~~gcurrent period pretax loss as a ~~0.3% increase in North America, a 6.8% decrease in Europe, and a double digit increase in consolidated e-commerce sales.~~ We believe that European results continue to reflect the impact of the ongoing uncertainty surrounding Brexit, as well as the May 2018 implementation of new privacy laws, which severely inhibited the Company’s ability to directly market to guests.

The retail business in the U.K. continues to be impacted due to a challenging retail environment brought on by Brexit and the May 2018 implementation of new privacy laws that have significantly inhibited our ability to build our contact database and market directly to our guests. In addition, the upcoming election and January Brexit deadline may cause additional uncertainty. As a part of our focused effort to mitigate some of the issues in the market, we recently implemented a new technology-based Bonus Club enrollment process that is compliant with the new European privacy regulations. Since then, we have seen significant growth in the opt-in rates of Bonus Club members which we believe will benefit the business on a go-forward basis.

~~Commercial revenue was $8.5 million for the~~ ~~thirty-nine weeks ended November 2, 2019~~ ~~compared to $4.2 million for the~~ ~~thirty-nine weeks ended November 3, 2018~~. The $4.3 million increase includes wholesale merchandise and furniture/fixture sales and outbound licensing fees, reflecting the results of our efforts to evolve the business model beyond traditional retail.

~~Retail gross margin.~~ ~~Retail gross margin dollars increased $2.5 million to $96.1 million compared to the~~ ~~thirty-nine weeks ended November 3, 2018. The retail gross margin rate increased 200 basis points to 43.1% mainly driven by merchandise margin expansion and leverage on occupancy costs.~~

~~Selling, general and administrative.~~ ~~Selling, general and administrative expenses were $106.9 million for the~~ ~~thirty-nine weeks ended November 2, 2019, a decline of $2.4 million compared to the~~ ~~thirty-nine weeks ended November 3, 2018. The decrease was driven by a decrease in advertising and continued disciplined expense management and focus on controllable spend offset by an increase in accrued incentive compensation.~~

~~Provision for income taxes~~~~. The income tax provision was a benefit of $0.1 million with a tax rate of 2.1% for the~~ ~~thirty-nine weeks ended November 2, 2019, as compared to a benefit of $4.4 million with a tax rate of 36.8% for the~~ ~~thirty-nine weeks ended November 3, 2018~~ .full valuation allowance has now been recorded globally. In the ~~first thirty-nine weeks~~second quarter of fiscal 2019,, the effective tax rate differed from the statutory rate of 21% primarily due to the valuation allowance being recorded in certain foreign loss ~~jurisdictions~~companies.

Twenty-six weeks ended August 1, 2020 compared to twenty-six weeks ended August 3, 2019

Total revenues. Consolidated revenues decreased 46.8%, including a 47.2% decrease in North America and a 44.0% decrease in Europe, offset by a triple digit increase in consolidated e-commerce sales.

Net retail sales for the twenty-six weeks ended August 1, 2020 were $85.0 million, compared to $156.3 million for the twenty-six weeks ended August 3, 2019, a decrease of $71.3 million, or 45.6%. The components of this decrease are as follows (dollars in millions):

Benefit/Provision for income taxes. Income tax ~~impact~~expense was $2.5 million with a tax rate of ~~equity awards.~~-7.5% for the twenty-six weeks ended August 1, 2020 as compared to income tax expense of $1.7 million with a tax rate of 101.7% for the twenty-six weeks ended August 3, 2019. In the first ~~thirty-nine weeks~~half of fiscal ~~2018~~,2020, the effective tax rate differed from the statutory rate of 21% primarily due to no tax benefit being recorded on the current period pretax loss as a full valuation allowance has now been recorded globally. In addition, the first half of fiscal 2020 was impacted by the $3.3 million valuation allowance recorded on the beginning balance of the net deferred tax assets in certain jurisdictions. In the first half of fiscal 2019, the effective tax rate differed from the statutory rate of 21% primarily due to the ~~jurisdictional mix~~valuation allowance being recorded in certain foreign loss companies and the $0.2 million tax impact of ~~earnings.~~equity awards vesting.

Our operating results for one period may not be indicative of results for other periods, and may fluctuate significantly because of a variety of factors, including, but not limited to: (1) changes in general economic conditions (including as a result of the COVID-19 pandemic and tariffs) and consumer spending patterns; (2) changes in store operations due to our continuing assessment of and response to the COVID-19 pandemic apart from its effect on the general economy, including temporary store closures or additional social distancing and sanitation practices recommended by federal, state or local authorities; (3) increases or decreases in our existing store and e-commerce sales; ~~(3)~~(4) fluctuations in the profitability of our stores; ~~(4)~~(5) the timing and frequency of the sales of licensed products tied to major theatrical releases, our marketing initiatives, including national media and other public relations events; ~~(5)~~(6) changes in foreign currency exchange rates; ~~(6)~~(7) the timing of ~~our~~new store openings, closings, relocations and ~~closings~~remodeling and related expenses; ~~(7)~~(8) changes in consumer preferences; ~~(8)~~(9) the effectiveness of our inventory management; ~~(9)~~(10) the actions of our competitors or mall anchors and co-tenants; ~~(10)~~(11) seasonal shopping patterns and holiday and vacation schedules; (12) disruptions in store operations due to civil unrest; and ~~(11)~~(13) weather conditions.

The timing of store closures, relocations, remodels and openings (and reopenings) may result in fluctuations in quarterly results based on the revenues and expenses associated with each store location. Expenses related to store closings are typically incurred in stages: when the decision is made to close the store typically associated with a lease event such as an expiration or lease triggered clause; when the closure is communicated to store associates; and at the time of closure. We typically incur most preopening costs for a new store in the three months immediately preceding the store’s opening.

