BBW - Earnings call transcript Q1 2021 | Build-A-Bear Workshop, Inc.

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Operator

Greetings, and welcome to Build-A-Bear Workshop First Quarter 2021 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 today, Ms. ICR. of Malkin Allison proceed. Please

Allison Malkin

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

For guidance our begin first today's After, Voin outlook will discussion our year. detail. call, our financials review of and for with the quarter more initiatives, strategic a performance, will and in our XXXX Sharon

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

Sharon Price John

improving to Good actions in These we've of focus strategic X% cases stores investment in pandemic our We program, merchandise revenues delivered channels. saw put and warehouse from that reconfiguration connection joining on the kept that that quarter. fiscal the Giving in position on fulfillment in believe in by our relentless we and quarter outstanding driven desired motion improvement fiscal executing first you believe had line, and digital bottom brand strong to consumer the demand and record-breaking the on our in us of results put our of intense omni-channel was by mix, morning, quarter's Gift the a quarter. the today marketing includes the and well during prior and and digital our has This our a part our driving transforming levels. leveraging increases relevant many attribute XXXX. positioning to us efforts XXXX this plan up physical We thank for and capacity discipline to discuss of the results improved as of The quarter both first advantage up XX% total the the brand, strength for a everyone, many pandemic. from merchandise program. XXXX we increased partnership. aggressive accelerated as include We top the our emotional Build-A-Bear including that marketing, the on and upgrades, million, Salesforce take with and Overall, including capabilities both $XX were innovation systems supported due to we and

our material we increase delivered This of increase package history, campaigns. from compared transaction increase versus better period. a timing highlighting rates quarter was a a the and XX% the dollars demand from in we XXXX growth. in While with triple-digit benefited traffic to to Notably, conversion marketing the first highest reengage digital and drove in in had new coincided personal consumers sought and trends per of the experiences, sales our company pent-up effectiveness improvement our the as XXXX of our stimulus e-commerce demand our in which fueled transactions guests, XXX% fiscal by an level

quarter the at the our XX.X% cash equivalents ongoing occupancy margin expense reflecting First And have lease We've total the and pre-tax with improved of for in quarter of of which $XX benefit profitability fixed been of the expanding leverage quarter ended of quarter in for million. represents by balance negotiations, history. profit first in with sheet, which and looking margin, XX-year $XX income, million to revenues, merchandise nearly consistently highest returned multiple we gross years. our the profit we expectation total

results to as believe consumer of we we we of We our an to XXXX. in agility potential as quarter first are and pleased evolved expect we expect deal growth evolution with preferences patterns infrastructure balance respond and in year, have the shopping organization uncertainty and while the to built greater to with with see continued deliver the

on strategic primarily growth. and omni-channel we centered significantly a One, key content remain priorities including solid acceleration investments expanding strategic capacity. including and which the initiatives. business e-commerce capabilities designed evolving position, And, experiences strong sheet entertainment our balance and we retail transformation, financial As rapidly are make for Two, our a to drive to support previously including further three, maintaining year, further our have focused digital our three and of areas. on shared,

year, adult more we and digital drive another We progress multi-year America, continue demonstrates expanded our and are this the believe to content we make are sustained our around solutions guests, North significant many the triple-digit the events. consumers graduation. platforms we gift of that incremental for Mother's leveraging occasions, area. key to quarter, centered With on as as status gifting by adult demand, first enhanced trend diversify in Day, use in business and intent our capabilities, in effective growth to our segments efforts. to leveraging building and Valentine's fulfillment occasions of that we digital enhanced multigenerational brand including business with sales. for XX% moments in our searching to quarter's target marketing most We marketing these and a the to strong consumer digital In our technology drive and inform Easter, quarter on the were this transformation, well of while expand prior and Regarding improved acceleration including our over e-commerce saw of Day, gains increase recently as leveraged highlighted

prefer continue to with designed plus these Bear section of also that a expanded We digital of launch offerings demographic and our teen Cave, other a which shop older segments online. in website gift innovation giving guests The new specifically curated develop our and with pipeline products our for affinity carefully offers to merchandise mind,

slightly to are on brand We as products edgier, but that still year the add progresses. expect

demand. In Sales inspired our to as will options and evergreen addition to highly which Nintendo's product increased Potter, New license robust a we popular include digital proprietary Harry Pokemon, new Horizons, products game, and to such of most line licenses demand. Animal contribute from Crossing: the recent interest by relevant introduction offerings, continue driving successful digital are

