Exhibit 99.1
Build-A-Bear Workshop, Inc. Reports Fiscal 2005 Second Quarter Results
ST. LOUIS--(BUSINESS WIRE)--July 28, 2005--Build-A-Bear Workshop,
Inc. (NYSE: BBW):
-- Earnings per diluted share were $0.17, include $0.03 per
diluted share for flagship store preopening costs.
-- First half net income increased 12% to $11.5 million or $0.57
per diluted share and includes $0.05 for flagship store
preopening costs.
-- Maintains guidance of 26% to 32% net income growth for fiscal
2005.
Build-A-Bear Workshop, Inc. (NYSE: BBW), an interactive
entertainment retailer of customized stuffed animals, today announced
earnings results for the fiscal 2005 second quarter and confirmed
earnings guidance for the full year.
Total revenue for the fiscal 2005 second quarter (13 weeks ended
July 2, 2005) was $73.7 million, compared to $66.1 million in the
prior year's second quarter (13 weeks ended July 3, 2004). Second
quarter net income of $3.5 million, or $0.17 per diluted share, on
20.2 million diluted shares outstanding, includes $0.03 per diluted
share of preopening costs related to the Company's new flagship store
in New York City. In the second fiscal quarter of 2004, the Company
reported net income of $4.9 million, or $0.27 per diluted share, on
18.0 million diluted shares outstanding.
The Company also reiterated full year net earnings guidance of
$1.24 to $1.30 per diluted share.
"Strong new store sales performance combined with continued high
merchandise margins helped drive our solid results in the second
quarter," said Chairman and Chief Executive Bear, Maxine Clark. "We
have opened 16 new Build-A-Bear Workshop stores through the first half
of this year compared to eight in the first half of 2004. One of the
keys to our continued growth is the sales and margins we are able to
generate from new stores. That was certainly the case this quarter,
and we remain confident that with the openings we plan for the second
half, the planned higher spending on brand building and marketing, and
ongoing expense control, we can grow full year net income by 26% to
32%."
Fiscal 2005 Second Quarter
Fiscal 2005 second quarter total revenue includes net retail sales
of $73.3 million, an increase of $7.4 million or 11.2% compared to
last year's second quarter. Net retail sales growth was primarily
driven by the addition of new stores opened during the past twelve
months partially offset by a decline in comparable store sales of
6.9%. Second quarter total revenue includes international franchise
fees and third-party licensing revenue totaling $420,000, an increase
of $230,000 compared to last year's second quarter.
The second quarter net income reflected higher store preopening
costs and the impact of comparable store sales declines on costs and
expenses, partially offset by the impact of higher new store sales and
increased interest income. Gross margin rate declined to 46.8% from
48.2% in the fiscal 2004 second quarter. Selling, general and
administrative expense as a percent of total revenue increased to
37.4% from 35.8% as store payroll expense increased as a percent of
revenue. Store preopening expense increased due to higher costs
associated with the New York City flagship store opening, which
totaled $0.9 million pretax, or $0.03 per diluted share, in the second
quarter.
Second quarter 2005 was negatively affected when compared to the
comparable quarter of last year because of the shift in the Easter
holiday and associated school vacations, an important selling time for
the company. In 2005, Easter sales were included in the first quarter;
in 2004 Easter sales were included in the second quarter. Sales
comparisons are also impacted by the Company's appearance on a
syndicated talk show in February 2004 which had a positive impact on
2004 sales.
During the 2005 second quarter, the company opened 13 new
Build-A-Bear Workshop(R) (BABW) retail stores in the United States and
Canada, as planned, compared with opening seven new BABW stores during
the 2004 second quarter. These new stores bring the total number of
BABW stores at the end of the second quarter to 179 in the United
States and 7 in Canada. During the quarter international franchisees
opened four new international stores; international stores totaled 16
at the end of the second quarter.
On July 8, the Company officially opened its New York City
flagship store located on 5th Avenue at 46th Street.
Total revenue for the fiscal 2005 first half (26 weeks ended July
2, 2005) was $159.8 million, up 17.7% compared to $135.7 million in
the 2004 first half (26 weeks ended July 3, 2004). First half net
income of $11.5 million, or $0.57 per diluted share, on 20.2 million
diluted shares outstanding, includes $0.05 per diluted share of
flagship store preopening costs. In the first half of 2004, the
Company reported net income of $10.2 million, or $0.57 per diluted
share, on 17.9 million diluted shares outstanding.
