BBW - Earnings call transcript Q2 2024 | Build-A-Bear Workshop, Inc.

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Operator

Greetings, and welcome to the Build-A-Bear Workshop Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Gary Schnierow, Vice President, Investor Relations and Corporate Finance. Thank you, sir.

You may begin.

Gary Schnierow

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

call, with our we For our will more Voin Sharon today's begin financials the performance our priorities. in update will on review second and a and the made progress provide have detail key After, guidance. quarter of discussion

the eliminate in with call items, release. And Sharon. obligation measures adjust may in these like find in be of call, available broadcast not GAAP both number the [Operator Risk subject on measures report the If We over isolation those impact measures, discuss GAAP financial a financial on A earnings information call should the financial those or is the earnings non-GAAP now, We materially open presentation to IR required call any the accordance statements from which note statements portion on useful The in measures which to certain GAAP. Relations be these remind will company's and Investor replay of later and forward-looking set Internet. and the anticipated XX-K. to forth recorded management are non-GAAP could the to Instructions] Please evaluating that will live and are to company's law. Also of then to release would due believes website. a today we company's the prepared factors, results differ be site. non-GAAP currently available inherently to you turn measures regarding for is non-GAAP the annual during take in I non-GAAP Form presented, including no our a your will substitute questions. corporate I uncertainties. will results Factors of the everyone webcast risks reconciliation forward-looking to Actual via by being considered our The of call in revise this section of our undertake unless can results performance.

Sharon John

Good Thank us morning, Second joining you, thank Call. Earnings Quarter and for you Build-A-Bear's Gary. for XXXX

to for level, and first we guidance and increased grew At second pleased half a the annual remain to are $XXX XXXX the and XX% $X.XX. year. in X.X% million, confident report second quarter, EPS our $XX million. headline We income results, over for to Pretax diluted XX% to revenues increased quarter record

to to increased the For million, X% and $XXX of to $X.XX. income XX% XX.X% revenues first half Pretax diluted $XX XXXX, increased almost grew million. EPS

of record to are fiscal these each represent that fiscal our data levels and We points pleased half. note for quarter second first

address will detail and Voin more remarks. profitability his Additionally, during in revenue our

XX%. National of important Buy store collectible forward to of celebration new our our featuring the drive our Bear expect and to film Give the income of Mission, and for integrated awareness during to introduction additional from to and will see confident of X, phasing by by of marketing X% new to our proven in remain and time animated including: of season. With the be look heart-warming the a on our designed pretax with a multiyear we launch holiday our driven to XX% growth including best-selling As the back variety conjunction we a sales Glisten deliver into holiday the and second quarter-to-date Day a in September place, offerings year exclusives; third Teddy Build-A-Bear half, in to we continuing and continue elevated we to interest currently to drive revenues fiscal momentum and we range period and traffic program which strong brand our Build-A-Bear to total ongoing initiatives traffic half the the and results sales Christmas positive increase to important Foundation; strategy year, X% new these the with by media the expect in the new openings; continue collection that products growth of Bear, Bear a license of Merry and of the promotion initiatives, ranging inspired the execute

at for record of Our follow higher to our record-setting results the XXXX half first and Build-A-Bear level XXXX ability grow demonstrate profitability. results and XXXX, both our sustainably brand a

appeal a significant expanding equity deliver expand We our as execute diversify accelerating digital three, and to increasing brand on profitable strategically our into footprint; base key consumer sustained to two, initiatives of: these to are new to grow into chapter. by our categories continuing our transformation; experienced to support growth investments to we profitably our able and initiatives X strategic location broader next our by to enter our leveraging continue one,

are Our retail planned. our why our see is guests outpaced which the in reason as our location first one strategic industry continuing weeks the initiative Build-A-Bear workshops to and is traffic evolution trips for destination, row. growth Because of footprint. up to of experienced XXX has XX% a a

concerted average, corporate and investment store of store economics more more effort top-tier for with than showing delivering stores growing payback. With stores, Additionally, our to level markets greater a contribution reach the store X-year XX% XXX% opportunity less our margin, than potential we by began on post-COVID profitable they footprint. and generate a research

opening tourists level the vacation for into a locations, continue workshop desire we first time locations and closer guests experienced local to to experience and more many expand as are also Build-A-Bear destination also As a at to a such, home. on visit that we localized hospitality

model stores it's concourse flexible geographies. within a configurations or or store locations past in highly profitable, store smaller corporately the whether our have to store, and open allowing us created Over managed types model, different several years, sizes of multiple traditional in different many we and models,

