BBW - Earnings call transcript Q4 2020 | Build-A-Bear Workshop, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Build-A-Bear Workshop Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Allison Malkin of ICR.

Allison Malkin

morning. Good joining for us. you Thank me Sharon Voin John, and are CFO. With Price Todorovic, CEO; today

For will performance call, After, outlook quarter priorities today’s in Sharon we Voin and our discussion as financials fiscal fourth will of more review year and fiscal detail. XXXX begin and the our begin highlight XXXX. with our a

on over We now, like a no This forth of recorded get to The COVID-XX on your operations, the in maybe The to that uncertainties. that us call statements of the any you this available materially turn in could and Actual ask conference everyone’s I via revise of the will flow, I open later Annual remind today could have contact one is and section Sharon. Please this pandemic a Feel Internet. webcast with The We should differ the those outlook. question will And call our due Form current the position. undertake earnings note, We nature one-hour are to statements. then significant can website. everyone risks including media further call uncertain forward-looking be factors, the Risk on its if free and corporate impact after questions. financial call both of results dynamic materially to Members impact from portion way, ongoing broadcast one is during questions Relations to who and XX-K. continues our follow-up. the Investor your set cash call and of those release and our the live to you to inherently would questions. today questions we to replay our questions. anticipated being site. take call. Report A and on available our to limit your the IR number conditions obligation forward-looking currently have alter re-queue on Factors call to subject company’s will our

Sharon Price John

morning Thank locations. many governmental joining forced to our virtual party even today our year, reviewing half and all accurate year, shifted fourth fiscal Thanks and everyone. including while mode. mandated quarter year franchise immediate expense as and I pandemic you, as management as of Allison In action e-commerce XXXX. responded the full to to of drive and to we our first for think a the the In the the good half. operated maintain us third of a that We it results of to see aggressive well the company, of pivoting tale global it's we rapidly of headquarters share our onset cash corporately two preservation, as closure well-being took as a demand, stores, financial for

cash staff change borrowings a drove no on that and that adapt prior continues virtually, of to drive to ability into As basis year-end to deliver credit and the profitable and to and we year resilience proud retail. evolve to second guidelines rapidly staggered second moved to lead a us the key stronger headquarter transitioned, stores by a initiatives work with its transformation reopened in turned our focus our the the digital facility. on compared organization half, to I’m shown position, this half accelerating as

store stores with the stores [forced restrictions and on the number quarter, the be XX% of guidance on the negative of sales days detail well as days, Looking exceeded even included the by driven at reduction operating impact largely key This a operating store achievable operations. COVID-XX of previously ongoing in with in metrics, Europe key our most number hours, we in of all holiday across quarter, as more on fourth re-closure] an our in of during issued for retail season. [consumers]

consumer our achieve Even retail growth economic frequency expect and mortar stated expand a ongoing to profitable up purchase key as and influx, of e-commerce the brick our goal and base digit our in drive benefit retail of position transformation, more company stepped that digital stable accelerate and have the assuming to we demand, rollout to and situation initiatives we our growth, remained environment. continue to triple

by of decline the the compared guidance on $XX.X future prior In on the retail Finally, kept the to reported we beyond January, total year. we quarter, exceeding also provided business in still the million revenue initiatives brand delivering of an model. eye the fourth the a we representing

in income flat to almost quarter, just offset in Our to benefit in to from increase while expense, the ended. Gross performance profit merchandise United to partially weekly improvement by benefit and of in assisted the lower momentum on margin This by the rent prior business an another compared driven to range negatively trends year. leverage total XX%, by rate triple $X.X the digital due is our government compared prior increase year stores, giving pandemic revenue, period mortar year as the margin brick also occupancy GAAP strong, us to an showed increased guided program gross remained the digit and Kingdom. million. the impacted reduction the reductions the in previously with with over leading exceeded pre-tax finish and margin in

of finished up year balance on the the we year. versus million, $XX.X the XX% While cash total with prior higher sheet,

connection future we Underlying can retail and XXXX, to we the brand guest our remain and As I retail. as pandemic ongoing created both response strategy engagement that marketing momentum as outlook positive categories the noted, we traditional uncertainty. of XXXX, leverage and a and beyond is saw fiscal given model the finished channels by in one-to-one we begin the emotional yet power monetize cautious