Because our retail operations have toy products which have sales that historically peak in relation to the holiday season as part of our revenue model, our sales are highest in our fourth quarter. The timing of holidays and school vacations can impact our quarterly results. We cannot provide assurance that this will continue to be the case. We are also unable to assess whether the COVID-19 pandemic will significantly affect this trend during the upcoming holiday season. In addition, for accounting purposes, the quarters of each fiscal year consist of 13 weeks, although we will have a 14-week quarter approximately once every six years. For example, the 2014 fiscal fourth quarter had 14 ~~weeks and the fiscal year transition period ended February 3, 2018 had five~~ weeks.

~~Our~~As of August 1, 2020, we had a consolidated cash balance of $25.3 million and approximately 82% of this balance was domiciled within the United States. Historically, our cash requirements ~~are~~have been primarily for the relocation and remodeling of existing stores in our new design, opening of new stores, investments in information technology infrastructure and working capital. Over the past several years, we have met these requirements through capital generated from cash flow provided by operations. ~~We have access to additional cash through our revolving line of credit that has been in place since 2000.~~

~~A summary of our operating, investing and financing activities are shown in the following table (dollars in thousands):~~

	Thirty-nine weeks ended
	November 2,			November 3,
	2019			2018
Net cash used in operating activities	$	(1,563	)		$	(9,027	)
Net cash used in investing activities		(10,099	)			(8,769	)
Net cash provided by (used in) financing activities		(245	)			5,189
Effect of exchange rates on cash		180				(261	)
Net decrease in cash and cash equivalents	$	(11,727	)		$	(12,868	)

~~Operating Activities.~~ ~~Cash provided from operating activities decreased $7.4 million for the~~ ~~thirty-nine weeks ended November 2, 2019, as compared to the~~ ~~thirty-nine weeks ended November 3, 2018~~. This decrease in cash from operating activities was primarily driven by an increase in inventory over last year to support upcoming product launches in conjunction with the decision to bring in inventory early in response to anticipated increases in tariffs. This decrease was offset by the increase in profitability, receivable collections, and the realization of prepaid expenses.

~~Investing Activities.~~ ~~Cash used in investing activities increased $1.3 million for the~~ ~~thirty-nine weeks ended November 2, 2019~~ ~~as compared to the~~ ~~thirty-nine weeks ended November 3, 2018. This increase in cash from investing activities was primarily driven by cash used to open additional shop-in-shops within select Walmart stores.~~

~~Financing Activities.~~ ~~Cash used in financing activities increased $5.4 million for the~~ ~~thirty-nine weeks ended November 2, 2019, as compared to the~~ ~~thirty-nine weeks ended November 3, 2018. This decrease in cash from financing activities was primarily driven by the draw on the credit line during the same period prior year that did not occur during the current year.~~

~~Capital Resources:~~ ~~As of~~ ~~November 2, 2019, we had a consolidated cash balance of $6.2 million and approximately 42% of this balance was domiciled within the United States. We also have a line of credit which we can use to finance capital expenditures and working capital needs throughout the year.~~ On ~~September 11, 2019,~~August 25, 2020, we entered into ~~the twentieth amendment to this credit~~a Revolving Credit and Security Agreement with PNC Bank, National Association, as agent. The agreement ~~with our lender. Under the twentieth amendment, the bank line~~ provides ~~availability~~for a senior secured revolving loan in aggregate principal amount of up to ~~$20.0 million.~~$25,000,000 (subject to a borrowing base formula), which may be increased with the consent of the lenders by an amount not to exceed $25,000,000. Borrowings under the ~~credit~~ agreement are secured by our assets and a pledge of 66% of our ownership interest in certain of our foreign subsidiaries. The credit agreement expires on December 31, 2020 and contains various restrictions on indebtedness, liens, guarantees, redemptions, mergers, acquisitions or sale of assets, loans, transactions with affiliates and investments. The agreement limits the conditions under which the Company may declare dividends and repurchase shares. For example, we may not use the proceeds of the line of credit to repurchase shares. The commitment fee is 0.25% per annum and borrowings bear interest at (a) a base rate determined under the agreement, or (b) the borrower's option, at a rate based on LIBOR, plus ~~3.25%. Financial~~in either case a margin based on average undrawn availability as determined in accordance with the agreement. The agreement matures on August 25, 2025 (unless terminated earlier in accordance with its terms) and requires compliance with conditions precedent that must be satisfied prior to any borrowing. The agreement also contains various representations, warranties and covenants ~~include maintaining minimum thresholds~~that we consider customary for ~~cumulative earnings before interest, depreciation and amortization (“EBITDA”) for~~an asset-based credit facility. The agreement requires us to comply with one financial covenant, specifically, that we maintain availability (as determined in accordance with the ~~third quarter of fiscal 2019 (as defined by the credit~~ agreement)~~, maintaining minimum liquidity~~ at all times equal to or greater than the greater of (a) 12.5% of the loan cap and (b) $3,125,000 (subject to increase upon exercise of the increase option). The “loan cap” is the lesser of (1) $25,000,000 less the outstanding amount of loans and letters of credit under the agreement and (2) the borrowing base from time to time under the agreement.The agreement also contains various information and reporting requirements and provides for various fees customary for an asset-based lending facility. We anticipate the annual costs of maintaining the agreement, including interest and fees, will be between $500,000 and $600,000. The agreement contains customary events of default, including without limitation events of default based on payment obligations, material inaccuracies of representations and warranties, covenant defaults, final judgments and orders, unenforceability of the agreement, material ERISA events, change in control, insolvency proceedings, and defaults under certain other obligations.

An event of default may cause the applicable interest rate and fees to increase by 2% until such event of default has been cured, waived, or amended. The agreement contains typical negative covenants, including, among other things, that the borrower will not incur indebtedness except for permitted indebtedness or make any investments except for permitted investments, declare dividends or repurchase its stock except as permitted, acquire any subsidiaries except in connection with a ~~minimum fixed charge coverage ratio effective in~~permitted acquisition, or merge or consolidate with any other entity or acquire all or substantially all of the ~~fourth quarter~~assets of ~~fiscal 2019 (as defined in~~any other company outside the ordinary course of business.