of Some Bear the Cave the include Lord planned upcoming new Disney The of Jam, licenses Space movie. Rings, additions for the and Cruella,

online points. Bear an across likely able advanced consumers marketing have our are that to are to we noted, communications target including high touch products digital campaigns, Cave through CRM, for programs, effectively affinity potential improved and As

acquire of Salesforce technology to value new to quarter continue we from that fine-tune the consumers we efficiently and in the added With data, combined which XXXX, our results. early to drive contributed existing were with tactics our consumer lifetime believe platform first enhanced guests, robust

and both use In addition, online consumers to tool continue entertainment drive began and sales and to we and content, marketing as as restrictions stores digital in engage media, COVID building ease. brand to our

rapidly evolve with consumers options. to extend of and retail and the second to ways our expanding is by we as changing Our initiative engagement capabilities omni-channel meet needs delivery driving connect

and restrictions. the were period opened Our quarter. all largely operating stores to with our began due the European North governmental stores throughout American of closed We

did distribution stores consumers from as demand Locations ship However, labor we April. store our re-engaged improving or interactive workshop digital leveraging with fulfill optimizing effectively reopened in inventory. helped in see added the many in buy the patterns traffic majority increase option. store, experience, acted centers, through -- in as online, only and pickup retail our also Not

critical every five provide in to approximately reopening support XXXX the in in orders put in adding be optimize to capabilities this digital omni-channel building we including to continued options, So locations our multiple ways. of in blocks sustained our algorithm have our advantages and mortar geographic positioning one allowed This and shipped diversify strong provided allocation quarter. year's made that brick demand. traditional to to an place enhanced store e-commerce first a The from

grow our of As our initiatives as actively more sheet well rapid and positioning, that investment improved are key our trends, financial results in third priority, business evaluating a strong acceleration given aggressively we as to balance opportunities programs positive enable our would company. regarding

and we second details priorities, of closing, capital initiatives we during that -- to investments and, to use to driving cases, place our call. quarter this pandemic were such, beginning put including believe investment prior accelerated the we the continue of the in provide to many As I more results, pandemic as plan In call, on improved expect in which the noted at are on continue.

to that we remain a we quarter plan the Thus strong, License brick US have fiscal through majority important reopened to developed and and products to us far, and meaningful have giving and confidence press guidance as on current mortar expand. best-in-class of UK. occasions aggressively morning's increase strongly our in the release. with this profit have products gift we second stores highlighted in the the business vast for continue We segment be year, in partners positioned the remained sales

digital strategic the little real increasing ability world, remain care aggressively pivot to I'm to brand. on of includes in-store remained through As environment. revenue appreciative this organization's continues digital in and plans heart mission optionality our our the streams diversifying very interactions. personal to This proud life. successfully to fulfilling and I'm the our pandemic, integration, powerful drive maintaining evolving of have a add navigate estate flexible lease forward to portfolio Build-A-Bear, show like they leverage a and deliver our our of to omni-channel our rest the capabilities, to high associates both more uncertain experiences, with agile focused

Finally, we consumer heart. that our million XXXX a Ultimately, us have deliver recently to expand furry a it's of is gives XXX our strong lot the sustained great these I'm Bear business the established brand the excited in to growth. a opportunity kept and experiences that and goal profitable associated share sold with that connections since and company was with long-term grow to -- friend this

call Now, me for discussions the turn let over outlook. and on further our performance Voin to

Voin Todorovic

and everyone. good morning, Sharon; Thanks,

transform our pleased momentum Build-A-Bear the elevated and locations with and digital made our in that US our We our brand our year to competency improving trends robust and leveraging results towards brick with a have are stimulus strategic We These business. the we mortar quarter consumers benefited demand believe start the and across the programs have business. we have period, in the we platform Throughout and affinity in goals, positively reflect progressed. pent-up traffic and omni-channel capabilities. the strong as our US the to saw our the including sales progress

Our locations expectations. have been for United starting majority stores the the reopening Ireland Kingdom Sales on were April meeting with our the closed those and quarter XX. in of in