key on Our disciplined platforms. has of on strategy execution centered the focus this three

business which our e-commerce future further and support one, three, maintaining rapidly and our and the we include: our including stability financial they so liquidity investments includes digital make transformation, retail expanding two, initiatives; to reminder, strategic growth. designed drive entertainment a and managing can significantly As capacity; content capabilities, both evolving

demand product characters. Regarding new the entered lifetime we the efficiently business buyer growth in build we We digital from digital trend in and space acquire and digit as the overall the Potter quarter Harry licensed to the performance. the products Salesforce Mission line proprietary capabilities expanded over transformation, influencers, intend fulfillment the Separately, well to with our new a with and inform enterprise, data, And gifting holiday drive efforts. an and drive XXXX in value this that new journey, were the fourth of with and created fourth capabilities, robust key Mandalorian TikTok launch CRM into on of including robust program the our consumer continued were see multi-channel designed Wars added more effective e-commerce created collaboration Year we with our demand sustained as have for and cute. our to Merry we across In acceleration we new existing we collection, including of marketing enhanced while strong also to of digital those leveraging in technology combined platforms digital and which the series, for advanced guests. products, customers our with of robust inspired and demand expanded a improved triple use technology child our New by saw we Star carried quarter, hit Pokemon Valentine's collection, plus from a with content capabilities

as and expect tools, communication our progress expanded available and as well platforms in these having to execution. entire refined year, have the our We from further both making benefit for

interact also to adding preferred events, leverage [opted as streaming our planning platform evolve that accelerate consumer we in] our expand new ways saw we base, brand, online social communication. XXXX, to new proved capabilities in with Year. seek which to Throughout the of are and in option, number to and a effort our We in-app with for and as through transact XX developments purchase New million well innovative in as consumer across successful consumers engagement hosted their direct channels, digital to plus we

brand on our sales. In millions addition, digital to and was monthly Hallmark and has seen steadily live grown XXX,XXX marketing on consumers media continue by tools action film and by we Radio Channel. platform of surpassed first and building as while Mystery the listeners, iHeart entertainment engage recently drive Build-A-Bear Christmas the most use viewers content and to delivered Movies

continues agreement with Entertainment to film on worldwide we Build-A-Bear acquisition. Pictures wrapping Sony As pleased our our be live to first production through develop action are

while discovery]. recognizing of property it empowerment in better part up As popular released in be we which It also together, a Girls, uses [Technical can of our power the inspired all Honey the film is and is expected agreement, as successful product individuality, line. girl by celebrates fall Difficulty] fun to music intellectual XXXX, be of that of this [journey wrapped

heightened the Girls to increased is see products We channels. consumer to with film for effectively content when marketing drive released Honey the across interest acting music, and movie expect as original with the branded engagement tools entertainment

with In capabilities over broaden market Our and extend XXX% to growth using delivery engagement ways we omni-channel from and second and omni-channel our for purchases occasion of the addressable XXXX, offerings second rapidly plan licenses. acquisition consumer is a We meet connect progress and half, with incremental previously expand new engagement to guest driving and options. initiative high in with base demand needs both account. in made the online retail as expanding by to evolve lapsed based continue consumers to our appeal we strong changing

later our increased based Crossing: to adding on Accordingly, order to pleased by with expand creation improving online popular Horizons. As demand, deliver warehouse fulfillment needed and to we throughput digital game, such, products omni-channel I'm quarter Switch initially exclusively the the capabilities capabilities. this to New efficiently launch announce highly plans increased Animal the Nintendo

than online XXXX, a capabilities, our managing on capital with while buy partnering our our COVID developing to and We liquidity to added store, pickup centers, option And to leverage act efficiency, continues. and options guests. business, omni-channel as by more shipped provide we been uncertainty working inventory. ship keenly needed as effectively store, capacity diversified fulfillment many from as to labor, delivery pick online optimizing support improving as curbside stores In leveraging our maintaining double have finally, focused our the buy day for well up warehouse to we able stability same distribution in remain with financial