Build-A-Bear Workshop expects to open a total of 30 new BABW
stores in the United States and Canada in fiscal 2005. Plans also
include opening three new friends 2B made stores. International
franchisees expect to open a total of 20 to 25 new stores in fiscal
2005.
Outlook
The Company also re-confirmed its guidance for fiscal 2005 (52
weeks ended Dec. 31, 2005) net income in the range of $25.1 million to
$26.3 million, representing net income growth of 26% to 32% compared
to fiscal 2004. Diluted earnings per share (EPS) are expected to be in
the range of $1.24 to $1.30. Comparable store sales for the year are
expected to be flat with 2004.
The Company expects to begin expensing stock-based compensation in
the first quarter of fiscal 2006 as required by SFAS 123R, Share-Based
Payment.
Today's Conference Call Webcast
Today at 10:00 a.m. EDT, Build-A-Bear Workshop(R) will host a live
audio webcast of its discussion with the investment community
regarding the company's fiscal 2005 second quarter results. The
webcast can be accessed at http://ir.buildabear.com. Following the
live discussion, a replay of the webcast will be available until the
next quarterly conference call.
About Build-A-Bear Workshop, Inc.
Build-A-Bear Workshop, Inc. (NYSE: BBW), with fiscal 2004 total
revenue of $302 million, is the only national company that offers
Guests an interactive make-your-own-stuffed animal
retail-entertainment experience. The first store opened in St. Louis
in 1997; the company currently operates over 190 stores in the United
States and Canada. With the opening of its store in Sheffield,
England, in the fall of 2003 and the addition of international stores
in Japan, Denmark, Australia, South Korea and France, Build-A-Bear
Workshop has become the global leader in the teddy bear business. In
November 2004, the company opened two friends 2B made(R) stores, the
newest concept based on the doll-making experience. For more
information about the company and its products, call 888.560.BEAR
(2327) or visit the company's award-winning Web site at
www.buildabear.com.
Forward-Looking Statements
Statements in this news release expressing or indicating the
beliefs and expectations of management regarding future performance
are forward-looking statements including, without limitation, company
financial performance, sales growth, new store openings, any other
plans, objectives, expectations and intentions contained in this
release that are not historical facts. These statements reflect our
current views with respect to future events and are based on
assumptions and subject to risks and uncertainties. These risks and
uncertainties include, without limitation, those detailed in our 2004
annual report on Form 10-K filed with the SEC on March 29, 2005 under
the caption "Risk Factors" and the following: (1) we may be unable to
generate comparable store sales growth; (2) our marketing initiatives
may not be effective in generating sufficient levels of brand
awareness and Guest traffic; (3) we may be unable open new stores to
effectively manage our growth; (4) we may be unable to effectively
manage our international franchises or laws relating to those
franchises may change; (5) we may be unable to generate interest in
and demand for our interactive retail experience, or to identify and
respond to consumer preferences in a timely fashion; (6) customer
traffic may decrease in the shopping malls where we are located, on
which we depend to attract Guests to our stores; (7) general economic
conditions may decrease, which could lead to reduced consumer demand
for our products; (8) our market share could be adversely affected by
a significant number of competitors; (9) we may lose key personnel, be
unable to hire qualified additional personnel, or experience turnover
of our management team; (10) the ability of our principal vendors to
deliver merchandise may be disrupted; (11) the availability and costs
of our products could be adversely affected by risks associated with
international manufacturing and trade; (12) third parties that manage
our warehousing and distribution functions may perform poorly; (13) we
may fail to renew, register or otherwise protect our trademarks or
other intellectual property; (14) we may have disputes with, or be
sued by, third parties for infringement or misappropriation of their
proprietary rights; (15) we may be unable to renew or replace our
store leases, or enter into leases for new stores on favorable terms,
or may violate the terms of our current leases; (16) we may experience
failures in our communications or information systems; (17) terrorism
or the uncertainty of future terrorist attacks or war could reduce
consumer confidence and mall traffic; (18) we may become subject to
challenges relating to overtime pay or other regulations relating to
our employees; (19) we may suffer negative publicity or be sued due to
violations of labor laws or unethical practices by manufacturers of
our merchandise, and (20) we may improperly obtain or be unable to
protect information from our Guests in violation of privacy or
security laws or expectations.