Additionally, on August 25, 2020, upon execution of the ~~fourth quarter~~agreement with PNC Bank, we terminated our existing bank credit line with U.S. Bank, under the Fourth Amended and Restated Loan Agreement, as amended as of ~~fiscal 2019 (as defined~~May 28, 2020. The former agreement with U.S. Bank provided for a maximum borrowing capacity of up to $10,000,000, subject to compliance with certain financial tests. The former credit agreement would have matured on September 30, 2020. At the time of termination, we did not have any outstanding borrowings under the agreement with U.S. Bank and was in compliance with the amended covenants set forth in the former credit ~~agreement). The Company has a~~agreement. Our outstanding $1.0 million letter of credit against the line of credit at the end of the third quarter of fiscal 2019. As of the end of the third quarter of fiscal 2019: (i) we were in compliance with all covenants; (ii) there were no borrowings under the ~~line of credit; and (iii) there was $19.0 million available for borrowing under the line of credit.~~agreement with U.S. Bank will remain outstanding subject to cash collateralization provided by us to U.S. Bank.

In ~~fiscal~~ ~~2019~~,addition to the foregoing, in response to the COVID-19 pandemic, we ~~expect~~have taken other actions to ~~spend a total of $12 to $14 million on capital expenditures. Capital spending through the~~ ~~thirty-nine weeks ended November 2, 2019~~ ~~totaled $10.1 million, on track~~preserve and fortify our liquidity, including reducing and deferring various operating and other expenses, temporarily furloughing employees, position eliminations, or reducing employee salaries, engaging in discussions with our ~~full year plans. Capital spending~~landlords to negotiate better lease terms, reducing planned capital expenditures, and entering into a new revolving credit facility. In addition, we do not plan to utilize our cash to repurchase shares in fiscal ~~2019~~2020 in order to preserve our cash position. Our ability to repurchase shares is ~~expected to primarily support~~limited by conditions set forth by our ~~store activity, including both new stores and remodels, and investments~~lender in ~~information technology infrastructure.~~

our credit agreement, as described above. We believe that the above measures taken to increase and maintain our liquidity, including the new revolving credit agreement, together with cash generated from operations ~~and borrowings under our credit agreement~~ will be sufficient to fund our working capital and other cash flow requirements for at least the ~~near future.~~next 12 months. We continue to explore other options to access alternative liquidity sources which may include various government assistance programs and monetization of existing assets, and we will continue to consider other actions to improve our cash position, including but not limited to implementing further Selling, general and administrative expense reductions and foregoing or delaying capital expenditures.

A summary of our operating, investing and financing activities is shown in the following table (dollars in thousands):

Operating Activities. Cash provided by operating activities increased $0.6 million for the twenty-six weeks ended August 1, 2020, as compared to the twenty-six weeks ended August 3, 2019. This increase in cash from operating activities was primarily driven by a focus on working capital management resulting in less inventory purchases compared to the same period in the prior year, reduced marketing spend and the temporary extension of payment terms with vendors and landlords.

Investing Activities. Cash used in investing activities decreased $1.6 million for the twenty-six weeks ended August 1, 2020 as compared to the twenty-six weeks ended August 3, 2019. This decrease in cash from investing activities was primarily driven by reductions in planned capital expenditure as a result of the COVID-19 pandemic.

Financing Activities. Cash used in financing activities decreased $0.1 million for the twenty-six weeks ended August 1, 2020, as compared to the twenty-six weeks ended August 3, 2019. This decrease in cash from financing activities was driven by less stock-based compensation vesting year-to-date in fiscal 2020 compared the same period in prior year resulting in the need for less shares withheld for taxes.

Capital Resources: As noted above, as of August 1, 2020, we had a consolidated cash balance of $25.3 million and approximately 82% of this balance was domiciled within the United States. On August 25, 2020, Build-A-Bear Workshop, Inc. entered into a Revolving Credit and Security Agreement with PNC Bank, National Association, as agent, unlocking additional capital resources for our use . Refer to foregoing sections for further discussion of this new facility.

Most of our retail stores are located within shopping malls and all are operated under leases classified as operating leases. Our ~~credit agreement expires~~leases in North America have shifted to shorter term leases to provide flexibility in aligning stores with market trends. Our leases typically require us to pay personal property taxes, our pro rata share of real property taxes of the shopping mall, our own utilities, repairs and maintenance in our store, a pro rata share of the malls’ common area maintenance and, in some instances, merchant association fees and media fund contributions. Many new leases contain incentives to help defray the cost of construction of a new store. Typically, a portion of the incentive must be repaid to the landlord if we choose to terminate the lease before the end of its initial term. In addition, some of these leases contain various restrictions relating to change in control of our company. Our leases also subject us to risks relating to compliance with changing mall rules and the exercise of discretion by our landlords on ~~December 31, 2020.~~various matters, including rights of termination in some cases. Rents are invoiced monthly and paid in advance.

Our leases in the U.K. and Ireland typically have terms of ten years and generally contain a provision whereby every fifth year the rental rate can be adjusted to reflect the current market rates. The leases typically provide the lessee with the first right for renewal at the end of the lease. Real estate taxes also change according to government time schedules to reflect current market rental rates for the locations we lease. However, for fiscal 2020, business rates have been forgiven by the U.K. government through March 2021. Rents are invoiced monthly or quarterly and paid in advance.

Capital spending through the twenty-six weeks ended August 1, 2020 totaled $3.4 million, which reflects previously committed investments in infrastructure to support our digital initiatives. In response to the COVID-19 pandemic, we have reduced future planned capital expenditures in fiscal 2020 to maintenance levels.

In August 2017, our Board of Directors adopted a share repurchase program authorizing the repurchase of up to $20 million of our common stock. From the date of the program approval through ~~November 2, 2019~~,August 1, 2020, we repurchased a total of 1.3 million shares at an average price of $8.75 per share for an aggregate amount of $11.2 million. ~~As of~~ ~~November 2, 2019~~,Although we had $8.8 million of availability under the 2017 Share Repurchase ~~Program. However~~Program as of May 2, 2020, currently we do not plan to utilize our cash to resume share repurchases in fiscal 2020. In addition, our ability to repurchase shares is limited by conditions set forth by our lender in our credit ~~agreement.~~agreement, as described above.