[Technical [pandemic], leveraged over to leases. store lease As our Difficulty] strategic the renegotiate all during of we have optionality high we XX% have

with have in that years. continuing Importantly, over we XX% three to optionality the of next maintained leases an event

company's that our real of closing, XXXX In future. estate our be further able hug provide. again was to particularly capital, we benefit the like to drive invest back digital continues. disciplined the and transformation thrive portfolio as associates furry responsive friend indeed would in expect commitment goal. to space We Separately, from plan their and half as negotiate disruption acceleration of they results our one of in on we to will know from believe for only a driven called as can two to a back and tale the believe from solid demonstrate pandemic, thank action execution halves, to I the a ultimately, strategy, that Build-A-Bear the a a on and management to not resilience I mission survive but our comfort We but this a and organization the team. focus to once the look to year take

more stabilize to and to deliver growth profitable beloved activities. brand We consumers are normal the power times to the monetize as of future return committed challenging our

Now, outlook. let and to the call to year me Voin discuss our turn further the over

Voin Todorovic

good and Sharon morning, Thanks everyone.

fourth the January. solid guidance the noted, with half year As stores, momentum navigate halves. negatively two accomplished with finished key improved and and year, acceleration of the in year initiatives of evolving borrowings the third prior The restrictions This retail earnings of the even shared and we to a in the of of our reopening allowed We of in impacting a the transform to quarters. us ended over with taken all in deliver digitally, half the year total $XX sheet, both first tale profitability of the million and XX% year channels increase reporting was our our sales We the balance credit the pandemic segments. about ongoing year with in to was reporting cash, combined and our ahead a facility. rapidly in Sharon fourth quarter back actions no growth

XX% about and driven year, [$XX.X and earlier generated net the despite for Turning operating from to expenses and no the which our our the through through of days, to fourth in primarily points closed to includes basis year. decrease asset revenue flows XX.X] XX% prior reflects were $X.X due profit hours, XXX% margin fulfilled the quarter. for which were quarter. This quarter locations recorded million the year's the temporary gift capacity million, period. international rent closures, terms rigorous including costs, were orders, to total fourth that impacted in stores. from our from fewer sales, Gross store with rose this benefits for pandemic stores in Consolidated to store an the in and e-commerce from the in and prior by revenues restrictions. non-cash was full-quarter, negatively a those compared XXXX the down results, the fiscal were XX fourth the associated online reduction operating offsetting impact by lease card $X.X prior compared XX.X%, two-thirds an being breakage retail an reduced over revenues impact particular X.X% franchise our negative demand million, Commercial Partially year. European costs, positive renegotiate included occupancy impairment efforts This

payroll side, as the was expenses lower On operating cost a fourth as reduced expense result of down by XXXX initiatives. hours, decrease XX.X% expenses our corporate from part million quarter and the containment or $X.X of driven of SG&A

fourth basis to efforts a also fluctuations Overall, levels, of compared We saw expense COVID as marketing XXXX of store and improvement, fiscal impact significant closures restrictions. to representing a given was and revenues, in mitigation quarter. positive temporary capacity of ongoing SG&A traffic part currency XX.X% total XXX manage point reduction

quarter, benefited we assistance reduced from costs. the programs grants that our and government SG&A During

to will $X.X quarter, was $XXX,XXX million market, and Difficulty] quarter to year programs [Technical in a as on in basis. Some helped it the close. $X.X adjusted period or year Pre-tax improvement these XXXX, compared prior of continue during predominantly UK prior offset compared increase, very the million, an the income

fiscal the sales in were store closures. year, by million, This from negatively million, XXXX. a XX.X% fiscal related days, net Sales reflects of XXXX decline driven revenues pandemic decline in For includes year, fiscal reduced total compared by impacted were XXXX retail to operating $XXX.X throughput XX% $XXX.X a the $XXX.X million of also which store over a note, omni-channel buy fiscal e-commerce or our in positive generated growth in in able warehouse, up operating were On our programs. ship hours from [last improving mile and pick support capacity. XXXX store of increase store to accelerating driving demand. initiatives we this online a XXX% through including We in efforts our delivery],