These risks, uncertainties and other factors may adversely affect
our business, growth, financial condition or profitability, or subject
us to potential liability, and cause our actual results, performance
or achievements to be materially different from those expressed or
implied by our forward-looking statements. We do not undertake any
obligation or plan to update these forward-looking statements, even
though our situation may change.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
13 Weeks 13 Weeks
Ended % of Total Ended % of Total
July 2, Revenues July 3, Revenues
2005 (1) 2004 (1)
---------- ---------- ---------- ----------
Revenues:
Net retail sales $ 73,279 99.4 % $ 65,925 99.7 %
Franchise fees 334 0.5 190 0.3
Licensing revenue 86 0.1 -- 0.0
---------- ---------- ---------- ----------
Total revenues 73,699 100.0 66,115 100.0
---------- ---------- ---------- ----------
Costs and expenses:
Cost of merchandise sold 38,951 53.2 34,124 51.8
Selling, general and
administrative 27,555 37.4 23,639 35.8
Store preopening 1,929 2.6 493 0.7
Interest expense
(income), net (378) (0.5) (59) (0.1)
---------- ---------- ---------- ----------
Total costs and
expenses 68,057 92.3 58,197 88.0
---------- ---------- ---------- ----------
Income before income
taxes 5,642 7.7 7,918 12.0
Income tax expense 2,147 2.9 3,009 4.6
---------- ---------- ---------- ----------
Net income 3,495 4.7 4,909 7.4
Cumulative dividends and
accretion of redeemable
preferred stock -- 493
Cumulative dividends of
nonredeemable preferred
stock -- 114
---------- ----------
Net income available to
common and participating
preferred stockholders $ 3,495 $ 4,302
========== ==========
Net income allocated to
common stockholders $ 3,495 $ 153
========== ==========
Net income allocated to
participating preferred
stockholders $ -- $ 4,149
========== ==========
Earnings per common share:
Basic $ 0.18 $ 0.44
========== ==========
Diluted $ 0.17 $ 0.27
========== ==========
Shares used in computing
common per share amounts:
Basic 19,801,598 351,944
Diluted 20,223,601 18,021,047
(1) Selected statement of operations data expressed as a percentage
of total revenues, except cost of merchandise sold which is
expressed as a percentage of net retail sales. Percentages will
not total due to cost of merchandise sold being expressed as a
percentage of net retail sales and rounding.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
26 Weeks 26 Weeks
Ended % of Total Ended % of Total
July 2, Revenues July 3, Revenues
2005 (1) 2004 (1)
--------------------- ---------------------
Revenues: (restated)
Net retail sales $ 159,002 99.5 % $ 135,420 99.8 %
Franchise fees 640 0.4 307 0.2
Licensing revenue 116 0.1 -- 0.0
---------- ---------- ---------- ----------
Total revenues 159,758 100.0 135,727 100.0
---------- ---------- ---------- ----------
Costs and expenses:
Cost of merchandise sold 81,558 51.3 70,046 51.7
Selling, general and
administrative 57,190 35.8 48,632 35.8
Store preopening 3,117 2.0 705 0.5
Interest expense
(income), net (746) (0.5) (98) (0.1)
---------- ---------- ---------- ----------
Total costs and
expenses 141,119 88.3 119,285 87.9
---------- ---------- ---------- ----------
Income before income
taxes 18,639 11.7 16,442 12.1
Income tax expense 7,176 4.5 6,248 4.6
---------- ---------- ---------- ----------
Net income 11,463 7.2 10,194 7.5
Cumulative dividends and
accretion of redeemable
preferred stock -- 985
Cumulative dividends of
nonredeemable preferred
stock -- 228
---------- ----------
Net income available to
common and participating
preferred stockholders $ 11,463 $ 8,981
========== ==========
Net income allocated to
common stockholders $ 11,463 $ 261
========== ==========
Net income allocated to
participating preferred
stockholders $ -- $ 8,720
========== ==========
Earnings per common share:
Basic $ 0.59 $ 0.92
========== ==========
Diluted $ 0.57 $ 0.57
========== ==========
Shares used in computing
common per share amounts:
Basic 19,538,111 284,731
Diluted 20,173,764 17,938,328
(1) Selected statement of operations data expressed as a percentage
of total revenues, except cost of merchandise sold which is
expressed as a percentage of net retail sales. Percentages will
not total due to cost of merchandise sold being expressed as a
percentage of net retail sales and rounding.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(dollars in thousands, except share and per share data)
July 2, January 1, July 3,
2005 2005 2004