We do not believe that inflation has had a material adverse impact on our business or operating results during the periods presented. We cannot provide assurance, however, that our business will not be affected by inflation in the future.

The preparation of financial statements in conformity with U.S. GAAP requires the appropriate application of certain accounting policies, which require us to make estimates and assumptions about future events and their impact on amounts reported in our financial statements and related notes. Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such differences could be material to the financial statements.

We believe application of accounting policies, and the estimates inherently required therein, are reasonable. These accounting policies and estimates, including those related to ~~inventory,~~ long-lived assets, leases, revenue recognition and income taxes, are reevaluated on an ongoing basis, and adjustments are made when facts and circumstances dictate a change.

Historically, we have found our application of accounting policies to be appropriate, and actual results have not differed materially from those determined using necessary estimates.

Our critical accounting policies and estimates are discussed in and should be read in conjunction with our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (SEC) on April ~~18, 2019,~~16, 2020, which includes audited consolidated financial statements for our 2019 and 2018 ~~and 2017~~ fiscal years and the five weeks ended February 3, 2018. Except for changes resulting from the adoption of new accounting standards during the period, including the new lease standard (See footnote 3 to the Condensed Consolidated Financial Statements), thereyears. There have been no material changes to the critical accounting estimates disclosed in the ~~2018~~2019 Form 10-K.

See Note 1 to the Condensed Consolidated Financial Statements — Basis of Presentation — Recent Accounting Pronouncements – Adopted in the Current Year

There have been no material changes to our Quantitative and Qualitative Disclosures About Market Risk as disclosed in our Annual Report on Form 10-K for the year ended February ~~2, 2019~~1, 2020 as filed with the SEC on April ~~18, 2019.~~16, 2020.

Our management, with the participation of our President and Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including our certifying officers, as appropriate to allow timely decisions regarding required disclosure. Based on the foregoing evaluation, our management, including the President and Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of ~~November 2, 2019~~,August 1, 2020, the end of the period covered by this Quarterly Report.

It should be noted that our management, including the President and Chief Executive Officer and the Chief Financial Officer, does not expect that our disclosure controls and procedures or internal controls will prevent all error and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting. The Company’s management, with the participation of the Company’s President and Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of the Company’s internal control over financial reporting to determine whether any changes occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. There ~~has~~have been no changes in our internal control over financial reporting during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to our risk factors as disclosed in our Annual Report on Form 10-K for the year ended February ~~2, 2019~~1, 2020 as filed with the SEC on April ~~18, 2019.~~16, 2020.

The following is a list of exhibits filed as a part of the quarterly report on Form 10-Q:

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Page
Part I Financial Information

Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income ~~(Loss)~~	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2730

Item 4.	Controls and Procedures	2731

Part II Other Information

Item 1A.	Risk Factors	2831

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2832

Item 6.	Exhibits	2933

Signatures		3035

		November 2,			February 2,			November 3,				*August 1,*			*February 1,*			*August 3,*
		2019			2019			2018				*2020*			*2020*			*2019*
		(Unaudited)						(Unaudited)				(Unaudited)						(Unaudited)
ASSETS	ASSETS										*ASSETS*
Current assets:
Cash and cash equivalents		$	6,167		$	17,894		$	8,631			$	25,274		$	26,726		$	14,965
Inventories, net			66,205			58,356			57,309				55,509			53,381			62,081
Receivables, net			10,250			10,588			12,962				6,314			11,526			8,714
Prepaid expenses and other current assets			6,327			12,960			16,848				5,400			7,117			6,889
Total current assets			88,949			99,798			95,750				92,497			98,750			92,649

Operating lease right-of-use asset			135,810			-			-				114,709			126,144			137,680
Property and equipment, net			65,954			66,368			73,343				58,085			65,855			64,191
Deferred tax assets			3,203			3,099			6,783				0			3,411			1,949
Other intangible assets, net			27			731			887				0			0			1,067
Other assets, net			2,734			2,050			2,091				2,972			3,102			1,658
Total Assets		$	296,677		$	172,046		$	178,854			$	268,263		$	297,262		$	299,194

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY										*LIABILITIES AND STOCKHOLDERS' EQUITY*
Current liabilities:
Accounts payable		$	18,390		$	22,551		$	18,179			$	23,267		$	15,680		$	16,734
Accrued expenses			9,985			10,047			7,559				15,911			16,536			8,622
Operating lease liability short term			31,537			-			-				39,917			30,912			30,697
Gift cards and customer deposits			19,141			21,643			18,580				17,988			20,231			16,981
Short-term borrowings			-			-			7,250
Deferred revenue and other			2,347			1,936			2,006				2,659			2,605			2,056
Total current liabilities			81,400			56,177			53,574				99,742			85,964			75,090

Operating lease liability long term			130,394			-			-				111,640			119,625			132,613
Deferred rent			-			18,440			18,066
Deferred franchise revenue			1,289			1,625			1,557				916			1,325			1,399
Other liabilities			1,651			1,490			1,765				1,430			1,717			1,587
Commitments and contingencies			-			-			-

Stockholders' equity:
Preferred stock, par value $0.01, Shares authorized: 15,000,000; No shares issued or outstanding at November 2, 2019, February 2, 2019 and November 3, 2018			-			-			-
Common stock, par value $0.01, Shares authorized: 50,000,000; Issued and outstanding: 15,219,915, 14,953,142 and 14,956,711 shares, respectively			152			150			150
Preferred stock, par value $0.01, Shares authorized: 15,000,000; No shares issued or outstanding at August 1, 2020, February 1, 2020 and August 3, 2019													0			0			0
Common stock, par value $0.01, Shares authorized: 50,000,000; Issued and outstanding: 15,591,553, 15,205,981 and 15,220,252 shares, respectively													156			152			152
Additional paid-in capital			69,955			69,088			68,274				71,906			70,633			70,295
Accumulated other comprehensive loss			(11,927	)		(12,018	)		(12,049	)			(12,339	)		(12,079	)		(11,579	)
Retained earnings			23,763			37,094			47,517
Retained (deficit)/earnings													(5,188	)		29,925			29,637
Total stockholders' equity			81,943			94,314			103,892				54,535			88,631			88,505
Total Liabilities and Stockholders' Equity		$	296,677		$	172,046		$	178,854			$	268,263		$	297,262		$	299,194