loss had For partially a as temporary offset pre-tax full of million revenue in as loss to a due a the year, GAAP closures, on we annual of $XX.X an burden $XX the million This by decline store of reduction basis. SG&A. well adjusted a or in expense, rent reflects

million was sheet, balance of the year. year-end, XX.X prior total to the increase million, cash or Turning XX% $X.X at an to compared

decline of disciplined working a million, was inventory strong $X.X approach vendor year-over-year. our XX.X% and As part of to relationships, management down of capital

the year, supply fiscal are to XXXX XXXX million expenditures $X tight While and backdrop logistic of disruptions in were chain reduction level, with capital capital our our composition shipments. we of million, product $XX.X we year planned in the reflecting the and management, managing flow, pandemic. Capital are received to our compared and comfortable expenditures working in fiscal for the delays inventory, mitigate with

$X million, of in approximate For be million for capital we and and amortization $XX million. depreciation to fiscal expenditures million to $XX range expect currently XXXX, to to $XX the

fiscal XXXX million]. [Technical currently EBITDA be Difficulty] we than of [$XX.X to for outlook, our Regarding expect higher XXXX, the

back historical from EBITDA This the support savings fiscal to in and expenses annualized levels of EBITDA we will end see retail In million European resume higher salary have mind, closures million XXXX. initiatives levels, in outlook to and range and to year. and the tax closing, serving reduction due quarter, In government incur that more United achieve Kingdom, I to in to a our and the challenging of significant guests still at payroll we stable of in disciplined The fiscal sales due our XXXX, the moment assumes additional and no Furthermore, appreciate reinstated the brought environment by questions. over implemented turn our expect note. management, and XXXX outlook our their XXXX. we finishing assumes marketing United economic expect dedication mandates concludes positive position addition, the growth. the in marketing locations a activities to commitment to thank call expense prepared employees, manage keep as now reopening first their we will back XXXX. to $XX our by expense pay Please furloughed we to their to $XX our fiscal to fiscal States for to in we beyond. in valuation the taxes throughout the Also, circumstances to minimal extraordinary like both for these This would while under also Operator? brand, expect year We and times, a take through remarks on ability cash operator while team while

Operator

Instructions] [Operator Please Eric from SCC you. question first Thank Research. Beder is And with proceed. our

Eric Beder

and Good congratulations on QX. morning

Voin Todorovic

Good Thank Eric. morning, you.

Eric Beder

crazy you April? bit has lockdowns? be in Are thinking Could after the just chance fill about should year for UK? us a in what basically international the of that in start revive you to and closed we markets the and somewhat been market until How a on sloppy very little terms

Sharon Price John

the in when are to. And as open governmental for you, Hi. expect is non-essential place now know, so to as you Thank foreclosures soon we, allowed businesses middle to April the speak. until Eric. are mandate Right we of and preparing

picked business in e-commerce store have still since the very but UK on are therefore furlough, associates do closures. has that those robust up a Our we

did that didn't and how posts and we people were and our choppy. closed in that it want of that were you we're time that the once know in news closed and build that quite We a was of will special stabilize. mid-April consumers hopeful beginning then so December, down out retailtainment, open want just But being period. and to experience, good and the December, again to to recently back and reopen respond, they November, in will right we do are remain through reopened come again we of opened. in When closed You were closed we have we sense the start announced start come has been it is to we to they things January, there

Voin Todorovic

And point, you just may to one more add this as Eric, know, help.

UK, As think for weeks with to going coming that's XX to basically on revenue for our about quarter. QX we of rent weeks we only of expect last couple the P&L the have of be expense impacted

So, definitely in our but partially some still UK quarter headwind that government the the assistance of to in applying programs challenging expect be a big losses, has to for time a be been will going we of UK that's help this team for organization, offset those some but around.