As the Sharon quarter, noted, momentum. maintained far thus we strong second have in

of to increase review first revenues Total million, $XX.X quarter quarter the XXXX. our million results. to a in now compared were Moving first $XX.X XX.X% fiscal

as growth compared in our quarter Separately, prior temporarily majority margin of profit delivered quarter occupancy leveraged for by impacted lease X.X%. restrictions. wasn't a compared was net expense. the the European of the total total to period of revenues the strong COVID XX growth, increased decreased perspective, events. stores sales even the pandemic, added compared fixed the significantly to at XXXX, higher first by and stores to the to Canadian to revenues store prior due were closed Gross We count year, which due our end For year,

of highest lease benefited fact, that In in favorable was terms onset XXXX we pandemic. first rate quarter the from the the starting year-over-year Build-A-Bear's for margin negotiated with results. were in lower the percentage as was more expense history Rent

in driven strong markup by margin, the highest We lower quarter, and merchandise during first also also saw expansion ever, the promotional initial activity.

of only reminder, As for full gross quarter basis, margin year fiscal XXXX of On weeks. expanded for quarter was SG&A quarter the XXX from salary $XX.X driven a we base. XXXX, up occupancy increased million given first included our the sales first first basis the expenses while fiscal retail a weeks, cost versus by six had XX reopening of the store $X.X million, full points XXXX.

income was remaining on points. On a majority workforce XX-year As two have million to level nearly of quarter furlough This basis, and loss associates the of highest SG&A We sales delivered with and was for adjusted the $XX.X of On Build-A-Bear's end first pre-tax year's in in by a for million. to a $X.X an year improved in million. compares of first percent our million first corporate reminder, salaries XXX of as at $XX.X pre-tax history basis $XX.X quarter basis, the the quarter the XXXX, reduced. been the pre-tax the quarter of the in pre-tax income XXXX. income of prior temporarily

to Turning We $XX.X in helped and Strong $XX first our the sheet. credit on drive the million quarter million cash the borrowings facility. and of business cash with ended balance no profitability with performance equivalents cash. improvement increase

pushed to during pandemic. were of deferred balance from capital timing Our XXXX inventory cash receipts to benefiting partially cash preserve rent the expenditures. is for benefiting payments Also, that year the cash timing this the and obligations balances out of from

we about versus in During year's $XXX,XXX $X.X million quarter. spent quarter, the last

plan Our $X.X with inventory range includes million from down across the quarter XXXX in reduction first the quarter. a XXXX. of the channels the million, $X period to first current in the caused capital us The XX.X% expenditures of end demand to $XX for in fiscal million surge

the inventory anticipated in have We support accelerated receipts demand. to order strong

for outlook, our While trends product is on logistic quarter raising EBITDA impact goal and XXXX our we minimize revenue expectations challenges of our profit are to supply Based in positive increases, disruptions, product strong total the and some in global fiscal introducing guidance. delays cost shipments. have the and transportation experienced first performance and chain, we with

was to For we fiscal $XX to exceed XXXX fiscal expect the which EBITDA $XX to an currently million is of This in range increase from be XXXX, previous million. of EBITDA million. our $XX.X guidance,

Our to range in amortization updated expectations $XX million. million of include $XX depreciation the and

fiscal that total we XXXX of adding total revenues We XXXX million. are for insight above revenues to $XXX.X fiscal also expect be

press strong Specifically our release, total XXXX sales related revenues have as second trends to exceed both quarter, expect to remained in we levels. XXXX noted our and and

we returned to performance progress our now In expenses only to closing, Please higher compared our see for the no we expect we reminder, in year. with levels initiatives to although full marketing period quarter several while demand positioned license was our additional believe essentially impact sales reduction over a us highly fiscal the the fiscal channel temporary As increase closures expense growth. implemented are of against e-commerce With that year, in closures. have had in due This Combined first been and and quarter. to second payroll products, questions. prepared the assumes and fiscal our strong of to expect XXXX, triple-digit online that our to demand in mind, store to of savings remainder XXXX. due with to drive employees and our be the concludes annualized the well launch we plans reflect XXXX, we anticipated significant we e-commerce pleased business expanded will be the for growth in the the over operator levels. financial back as Furloughed XXX% XXXX, the in pandemic, activity quarter mind, to majority from of from salary the and negative has of This flat and reinstated for government Operator? the revenue such XXXX for have of turn maintaining a keep marketing pre-pandemic momentum initiatives call remarks, will store mandates. operational outlook the as prolonged believe

Operator

a Beder SCC we with proceed. Please question first Thank you. comes At Instructions] conduct Eric [Operator question-and-answer session. Research. from Our time, will this

Eric Beder

Congratulations. Good morning.

Voin Todorovic

you. Good Thank morning, Eric.