	Thirteen weeks ended						Thirty-nine weeks ended						*Thirteen weeks ended*						*Twenty-six weeks ended*
	November 2,			November 3,			November 2,			November 3,			*August 1,*			*August 3,*			*August 1,*			*August 3,*
	2019			2018			2019			2018			*2020*			*2019*			*2020*			*2019*
Revenues:
Net retail sales	$	66,575		$	65,298		$	222,837		$	227,760		$	39,339		$	75,214		$	84,986		$	156,263
Commercial revenue		2,560			2,171			8,507			4,245			865			3,193			1,198			5,947
International franchising		1,249			1,225			2,616			3,051			149			807			793			1,366
Total revenues		70,384			68,694			233,960			235,056			40,353			79,214			86,977			163,576

Costs and expenses:
Cost of merchandise sold - retail		40,284			42,129			126,722			134,115			30,233			42,016			63,585			86,437
Store asset impairment														2,063			0			6,882			0
Cost of merchandise sold - commercial		1,412			773			3,887			1,843			387			1,211			527			2,475
Cost of merchandise sold - international franchising		962			731			2,417			1,650			130			1,016			385			1,455
Total cost of merchandise sold		42,658			43,633			133,026			137,608			32,813			44,243			71,379			90,367
Consolidated gross profit		27,726			25,061			100,934			97,448			7,540			34,971			15,598			73,209
Selling, general and administrative expense		35,412			35,069			106,940			109,334			21,516			35,720			48,241			71,527
Interest expense (income), net		8			(16	)		21			5
Loss before income taxes		(7,694	)		(9,992	)		(6,027	)		(11,891	)
Income tax benefit		(1,821	)		(3,928	)		(126	)		(4,381	)
Net loss	$	(5,873	)	$	(6,064	)	$	(5,901	)	$	(7,510	)
Interest (income) expense, net														7			(7	)		4			14
(Loss) income before income taxes														(13,983	)		(742	)		(32,647	)		1,668
Income tax (benefit)/expense														(74	)		482			2,466			1,696
Net (loss) income													$	(13,909	)	$	(1,224	)	$	(35,113	)	$	(28	)

Foreign currency translation adjustment		(349	)		(34	)		92			(1,249	)		(429	)		544			(259	)		440
Comprehensive loss	$	(6,222	)	$	(6,098	)	$	(5,809	)	$	(8,759	)
Comprehensive (loss) income													$	(14,338	)	$	(680	)	$	(35,372	)	$	412

Loss per common share:
(Loss) income per common share:
Basic	$	(0.40	)	$	(0.42	)	$	(0.40	)	$	(0.51	)	$	(0.93	)	$	(0.08	)	$	(2.35	)	$	(0.00	)
Diluted	$	(0.40	)	$	(0.42	)	$	(0.40	)	$	(0.51	)	$	(0.93	)	$	(0.08	)	$	(2.35	)	$	(0.00	)

Shares used in computing common per share amounts:
Basic		14,752,307			14,590,614			14,697,592			14,597,255			14,999,786			14,726,678			14,936,541			14,669,626
Diluted		14,752,307			14,590,614			14,697,592			14,597,255			14,999,786			14,726,678			14,936,541			14,669,626

	Thirty-nine weeks ended						*Twenty-six weeks ended*
	November 2,			November 3,			*August 1,*			*August 3,*
	2019			2018			*2020*			*2019*

Cash flows used in operating activities:
Cash flows provided by operating activities:
Net loss	$	(5,901	)	$	(7,510	)	$	(35,113	)	$	(28	)
Adjustments to reconcile net less to net cash provided by operating activities:
Depreciation and amortization		10,359			12,186			6,711			6,797
Stock-based compensation		1,827			2,624
Asset impairment		-			626
Share-based and performance-based stock compensation								736			1,454
Impairment of right-of-use assets and fixed assets								6,882			0
Deferred taxes		(106	)		(3,207	)		3,388			1,145
Provision for doubtful accounts		(140	)		-			669			(117	)
Loss on disposal of property and equipment		33			66
Gain on disposal of property and equipment								22			27
Change in assets and liabilities:
Inventories, net		(7,971	)		(174	)		(2,217	)		(4,501	)
Receivables, net		370			(4,116	)		4,512			1,725
Prepaid expenses and other assets		6,610			(3,803	)		1,697			5,975
Accounts payable and accrued expenses		(4,715	)		(6,302	)		8,360			(6,948	)
Operating leases		1,892			1,071			8,732			2,027
Gift cards and customer deposits		(2,916	)		(637	)		(2,213	)		(5,033	)
Deferred revenue		(905	)		149			(256	)		(1,174	)
Net cash used in operating activities		(1,563	)		(9,027	)
Net cash provided by operating activities								1,910			1,349
Cash flows used in investing activities:
Purchases of property and equipment		(10,099	)		(8,853	)		(3,378	)		(4,945	)
Proceeds from property insurance		-			84
Net cash used in investing activities		(10,099	)		(8,769	)		(3,378	)		(4,945	)
Cash flows used in financing activities:
Proceeds from the exercise of employee stock options, net of withholding tax payments		(245	)		(134	)		(114	)		(244	)
Borrowings under line of credit		-			7,250
Purchases of Company’s common stock		-			(1,927	)
Net cash provided by (used in) financing activities		(245	)		5,189
Net cash used in financing activities								(114	)		(244	)
Effect of exchange rates on cash		180			(261	)		123			850
Net decrease in cash and cash equivalents		(11,727	)		(12,868	)		(1,459	)		(2,990	)
Cash and cash equivalents, beginning of period		17,894			21,499			28,395			19,561
Cash and cash equivalents, end of period	$	6,167		$	8,631		$	26,936		$	16,571