Eric Beder

are U.S., wanting seeing Are reasons when you starting back visits, mall you to store of to of the starting in Is And the are kids? for our the out see the that pieces you momentum to with kind and come was to saw part of to their In that stronger? people you [indiscernible]? coming shop this year, see, that we January Okay. and why look through? starting

Sharon Price John

restrictions want want you together. time you some something, with are more the also a to And know, normalized, know, experience have, their spend they that an coming beg back that they are And to we seeing children, out, – do to But want given know, you come prepared people that to people does to, yes, people Eric, we closure. restrictions they are. little that many store in that are store beyond a how I our can – we Voin having any alluded comments back as of out, for those We're example. our things, start in remarks do under both under be of time, and at

during we're have limited very already have higher in we at that. to the we seeing of weekend traffic where it, So, store throughput some particularly be And periods, the fact, like capacity cognizant itself.

be we to of know, you conscious So, that. have

and and crowds jurisdictions. of cognizant and things the crowds, do maintain of be management state six to have foot by still vary rule, We

So, we're even it of very is Voin? though cause there But limitations are open. that. – the aware does stores

Voin Todorovic

I covered. think you

Eric Beder

you year question, no you have Great. basically done, And last movies. know last guys was

assuming how I of a services, TikTok child, kind these here guess think movies by look TikTok kind at the look services new lot do be at? driven or acute], [we streaming part you that where customers You've you here? in of the other, have And do world potential know, you driven and see, driven opportunities, – nostalgic you it's move you a streaming forward out of were refrained of those the characters done products which lot obviously on character there'll products. How different I'm I with, of was going your of pieces, the normalized, packets that leverage can I somewhat somewhat do guess, pieces how can forward? you of for but other

Sharon Price John

think now things Right. had for it other you things launching delayed, know, life, last out, that there's so new has, are time. minions the continuation, only quite you child example, some was have many it's which And the related and which Dragon, it that like know, I that Mandalorian, But even will the a do we on, the already noted, demand We XXXX, the available mentioned, our Harry know, a now on think anything Last Potter, announcement video just for launched a the clearly news. been certain call, evergreen. pieces I The and or you and to the is that of accelerated know, forum. the for many the and key things to pandemic, think things moving entertainment of touch you know, tail just The Raya that long like products I And season. aspects it, Crossing being like studios on Animal films be you of Disney like know, as are are things in in it recently around, I were from entertainment us first prevalent. And, on more is you just like big that many believe film model it's have know, but we now and more with right XXXX. be evolving you supposed that,

also those are stable types of products, those think and this So it, for types but you more about are there's When also us. those – properties spiky of that demand, not leans launched we this in of over intellectual have have our some and into are property they're launched, when also why long how things been creating process control own to such as [Honey our conjunction in fall. is in entertainment know will that's worldwide time, be, the a with expect Girls] for best quite our we you course, and, acquisitions. of the will, Sony, in assortments that know, property of of in Sony been one be later will our film some of we if And the line one selling you year you properties, and biggest launching

sell that's, Girls] So, And to that more with objective you associated [Honey obviously, our our know, know film. is and then we, you control. more in

So, to a all And the it people it's whether ways to is expect of with will film. changing feature content, use engage TikTok environment. we that

opportunities lot a the pipeline. have we and So, in of

great question. So, but that's

Eric Beder

to Right. Thank of the the you and year. rest good luck

Voin Todorovic

you. Thank

Operator

our with Management. Wealth Cannon is question Cannon David And from next

David Cannon

job. morning. Good Congratulations. Great

Voin Todorovic

you. Thank morning. Good

Sharon Price John

Thanks.

David Cannon

questions. two So,

that's give on some, there XD The And in it's you launching tracking augmentation you of you if how also, a could the e-com rolled the out, then or and first you expectation if a any and your of details from can how a this X.X experience? timeline? to there's of us aren't alluded it, the experience, of cadence the can on turbo if an one is be give boosting going about changing e-com color, to on lot experience, although deck], give on us an strategy talk update [ICR

Sharon Price John

toward On to tested XD, with well taking as of have launch learned Conference, test, as builder those from external headed, we this did users. and which we are beta we consideration continuing into a bit where a some We've share bit it we're the learnings of during quite a build ICR beta the later Bear video a year.