---------- ---------- ----------
ASSETS
Current assets: (restated)
Cash and cash equivalents $ 47,961 $ 67,327 $ 26,315
Inventories 35,806 30,791 29,948
Receivables 4,752 3,792 1,875
Prepaid expenses and other current
assets 8,493 5,320 4,501
Deferred tax assets 2,958 2,725 2,030
---------- ---------- ----------
Total current assets 99,970 109,955 64,669
Property and equipment, net 83,730 75,815 73,079
Goodwill - - 97
Other intangible assets, net 1,259 1,411 1,484
Other assets, net 2,184 2,056 1,989
---------- ---------- ----------
Total Assets $ 187,143 $ 189,237 $141,318
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,205 $ 25,767 $21,367
Accrued expenses 4,932 13,966 9,981
Other current liabilities 17,078 22,222 11,675
---------- ---------- ----------
Total current liabilities 39,215 61,955 43,023
---------- ---------- ----------
Deferred franchise revenue 2,177 2,075 1,864
Deferred rent 29,677 26,426 24,372
Other liabilities 659 732 803
Deferred tax liabilities 3,996 2,539 3,362
Redeemable preferred stock, at
redemption price - - 38,875
Stockholders' equity:
Nonredeemable preferred stock,
at par value - - 94
Common stock, par value $0.01
per share 199 196 7
Additional paid-in capital 81,561 77,708 10,928
Retained earnings 30,849 19,386 19,858
Notes receivable from officers (148) (1,770) (1,868)
Unearned compensation (1,042) (10) -
---------- ---------- ----------
Total stockholders' equity 111,419 95,510 29,019
---------- ---------- ----------
Total Liabilities and Stockholders'
Equity $ 187,143 $ 189,237 $ 141,318
========== ========== ==========
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
26 Weeks 26 Weeks
Ended Ended
July 2, July 3,
2005 2004
---------- ----------
(restated)
Cash flows from operating activities:
Net income $ 11,463 $ 10,194
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 8,517 7,125
Deferred taxes 1,224 (357)
Tax benefit from exercise of non-qualified
options 2,095 410
Loss on disposal of property and equipment 209 142
Stock-based compensation 215 94
Change in assets and liabilities:
Inventories (5,015) (7,375)
Receivables (945) 288
Prepaid expenses and other current assets (3,173) (286)
Accounts payable (8,562) (455)
Accrued expenses and other liabilities (13,109) 2,723
---------- ----------
Net cash provided (used) by operating
activities (7,081) 12,503
---------- ----------
Cash flows from investing activities:
Purchases of property and equipment (16,091) (6,132)
Proceeds from sale of property and equipment 24 -
Purchases of other assets (565) (657)
---------- ----------
Net cash used in investing activities (16,632) (6,789)
---------- ----------
Cash flows from financing activities:
Exercise of employee stock options and
employee stock purchases 2,702 -
Collection of note receivable from officer 1,645 -
---------- ----------
Net cash provided by financing
activities 4,347 -
---------- ----------
Net increase (decrease) in cash and cash
equivalents (19,366) 5,714
Cash and cash equivalents, beginning of period 67,327 20,601
---------- ----------
Cash and cash equivalents, end of period $ 47,961 $ 26,315
========== ==========
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Selected Financial and Store Data
(dollars in thousands, except square foot data)
13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
July 2, July 3, July 2, July 3,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Other financial data:
Gross margin ($) (1) $ 34,328 31,801 $ 77,444 65,374
Gross Margin (%) (1) 46.8% 48.2% 48.7% 48.3%
Capital expenditures (2) $ 10,590 3,729 $ 16,091 6,132
Depreciation and
amortization $ 4,352 3,582 $ 8,517 7,125
Store data (3):
Number of stores at end
of period 186 157
Store square footage at
end of period 575,682 479,042
Comparable store sales
change (%) (4) (6.9)% 12.9% (0.6)% 13.8%
(1) Gross margin represents net retail sales less cost of merchandise
sold. Gross margin percentage represents gross margin divided by
net retail sales.
(2) Capital expenditures consist of leasehold improvements, furniture
and fixtures, and computer equipment and software purchases.
(3) Excludes our webstore and seasonal and event-based locations.
(4) Comparable store sales percentage changes are based on net retail
sales and stores are considered comparable beginning in their
thirteenth full month of operation.
CONTACT: Build-A-Bear Workshop, Inc.
Investors:
Molly Salky, 314-423-8000, Ext. 5353
or
Media:
Jill Saunders, 314-423-8000, Ext. 5293
Website: www.buildabear.com