Supplemental disclosure of cash flow information:
Net cash paid (received) during the period for income taxes	$	(2,055	)	$	2,320
Total cash, cash equivalents and restricted cash							$	26,936		$	16,571
Less: Restricted cash from long-term deposits							$	(1,662	)	$	(1,606	)
Total cash and cash equivalents							$	25,274		$	14,965

Net cash received during the period for income taxes							$	(135	)	$	(1,946	)

	November 2,		February 2,		November 3,		*August 1,*		*February 1,*		*August 3,*
	2019		2019		2018		*2020*		*2020*		*2019*
Prepaid occupancy (1)	$	1,426	$	5,497	$	7,767	$	206	$	1,097	$	1,634
Prepaid income taxes	$	879		2,245		3,315		241		164		408
Other	$	4,022		5,218		5,766
Prepaid insurance								268		628		247
Prepaid gift card fees								1,225		1,413		1,139
Other ⁽²⁾								3,460		3,815		3,461
Total	$	6,327	$	12,960	$	16,848	$	5,400	$	7,117	$	6,889

		February 3,
	Classification on the Balance Sheet	2019
Assets
Operating lease right-of-use assets	Operating lease right-of-use assets	$	151,513

Liabilities
Current - Operating	Operating lease liability short term		34,672
Noncurrent - Operating	Operating lease liability long term		141,519
Total lease liabilities		$	176,191

	Thirteen weeks ended		Thirty-nine weeks ended
	November 2, 2019		November 2, 2019

Operating lease costs		10,260		31,030
Variable lease costs		514		1,828
Short term lease costs		255		940
Total Operating Lease costs	$	11,029	$	33,798

	~~(1)~~(1)	Prepaid occupancy consists of prepaid expenses related to non-lease components.
	(2)	Other consists primarily of prepaid expense related to IT maintenance contracts and software as a service.

	●	our business, operations and financial results have been and will continue to be negatively affected by the COVID-19 pandemic, which presents uncertainty relating to our anticipated duration and scope and whether there will a second wave or periods of increases in the number of COVID-19 cases in areas in which we operate, as well the restrictions imposed by federal, state, and local governments in response to the pandemic;
	●	any sustained decline in general global economic conditions, caused by the COVID-19 pandemic or otherwise, could lead to disproportionately reduced consumer demand for our products, which represent relatively discretionary spending, and have an adverse effect on our liquidity and profitability;
	●	~~we may not be able to operate our international corporately-managed locations profitably;~~
	●	we depend upon the shopping malls and tourist locations in which we are located to attract guests to our stores and a decline in consumer traffic, or if such consumer traffic does not return to levels that we saw prior to the COVID-19 pandemic, could adversely affect our financial performance and profitability;
	●	in connection with the reopening of our stores, we have modified our interactive shopping experience in order to comply with social distancing and sanitation practices. These modifications could have a negative impact on the appeal of our interactive shopping experience and reduce guest traffic to our stores. In addition, we are continuing to assess the impacts that such measures have on individual store performance due to the decreased volume of guests that may be able to enjoy our interactive shopping experience, and such reduced guest volume could adversely impact our ability to operate our stores profitably;
	●	we may experience store closures in shopping malls and tourist locations and other impacts to our business resulting from civil disturbances;
	●	we believe the hands-on and interactive nature of our store and high touch service model result in guests forming an emotional connection with our brand, which in turn contributes to the success of our ecommerce platform; if we are not able to offer the same experience in the short and medium-term, it may adversely affect the value of our brand;
	●	birthdays and other special occasions have historically been a key driver for store traffic, and our guests’ willingness to hold such events at our stores may adversely affect store performance and our overall profitability;
	●	a significant part of our revenue and net income comes during the holiday selling season; if the COVID-19 pandemic adversely affects consumers spending during this year’s holiday season our financial condition and flexibility could be adversely affected;
	●	if we are unable to generate interest in and demand for our interactive retail experience and products, including being able to adjust that experience consistent with our guests' expectations as the general retail economy emerges from the restrictions imposed by the COVID-19 pandemic, and to otherwise identify and respond to consumer preferences in a timely manner, our sales, financial condition and profitability could be adversely affected;
	●	~~our merchandise is manufactured by foreign manufacturers and we transact business in various foreign countries, and the availability and costs~~some of our licensed products ~~as well as~~are based on feature films with planned theatrical launches, given that the COVID-19 pandemic has negatively impacted theaters and delayed movie releases, the portion of our ~~product pricing, may~~business associated with these films could be negatively affected, ~~by risks associated with international manufacturing and trade, tariffs and foreign currency fluctuations;~~ particularly during the holiday season;
	●	if we ~~are~~may be unable to ~~renew, renegotiate or replace~~leverage the flexibility within our existing real estate portfolio to capitalize on future real estate opportunities over the near and intermediate term as our leases come up for renewal, and there may be other costs and risks relating to a brick and mortar retail store ~~leases or enter into leases for new stores~~model such as a lack of available retail store sites on ~~favorable~~ terms ~~or if we violate any of the terms of our current leases, our revenue and profitability could be harmed;~~ acceptable to us as a result;
	●	consumer interests change rapidly and our success depends on the ongoing effectiveness of our marketing and online initiatives to build consumer affinity for our brand and drive consumer demand for key products and services;
	●	we are subject to a number of risks related to disruptions, failures or security breaches of our information technology infrastructure. If we improperly obtain or are unable to protect our data or violate privacy or security laws such as the GDPR, the CCPA or the California Privacy Rights Act (if adopted), or expectations, we could be subject to liability as well as damage to our reputation;
	●	we may not be able to operate successfully if we lose key personnel, are unable to hire qualified additional personnel, or experience turnover of our management team;
	●	we are subject to risks associated with technology and digital operations;