exciting, feedback the it’s of beta. very lot So, positive from

in brand which timetable, never fresh you're so, But a of us for technology, something be, for track launching this that loose new space, And noted. was timetable, tracking you to we engaging know, have interactive the we've you for course, brand new completely particularly before. we're year, space when done that experience a on as still a

what not demand support reflects value, referring clouds turbo the the access attracting to with guests, the and transformation and primarily continuing the boosting all CRM that lifetime but that all have it capabilities and our systems as accelerated to build to the well you're so, extended all out journeys consumer capabilities, we as as is, Salesforce the well our with new the drive – building On retaining all if guests on as and our new guests. indeed, drive know to to I as driving we efforts of relationship I'm quite through digital are sure, combination e-com,

feel like our can also for more we occasions base, building our existing but on consumer we So, drive guests.

traditional configurator, bear their not builder because shipped through So, is want in bear the same our call can our bundle, our relationship. with want receive they a we them they a interactive product, builder engaging come whether now into then on shipped of only format to e-com, approach, the our relates] engage a guests directly side home, give many to where day can us whether it and all our of and which you builder bear to pick to other your they bear Difficulty], XD. of actually this get what we the store original ways XD, to with [it just it's – equation, the [Technical or question up, ways many it's whether or digitally, And it's kind mobile it completely delivered quick give we get first

customer And plan. but broader So, strategy. to the know, that's first base, from a engagement you last a first engages engagement our and it's with the consumer that, hopefully

David Cannon

Okay. Appreciate experience, that. essentially, dead differentiator whereas kind Turbo Boost Build-A-Bear, now, my a Year, know the what right is the traditional, it I from very meant purchase of by is, porting over you retail experience. experiential in speak the the child, digital where, and know, sales know, it's you you so between associate store, the to the an that to magic standpoint occurs is,

believe as would lack people Boost dead, really having it's real know now digital my Turbo you life I a almost in experience. sort like know, of the You experience now opposed a better of where right an word, for a opinion, in are you it lifeless know, to interface interactive,

have So that's so course, of with I forth. And the effective tools was you and and using it what more to. connecting, by that of some really referring making Salesforce marketing

what I that's meant. So,

is to remote what know, is brick there's, in in year. retail experience, traditional, question there's or between, during we the regards sort in you other live streaming know somewhere between I digital of this mortar see and one, which I The that physical the all the fits person, experience, a call about

successful? know, then, that? to roadmap did be forward? procedures going And, it You standard it comment it? that's look Could know, the like into incorporated did You know, your operating for You on you this results? does was what And how year? going you yield

Sharon Price John

know, brand, new options. transact comments, number they added in noted as with the we of new consumers and interact online hosted for well as, with the ways new as in-app a to purchase you we, events capabilities our Yes, streaming to

are it make to new today, successful, launching them did actually in stuffing continuing these a those we participate to are premier we We're year, forum, associated for event the leading proved and streaming products. if had the stuffing new it where that to live I one we a those our are consumer. Easter with towards people stuffing brand where using with have that opportunities. to this expanding we're will, the was events of into comments, launches noted new in. peeps, expanding work watch They you which We we're So, breakthroughs event, just we products calling as

I it's, it's start a So, equation of tool, part well a purchase. as master that in-app on tool both as we to the that sales think marketing the as good

digit clicking has that We you you year. go But I have way over increase long marketing to this is credibly, as e-commerce think it as triple know definitely on the a that know site, to which effective make side be. to our people been can it’s

David Cannon

the environment extremely navigating Okay. And year. last Thanks through again, for an challenging job update. great in

commentary incredible job. pass You guys team. your on did And please to an really that

Sharon Price John

Thank David. much you so

Voin Todorovic

you. Thank will. We

David Cannon

You’re welcome.

Operator

I reached Sharon John [Operator we've Instructions] call over now closing gentlemen, back session. would turn the the And for of question-and-answer like ladies to remarks. the to end and

Sharon Price John

for thanks look meetings stays everyone seeing the today. and in some our at and seeing joining Zoom additionally. hope We first We tomorrow you forward results. well you our forward we Conference Davidson to and quarter safe during you, on look Thank us to DA actually of

Operator

conference. This concludes today's

everyone. You participation. a Thank for time. at may morning, this disconnect your you great Have

Build-A-Bear Workshop (BBW) 10 Mar 212020 Q4 Earnings call transcript