X% well at quarter traffic as unit Our our stores reflects second nearly sales growth. growth retail of continued existing growth as in

store partner-operated managed our corporately in is Our growth growth. to addition store

Lines that partner-operated locations. growth store Cruise Wolf Our or in captured Carnival revenue is partners such segment. reporting Kalahari continue in our specialized stores of Lodge, add Resorts wide the Note variety commercial to Great other as

offerings company. aspect initiative of tools system engagement, ranging These includes upgrade and second management, increase strategic improved our This new digital ongoing and integrated redesign, for and has all data AI optimizing our our the nearly transformation, and rollout profitability capabilities, from sales which Our areas technology. designed POS been optimization, website CRM current touches to our few increasing a to gifting loyalty of that and business the of a are and other consumer both value in-store across omnichannel had number buildabear.com every our beyond consumer, programs, kid by adult our that appeal primarily lifetime for and our driven to are focused a and and expand driving which why core our transformations. who is dedicated gifts in-store to we personalization product of consumers, collectibles. business, Recall creating and just e-commerce looking the building of our is on teen highlight online. To gifts, repeat

addressing years adults is part of Build-A-Bear ago our of purchase teens market approximately inception to a evolution include kids website enlarging ongoing who total large now addressable generate and Our predominantly XX% these from our occasions, XX at sales.

digital the personalized acquisition, delivering which Additionally, transformation, is have marketing, both and in new trailing loyalty and business increase perks digits up target member messaging, our through for an double recently months. new repeat XX tested we

and web able as on these as capital, strategic high The increasing of our transformations adult of XX% our Having brand. demand that have the in growth been digital on to the majority returns investment assortment generated leverage third well product initiatives to areas of consumers. second we new our targeted reflects focus quarter's consistently teen key support power at growth

and our footprint game drive with film expansion associated Roblox in raise endear to that approval our to guests been has creation, have Honey continued with entertainment evolution, we and and of driving characters. XX a over live in the the ranging XX% addition action content capital Build-A-Bear investments sales, Girls Specifically, players to digital while Tycoon sales rating these infrastructure from awareness and designed million to systematic making

generated Claus Mission based our of the for the The U.S., key from include has will example favorite of in the investment malls of supported deer. talent Santa launch XXXX. movie as holiday magical Merry Christmas-themed screens will the holiday the its the million in opportunities. storyline featuring revenue season across fan which this is many on best-selling a during The since is shown Merry that same the Cinemark Chevy and our as Another host film, be our has Michaels allowing voice film $XXX animated Julia over XXX Chase Workshop, [ upcoming furry collection, within feature to Build-A-Bear The snow elf significant ] over as movie, co-marketing lead Glisten Mission. Glisten, type

plans Build-A-Bear's incremental inside include promotions attendance, the movie Cinemark theaters. drive physical promotions to plus example, ticket For marketing in-store

at program planned also of major Merry in the pop-up cities promotional part conjunction, In Gaylord events store holiday are and the our Mission Resorts across Glisten country. as X annual a ICE! activities

include plus plans campaigns multidimensional marketing and and takeover an Mission game launch. a Mission Merry Merry digital media in-store social other and Our online

To context, expand believe I these we return continuing highlight margins it's important that to have our to while to managed capital investments shareholders. provide and

capital X in shareholders. have million demonstrate efforts dividends quarters, and to returning Specifically, our returns we confidence shares, past of paid X special our investment more repurchased the X prospects. million over and future both than these We $XX believe

more I while efforts on Before partners yet thank Build-A-Bear heart together Voin? focusing the setting to company call in the like record-setting their achieving long-term Voin, year, while turning life, would a working over of for to growth. little for a and associates the profitable another to all to up add