	●	we may not be able to evolve our store locations over time to align with market trends, successfully diversify our store models and formats in accordance with our strategic goals or otherwise effectively manage our overall portfolio of stores which could adversely affect our ability to grow and could significantly harm our profitability;
	●	we rely on a few global supply chain vendors to supply substantially all of our merchandise, and significant price increases or any disruption in their ability to deliver merchandise could harm our ability to source products and supply inventory to our stores;
	●	our company-owned distribution center which services the majority of our stores in North America and our third-party distribution center providers used in the western United States and Europe may experience disruptions in their ability to support our stores or may operate inefficiently;
	●	our merchandise is manufactured by foreign manufacturers and we transact business in various foreign countries, and the availability and costs of our products, as well as our product pricing, may be negatively affected by risks associated with international manufacturing and trade, tariffs and foreign currency fluctuations;
	●	if we are unable to effectively manage our international franchises, attract new franchisees or if the laws relating to our international franchises change, our growth and profitability could be adversely affected and we could be exposed to additional liability;
	●	we may not be able to operate our international corporately-managed locations profitably;
	●	we may fail to renew, register or otherwise protect our trademarks or other intellectual property and may be sued by third parties for infringement or, misappropriation of their proprietary rights, which could be costly, distract our management and personnel and which could result in the diminution in value of our trademarks and other important intellectual property;
	●	we may suffer negative publicity or be sued if the manufacturers of our merchandise or of Build-A-Bear branded merchandise sold by our licensees ship any products that do not meet current safety standards or production requirements or if such products are recalled or cause injuries;
	●	we may suffer negative publicity or be sued if the manufacturers of our merchandise violate labor laws or engage in practices that consumers believe are unethical;
	●	our profitability could be adversely affected by fluctuations in petroleum products prices;

	●	our business may be adversely impacted at any time by a significant variety of competitive threats;
	●	we may suffer negative publicity or a decrease in sales or profitability if the products from other companies that we sell in our stores do not meet our quality standards or fail to achieve our sales expectations;

	●	we may be unsuccessful in ~~acquiring businesses or~~ engaging in ~~other~~various strategic transactions, which may negatively affect our financial condition and profitability;
	●	~~fluctuations in~~the duration of our ~~operating results could reduce~~plan to not utilize cash to resume share repurchases while we continue to take measure to preserve our cash ~~flow and we~~position may ~~be unable to repurchase shares at all or at the times or in the amounts we desire or the results of~~negatively impact our ~~share repurchase program may not be as beneficial as we would like;~~ financial condition;
	●	fluctuations in our quarterly results of operations could cause the price of our common stock to substantially decline;
	●	the market price of our common stock is subject to volatility, which could in turn attract the interest of activist shareholders; and
	●	our certificate of incorporation and bylaws and Delaware law contain provisions that may prevent or frustrate attempts to replace or remove our current management by our stockholders, even if such replacement or removal may be in our stockholders’ best interests.

	•	Direct-to-Consumer (“DTC”) – Corporately-managed retail stores located in the U.S., Canada, Puerto Rico, the U.K., Ireland, Denmark and China and two e-commerce sites;
	•	Commercial – Transactions with other businesses, mainly comprised of wholesale product sales to third-party retailers and licensing our intellectual property, including entertainment properties, for third-party use; and
	•	International franchising – Royalties as well as product and fixture sales from other international operations under franchise agreements.

	●	~~Development~~We accelerated our omni-channel competencies of ~~our experiential~~"Buy Online, Ship From Store" and "Buy Online, Pick Up In Store" allowing currently operating stores to serve as "mini distribution centers", an efficient shift given the ongoing challenges in traditional retail ~~model~~traffic. Expanded omni-channel allows us to ~~diversify and expand~~leverage the ~~impact and reach~~geographic proximity of ~~our brand:~~ We expect to continue to diversify our real estate portfolio to focus on places where families are increasingly going to shop or going for entertainment. We have been actively identifying and securing more tourist locations through both corporately-managed sites and third-party retail locations. We expect to continue to maintain the high level of lease optionality that we have achieved by planning and leveraging select natural lease events such as lease renewals or terminations. We are also actively working with a large retailer to expand our reach to a broader array of consumers. In addition, we expect to continue to enhance our capabilities and expand our eCommerce offerings to build on our eight consecutive quarters of growth through our web and mobile commerce sites. We believe that there is significant opportunity to develop products to reach key segments including our core family demographicstores as well as ~~gift-givers~~available labor to help fulfill the continuing strong e-commerce demand;
	●	We moved our National Teddy Bear Day event on September 9, 2020, which is a traditionally high traffic store event, to a primarily digital format featuring a live-streaming virtual-store event;
	●	We introduced our new at-home "Party in a Box" offering available online for families that want to celebrate special occasions - from birthdays to thanking the hero in their lives - with a curated product collection that simulates the party activity that had previously been a store-exclusive.
	●	We cancelled our highly popular annual in-store "Pay Your Age" promotion due to COVID-19 and ~~the affinity/collector sector. In addition, we expect to continue to improve~~replaced it with our online marketing programs to drive traffic to the site and leverage advanced data analysis capabilities to reduce cart abandonment and increase conversion rates of site traffic. We also expect to increase lifetime value of our Bonus Club loyalty members through enhanced segmentation models and improved marketing communications.first "NO LINE ONLINE Bear Building Sale!" event.


	●	~~Long-Term Profitability Improvement:~~ We are focused on improving profitability through the execution of our stated strategies detailed above as well as disciplined expense management and on-going efforts in process and systems upgrades. While we continue to monitor consolidated comparable sales as an important metric in our business, we believe that total revenue growth and profitability improvement are more indicative of the progress in our business initiatives on a go forward basis.