Eric Beder

returning So you to from at potential here mix back of potential space, being the the parties how as do normal add mix to eventually you in look are to see the coming the out movies the to part again? gains and

Sharon Price John

associates. we done and our that from Thank and a business follow our the the the needs you, throughout have Well, carefully and own we of pandemic, CDC guidelines our of as oversight the guests with safety Eric. perspective balance

we mindful have, children gathers and the as business, clearly together carefully, of party we So have and to would of that. we as that and we groups be because adults are just assessing

I see expect that would think looking we the future, to into out we're parties.

I same of is stays and we'll trickle system pandemic, start parties later Assuming everything the the there think resurgence this to no year. see into the back

store, on, them We the so may we'll out that size have It on the and not rolling given can natural there of specified the not participate them based date same well as again, point guidelines CDC assuring we service Build-A-Bear of meet distancing yet. time. be our we appropriately are other to guests for can that needs the higher as the in just demand at traffic that depend

levers. simple. So there's lot a seems so It of

there's switch looking think, having been, thus us -- prudent as and a already complexity about these We we've the On forward it lot the to involved flip I parties, Just your served movies, of we a mentioned, relationship. start but and diligent that question of we lot in. these certainly had license well. has we're best-in-class far have and films have

still of we're be We've just to all to They've time. -- some products But I bet were makes are and I exciting, XXXX this already We a the developed. and find were -- we're theaters, many how an these goes to to marketing think how right pushed not optimize. our of go products people And cases, In wheelhouse films a to in mindful. either have going straight guys some -- see been that we're out. approach the it. of for partners appealing that that looking again the may forward in to the particularly our I'm children. is approach, willing to with big Some sure have knowing on relationships and long planned, anyone going out think XXXX. way, these to for is planned the with characters will take been

we're So, that. looking to forward

Eric Beder

Great. And more. one

year, It doing it's still a online well went last and was success. huge plus Baby a from So, it. to stores Yoda year over into

Sharon Price John

Yes.

Eric Beder

is what that do had to still of like or at we'll be in and that a successful, order to of of how to you [indiscernible] that can you've long look Pokemon as be kind you a ability is as Animal a that sell kind Crossing, opposed shorter? that you kind something to of you Yoda kind stores, has aggression has Animal build we started saw When tremendous to believe online, bit does Crossing, the -- do then seeing with franchise little which Thanks. believe a that life movie, it

Sharon Price John

Well, sometimes It and on they what depends the franchise. call spiky sometimes the we really are films have longtail.

I franchise. movies act categorize the all or that the that. way great so when a -- Star itself is sometimes can't And this movie that Wars becomes of example a because way

actually adjunct which have the continued Baby maintained because Star of excitement For some a had Yoda, of continues to is product, Yoda, The new Wars to -- episodes. to has franchise, a Mandalorian that Grogu,

the as associated opportunity to believes could business Lucasfilm see The expect long that we I as So Mandalorian with there Grogu. think series, is potential with some

Grogu gifts of grad with top fact, this it's selling was In congratulations one a our sash. XXXX graduation a year

very he's So searchable.

that Animal certainly relate to pleased long have that's to second will that that well. type tail world, sitting, characters of with with Animal these entertainment, tremendous your of see you and piece play out the They question gaming own people The of them right. Crossing, were side." very in second an a expect always-on Their -- waiting affinity for. different, are "entertainment we It's their and very have as Crossing gate about some not and

of and long-term the Pokemon types of the of able these what entertainment of to years side licensing more effective a now the across So, has side, movies, being types and smoother with these that properties, it's both better curve us of gives turned us as balance into we're about in in the franchise pleased spiky properties, as and way. the management with for of create the their be gaming that relationships kinds of balance like aided has these well a relationships great plan-out

question. Now will we're to it, Pokemon? Pokemon got that Animal a for very Thank But hard decades far, become say. certainly behind the you pleased it. Crossing with thus has multiple

Eric Beder

Thank for good you and the year. rest of luck the

Operator

Cannon [Operator David Wealth Instructions] Please question Our next comes proceed. from Management. with Cannon

David Cannon

morning, Good congratulations. guys,

Sharon Price John

Thanks, David.

Voin Todorovic

morning. Good

David Cannon

to Also doing just of anyone would team your great meeting congratulations some I'm execute Jenn to efforts job. members let add, of I part I acknowledgment a express and on their of know that are and Chris gratitude not purpose. my and big like me But and a helping

All of you guys.

initiative question, durable, specific have with the you point shell after this Do market? you So, could a go speak? product -- do ruggedized guys first for to a of you pet gifting at or sort have dedicated that

Sharon Price John

haven't announced anything or public We is There forum anything in David. shared nothing the like that certainly concerning like that that.