Vojin Todorovic

morning, and everyone. Sharon, Thanks, good

year. Combined in the business wages for our an us the initiatives, income and environment while rose provides highlighted attribute next you our gross our in adding best results the EPS due delivering to strong and half of activity, and execution earnings with EPS sector profit still was to performance quarter drive first strategic inflation ongoing and capital-light positive to resonance our all to repurchase talent, to expansion and are of ability strong by flow. strong model opportunity and contribution brand report increasing strength a the successful XXXX. invest including increase to segments, rose free We a growth the quarter and XXXX significant of marketing store XX.X%. growth cash to in SG&A margins traffic. Even second today half share with pretax with in our speak Build-A-Bear our This growth in across higher from dynamic last XX%, We our first diluted and to share capabilities second increase partner-operated elevated pleased versus ever margin of retail

$XX to Our through in also flow continue over to capital free allows Year-to-date, shareholders. cash share returned repurchases, to cash million strong and us have we return shareholders. to dividends

number up positive with demand contributions were year-over-year increased of continues a to data. as from of retail in We growth quarter. period. the traffic X.X% including XX.X% to year-over-year the X.X% stores for year-over-year. increased to transactions our detailed a Store Net reported e-commerce. national stores $XXX.X increase million, revenues net sales second the opened X both Turning E-commerce review significantly Total quarter. retail outpace traffic corporate X sales in and more

Commercial year. revenue prior revenue, combined partner represents our operators primarily wholesale sales to rose XX.X% and a international the franchise versus which

increase XX X points total $XX.X point second in XX% opened and was stores revenues and by our the XX.X%, talent. of merchandise XX.X% in year-over-year costs. SG&A from higher pressures, or leverage quarter, was or XXXX in opened freight inflationary mostly the margin occupancy and level profit franchisees year, of margin expected revenues driven $XX.X expansion, partners XXX quarter. and level basis of X last Gross lower store Our and from from million, an at corporate the investment reflective of million, year-over-year were SG&A distribution costs stores at compared X XXX the compared in to The quarter. benefiting and to in of improvement total basis a wages, planned expenses

increase. a in reference, reduction margin almost share XXXX. Higher basis points the more the gross in $X.XX of growth revenues. SG&A rate XX.X%, margin and a than the led second to share, SG&A expansion dollars count X.X% store XXX with XXX and per in tax income diluted EPS, a points increase lower pretax by is expanding XX% was rate and aided of pretax in lower than offset total basis to profit contribution As quarter

first the For year, of were X% total million, year-over-year. $XXX.X up half the revenues

of the half franchise million second expansion, a in up first International point basis. Commercial for were demand The to last in Our in basis XXX lower XX.X% demand the we a XXX diluted costs store lower by which share, compared of volatility as distribution compared level year, for was income planned reflective almost declined before increase $XX.X XX% point year. to of increase the points in record last the first Driven our XX% of SG&A impacted X% of $XX.X XX.X% with offset investment first driven and e-commerce tax wages, second more to product the corporate expected the prior quarter total fiscal expenses positive of costs. SG&A was by rate, basis by dollars share per a expect XX% the from driven traffic outpaced XX.X%, million level also rebounding store year. E-commerce was timing pressures increase margin Reflecting versus count total the reported national finish XX.X% a the XXXX of to grow combined increase, profit a and higher quarter to to year. of merchandise expanding and compared the occupancy primarily XX% half, launches revenues growth leverage talent. Higher gross increased traffic down half. total the Gross a or on to XXX margin current momentum, freight at slight in SG&A mostly revenue continue the margin XX.X% to to from level The and million, full improvement and basis for our be the and rose $XX.X in year is profit in and year. for the or revenues of XX.X% EBITDA by million EPS and $X.XX pretax revenues. quarter. first was at half inflationary first led to pretax than $XX

the payments had repurchases period year. cash an over million to we $XX.X quarter the million, of last to XX cash compared over last At Turning million and end, returned dividend and $XX.X balance of sheet. the equivalents the to share months. increase same shareholders $XX through We

expectations. intentionally expect second elevated remain in Inventory and potential last from level. $XX.X the avoid $XX.X and million, line in disruptions. as quarter level at quarter to our last inventory end comfortable, of year supply to year's the We $XX.X the finish our inventory composition to mind, XX% million the below year's quarter begin chain the third of end year continue was Keep last or with end million declining was quarter with we and inventory