	Thirty-nine weeks ended																						Twenty-six weeks ended
	November 2, 2019											November 3, 2018											August 1, 2020											August 3, 2019
	North America			Europe			Asia		Total			North America			Europe			Asia		Total			North America			Europe			Asia		Total			North America			Europe			Asia		Total
Beginning of period		311			59			1		371			294			59			1		354			316			55			1		372			311			59			1		371
Opened		16			1			-		17			27			1			-		28			1			-			-		1			-			-			-		-
Closed		(12	)		(5	)		-		(17	)		(9	)		(2	)		-		(11	)		(10	)		(4	)		-		(14	)		(7	)		(4	)		-		(11	)
End of period		315			55			1		371			312			58			1		371			307			51			1		359			304			55			1		360

	Thirteen weeks ended						Twenty-six weeks ended
	August 1,			August 3,			August 1,			August 3,
	2020			2019			2020			2019
Revenues:
Net retail sales		97.5	%		95.0	%		97.7	%		95.5	%
Commercial revenue		2.1			4.0			1.4			3.7
International franchising		0.4			1.0			0.9			0.8
Total revenues		100.0			100.0			100.0			100.0

Costs and expenses:
Cost of merchandise sold - retail ⁽¹⁾		76.9			55.9			74.8			55.3
Store asset impairment		5.2			0.0			8.1			0.0
Cost of merchandise sold - commercial ⁽¹⁾		44.7			37.9			44.0			41.6
Cost of merchandise sold - international franchising ⁽¹⁾		87.2			125.9			48.5			106.5
Total cost of merchandise sold		81.3			55.9			82.1			55.2
Consolidated gross profit		18.7			44.2			17.9			44.8
Selling, general and administrative		53.3			45.1			55.5			43.7
Interest (income) expense, net		0.0			(0.0	)		0.0			0.0
(Loss) income before income taxes		(34.7	)		(0.9	)		(37.5	)		1.0
Income tax (benefit)/expense		(0.2	)		0.6			2.8			1.0
Net (loss) income		(34.5	)		(1.5	)		(40.4	)		(0.0	)

Retail Gross Margin ⁽²⁾		23.1	%		44.1	%		25.2	%		44.7	%

(1)	Cost of merchandise sold – retail is expressed as a percentage of net retail sales. Cost of merchandise sold – commercial is expressed as a percentage of ~~net retail sales.~~commercial revenue. Cost of merchandise sold – ~~commercial~~international franchising is expressed as a percentage of ~~commercial~~international franchising revenue. ~~Cost~~
(2)	Retail gross margin represents net retail sales less cost of merchandise sold ~~– international franchising is expressed as a percentage of international franchising revenue.~~
~~(2)~~	~~Retail~~- retail; retail gross margin percentage represents ~~net retail sales less cost of merchandise sold - retail;~~ retail gross margin ~~percentage represents retail gross margin~~ divided by net retail sales.

	Thirty-nine weeks ended
	November 2, 2019
Impact from:
Existing store and e-commerce sales	$	(6.7	)
New stores		8.1
Store closures		(5.3	)
Foreign currency translation		(2.0	)
Deferred revenue estimates, including breakage		1.0
	(4.9		)

Period	(a) Total Number of Shares (or Units) Purchased (1)		(b) Average Price Paid Per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2)
Aug. 4, 2019 - Aug. 31, 2019		-		-		-	$	8,795,529
Sept. 1, 2019 - Oct. 5, 2019		31		3.12		-		8,795,529
Oct. 6, 2019 - Nov. 2, 2019		99		3.82		-		8,795,529
Total		130	$	3.65		-	$	8,795,529

Exhibit No.		Description

2.1		Agreement and Plan of Merger dated April 3, 2000 between Build-A-Bear Workshop, L.L.C. and the Registrant (incorporated by reference from Exhibit 2.1 to our Registration Statement on Form S-1, filed on August 12, 2004, Registration No. 333-118142)

3.1		Third Amended and Restated Certificate of Incorporation (incorporated by reference from Exhibit 3.1 of our Current Report on Form 8-K, filed on November 11, 2004)

3.2		Amended and Restated Bylaws, as amended through February 23, 2016 (incorporated by reference from Exhibit 3.1 of our Current Report on Form 8-K, filed on February 24, 2016)

4.1		Specimen Stock Certificate (incorporated by reference from Exhibit 4.1 to Amendment No. 3 to our Registration Statement on Form S-1, filed on October 1, 2004, Registration No. 333-118142)

10.1		~~Twentieth Amendment to Loan Documents between~~Revolving Credit and Security Agreement dated as of August 25, 2020 among the Company and Build-A-Bear ~~Workshop,~~Retail Management, Inc., as borrowers; Build-A-Bear Workshop Franchise Holdings, Inc., Build-A-Bear Entertainment, LLC, Build-A-Bear ~~Retail Management, Inc., and Build-A-Bear~~ Card Services LLC and Build-A-Bear Workshop Canada, Ltd., as ~~Borrowers,~~guarantors; the lenders party thereto; and ~~U.S.~~PNC Bank, National Association, as ~~Lender, entered into effective as of September 11, 2019~~agent for lenders (incorporated by reference from Exhibit 10.1 toof our Current Report on Form 8-K, filed on ~~September 11, 2019)~~August 31, 2020).

10.2		Build-A-Bear Workshop, Inc. 2020 Omnibus Incentive Plan (incorporated by reference from Exhibit 101 of our Current Report on Form 8-K, filed on June 12, 2020)

31.1		Rule 13a-14(a)/15d-14(a) certification (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the President and Chief Executive Officer)

31.2		Rule 13a-14(a)/15d-14(a) certification (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the Chief Financial Officer)

32.1		Section 1350 Certification (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the President and Chief Executive Officer)

32.2		Section 1350 Certification (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Chief Financial Officer)

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document


101.CAL		Inline XBRL Extension Calculation Linkbase Document

101.DEF		Inline XBRL Extension Definition Linkbase Document

101.LAB		Inline XBRL Extension Label Linkbase Document

101.PRE		Inline XBRL Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

	BUILD-A-BEAR WORKSHOP, INC.
	(Registrant)

	By:	/s/ Sharon John
		Sharon John
		President and Chief Executive Officer (on behalf of the registrant and as principal executive officer)

	By:	/s/ ~~Sharon John~~Voin Todorovic
		~~Sharon John~~
		~~President and Chief Executive Officer (on behalf of~~ ~~the registrant and as principal executive officer)~~

	~~By:~~	~~/s/~~ Voin Todorovic
		~~Voin Todorovic~~
		Chief Financial Officer (on behalf of the registrant and as principal financial officer)