David Cannon

Okay.

this -- that is this initiative So is my in the question some you're it? is rephrase works, and eyeballing

Sharon Price John

anything initiatives any public the sort We about of specific products haven't strategic forum. confirming announced pet in

David Cannon

similar if is is category effect to a like lot I -- guess now you will It Okay. halo monetize. it. potentially evaluating this look And I be This guys buzz then, of for you non-fungible seems NFP's that tokens an something right would opportunity there. can

Sharon Price John

a forum the happy of operate experts tell not arena and value to they shared with type like that sense and the Build-A-Bear the Build-A-Bear assets. was of way in that spoken assess to as public for some you whether Although anything NFP's I we in well. have the we've that makes

David Cannon

can then, XD update give e-commerce on And Okay. an us initiatives? you your

Sharon Price John

in XD we have call the launch XXXX. expectations in shared builder [ph], to we As Bear January the what we ICR

David Cannon

this then, quick [ph] Okay. questions And here. is

back I could see So the not you third what's retail force and so contributed terms to in of throughout tell is the cadence next back of $X.X have where year? expectation million normal? your the it me party one Can party that obviously like for much. with do you closures And third forth, was the believe up things ultimately when go quarter, it ramping settling

Sharon Price John

individual course retail different the depending is process generating complete well, in normally itself party it's still areas evolution lines, they of post-COVID. as is We the Great doing revenue on partner and and open on specific places its Lodge already the Carnival of third the Cruise opposite Wolf in projections are but and quite provide and on and will embark, have on start started preparing that know And we again in going we're do anticipate expectations their when I if cruises ships start would -- to they excited you'd announce Voin they to that. any color so add like that when some those cruises they to of about participating [ph].

Voin Todorovic

is initiatives to one and asset some definitely of know is of definitely, this for organization. one our of, high with again aware have but slowed we we down, David, this those of like well light you these priorities partners. very that try additional delays are COVID you the find and and impact, things work But continue know to

David Cannon

it pandemic? with back -- at be Okay. from guess the your And was to prior the retail what to very even million. with into and third it is, quarterly year things go contribution revenues going phenomenal, the $X.X way looking though party peak year this I is driving peak I'm third in What through at also, party retail we I'm work is was to your normal. next were as -- was incremental as the really little quarter what it

Voin Todorovic

back you [indiscernible] definitely as some there orders past are we have spikes those have have bit big of seen question a same shipments out, to our to get going to you're a some be assuming year again things Cruise, the that rolling lineup that of little return these We normal we available are a party partners going of believe of reopens ships tourist Carnival hard and initial of historically. locations. of had really big of relationships how That that those the your on retail well sailing is, seeing as basis [ph] and some number is that. that and are information it with answer business the pretty like full locations a know, things we are was to numbers and some business back like -- they of when some third just because in to Like mean, publicly. able lot and shared you on portion their But, we and things you them to depend some I of those and initiate it's in

And as is going directly impacting And mentioned, I this share so is COVID point are where as through not to these this but more to can of some in partners. different partners ways look the channel to this we at there to continue again that unfortunately indirectly nothing I grow is but at time.

David Cannon

trading Anyway, congratulations easily And forward to at somewhat so. X.XX your board I positioned XX, to using [ph] and thank actually research board, though it no, go buy back low, oh peak makes it's one just exceed seeing a reaction, final times go down, a psychologically quite CapEx up cash of I me, stock back it Okay. and overcapitalized for a up X my price think hard very well-positioned. To to then more I'll the value you're frankly, and when your work, I'll and the gone assume it have and million list guidance I has know what XX a would this back it our from comment again being was. to the and substantial free stock for so accretive, look very point cash low we're a valuation and The it's say, here, on lot, our EV-to-EBITDA think item bit generate it would for knee-jerk commentary stock and I and you EBITDA, that be like even is is I is in $XX of it but so so think out going EBITDA your quarter. we're next coming we're sense to the flow. here

Sharon Price John

you, Thank David.

Voin Todorovic

you. Thank

Operator

Thank you. would over turn I comments. closing At to like back this time, the call management for to

Sharon Price John

today and Davidson. Thanks Zoom we some forward our look fireside tomorrow to to D.A. meeting later during the today. during you day. of chat Conference us seeing a great with the for at Have joining everyone on And Cowen

Operator

This teleconference. you. concludes Thank today's

this disconnect time. participation. your your at you You And for may thank lines

Build-A-Bear Workshop (BBW) 26 May 212021 Q1 Earnings call transcript