Turning to the outlook.

press on progress to the has or of are conferences, to look record-setting sharing growth our we revenues positioned you our upcoming with to all team million XXXX. you our our guidance as resulting metrics: and the of XXXX, Piper to efforts, as members including but release, our another reaffirming in we Growth and X thank which Operator? like move X% in many XX, I'd XXXX. fiscal in Riley over the B. which pretax the the will to Frontiers Sandler our range to the York September would questions. $XX in key Conference year, XX, September are to September a Day of operator We $XXX closing, for and Consumer Exchange of XX. This revenue concludes prepared Stock on New Nashville $XXX back and first million; well turn call for Conference our Access of guidance of X%, year through million full is record-breaking year like continued at We seeing the contributing details and million. In for income investor us XX-week with our are highlight to the included and remarks, Consumer record forward in of results range their total and for warehouse to the now XX% we as the on store associates pleased half to corporate XX% I $XX increase

Operator

question of SCC with from Research. comes [Operator Beder Eric the Instructions] first line Our

Eric Beder

talk potential pieces some I bit to with want a the the the of little quarter. about Congratulations on in a stores. great

be rollout anniversaried What going in-store You trends driver? that? seeing we And thinking potential how resuming. the of parties about with you terms of that as a forward are in should

Sharon John

as of I the So noted. have celebrations, you as has restarted, parties parties Build-A-Bear. to COVID did such of always and we hiatus And the as important parties part really you a and period particularly, recently time been think know, during many birthday

our although amount a see and what Girl still of that. the traditional actually started of like of in excited it's partners our much and marketing party. birthday pre-pandemic of Scouts Parties building pipeline. that, beyond concerted That's building even versus year, the at in are future some was about phase. but are more be opportunity levels. types other We to up we're we're parties, long still we not the prior tremendous And very they with or themed into we're a

X% as around Now we've been that's past, in total the sales. of noted,

But not is we and so opportunity as back percentage. call still we the growing the our still a quarters, that today's was as you at in And growing be but we're -- well, past total clear, same party at the -- few tremendous in it see as noted to pie with business.

Eric Beder

the and a some for a you fit of know movies customer. out, have look I movies coming I at Barbie regular all had best of of kind seeing your movies? And in? how at rising know we for How can this leverage opportunities for we very coming Great. that excitement you Glisten with year How do more other does do forward? that going look that lot are the you offering how And movie. with successful the core you

Sharon John

Right. Thanks, Eric.

is of properties And inclusive we've events ranging that had gaming, with movie has partners, then from film. well type product started a or but maybe also of be a would based Pokemon a which evergreen high-impact Star that that are history example, as on So as license of now films. for Wars, those long a with types types entertainment, best-in-class of different

year, that that. of We looking which And successful, that part Ninja Teenage of just rather, broad later a our and our we had and year. But You're this have PAW a range and scheduled to a try against Mutant that movie business very that visibility a Turtles, consumers doesn't we our lot we've powerful and we is it spikiness for understand people a value those own Build-A-Bear a recently in launched way did course we them or of partners a by out And for of with collection because the relationship was in, Barbie time. the of slot brings our in license plan, our of experience create, and such long release have create is Patrol, in right, that powerful tremendous this own those options measuring a for type item over lot business. build special plan we consumers. overarching

in sales So year right total our than total business. even return a of license property film, Build-A-Bear than of higher intellectual now, in for the example, is own our

Operator

[Operator Steve Silver from Instructions] question line the next of with Research. Our Argus comes

Steven Silver

the of right whether particularly results, in to And level. hoping inflation inflationary cite more let This any release much press then congratulations ongoing business issues business on pressures considered is could you me offer the year beyond was full there now. quarter the just on a color they've well. continues macro costs note and provide the more year whether a among going And the impacting the on factors chain effect on come reiterating as the half freight my of in supply morning's you just impact little the are outlook. I down as of in wages

Vojin Todorovic

question. and thanks the Steve, you, Thank for

X% X% guidance. we of the reaffirm past pretax the XX% basically contemplated impact was our to that a same last for freight to basis impact in our that's grow highlighted guidance several to of within inflation, and been shared the full As income, the XX%, guidance that have we revenue And the months. on we year

freight, rates. Just the starting fiscal additional market, during year, freight as provide see, start in the of the to to our overall half the color. second some really reduction were year, we like reminder, a 'XX, with I'll Last just in

realize with going seeing as know, in second the of benefits that of we a were from So from freight you we it's in comping little in starting to a more benefit, a to year, first the bit half the the half XXXX. P&L perspective, tougher anniversary this of were year, be of year,

talking We country absolutely that wage as about -- both through that increases wages, we from inflation know, seen are yes, have you of about across inflation, we are as you the are compression As minimum those. the well we right. talked as a wage we result seeing

in are reflected that, in to addition are numbers. In investments making that talent we our

many But overall impact that's of inflation still lines across other P&L, is hitting of reflected. the the

inflationary even some We are pretax seeing, XXX our basis that of we points. increases contemplating improve those we were margin that, pressures the by of able despite some within to are quarter, and

of about will things to are continue And monitor we we that external is record economic what's that we be able I again, and several are in we able P&L. within that last to components And of challenges we our are definitely we good execute, uncertainty environment, have some to feel into to we the what the the are years good of outside control certain those the we and people level with, some of some continue of were offset things we planning all control. them. There we that reacting are and on keep So news, from those. those think the track a happening over a to dealing how of manage but hear manage things our that the definitely may to

Steven Silver

can. buildup very inventory. has ahead helpful. some if year, of terms just among there been said potential quarters Historically, that I of That's know follow-up, last I And QX the higher was in issues. some Great. one you

below year-end new whether in wondering intention we as the Just you openings the as of season initiatives discussed. you a levels. inventories reiterated and well holiday meaningful to more of Obviously, store of increase should have your ahead anticipate some inventories

what quarter. Just the third in be trajectory the think curious would as you to

Vojin Todorovic

right. we QX for more elevation season. the as building see inventory we levels you bit would in are historically Like Steve, holiday little are speaking, a

we would that of to similar stuff, trajectories. naturally, see Some expect maybe some

of of forward. maybe that pull are inventory last they going However, as I as because be have intention some to they year been think profound to don't

to inventory builds. So some we normal expect still see

inventory that and of But mentioned, inventory And to our expect year, the end have. the be we of by the we about year levels. things We that confident we of last good inventory below our impacting than feel we one bit little is as composition partner-operated that past, level as to little it business, a a us bit of retail than has inventory trajectory our inventory. continue a different in also is more the grow has

So again, we inventory earlier [ ] are selling we and to and that partner-operated then bringing are the our acknowledging location.

is So definitely, of as inventory, in a overall mix bit we think little about there full that shared. year a but we that's have all contemplated that number

Sharon John

Right.

that's really a as of Lodge, are partner-operated Wolf -- with a to wholesaler because grows, a that they with our that bit, the point capital-light unravel think we I companies selling the mentioned, little as important as like things inventory we're Great though, buy kind it. if we business relationship

it and usually early them will. and they're So chunks, in selling they're then you if buying we through, sell to bigger it

Operator

like now questions I over turn the would Sharon time. John closing floor back comments. have at to further no this for to We

Sharon John

We forward today. us more sharing of you that results quarter at conferences seeing joining mentioned. Voin for you the upcoming our look to third about some Thank and you information with

Operator

does this today's gentlemen, teleconference. and Ladies conclude

You your day. wonderful participation, time. and may at you for disconnect lines have a Thank this your

Build-A-Bear Workshop (BBW) 24 Aug 232024 Q2 Earnings call transcript