UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2017

     Build-A-Bear Workshop, Inc.    
(Exact Name of Registrant as Specified in Its Charter)

         (314) 423-8000       
(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company   ⃞

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ⃞

Item 2.02.         Results of Operations and Financial Condition.

On July 27, 2017, Build-A-Bear Workshop, Inc. (the “Company”) issued a press release setting forth results for the Company’s 2017 fiscal second quarter and twenty-six weeks ended July 1, 2017.  A copy of the Company’s press release is being furnished as Exhibit 99.1 and hereby incorporated by reference.

The information furnished in, contained, or incorporated by reference into this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.  In addition, this report (including Exhibit 99.1) shall not be deemed an admission as to the materiality of any information contained herein that is required to be disclosed solely as a requirement of this Item.

Item 9.01.         Financial Statements and Exhibits.

(d)  Exhibits

SIGNATURES

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

 

EXHIBIT INDEX

 

4

Exhibit 99.1

Build-A-Bear Workshop, Inc. Reports Increased Total Revenue with Second Quarter Fiscal 2017 Results

For the 2017 second quarter:

• Total revenue increases 2.8% to $77.2 million
• Retail gross margin improves 150 basis points to 43.7%
• Consolidated comparable sales decline 0.9%
• Pre-tax loss is $2.6 million, an improvement of $3.6 million from the fiscal 2016 second quarter
• Loss per share of $0.10 compares to a loss per share of $0.28 in the fiscal 2016 second quarter

ST. LOUIS--(BUSINESS WIRE)--July 27, 2017--Build-A-Bear Workshop, Inc. (NYSE:BBW) today reported results for the 2017 second quarter and 26 weeks ended July 1, 2017.

Sharon Price John, Build-A-Bear Workshop President and Chief Executive Officer, commented, “We are pleased to report top line growth as well as expansion in merchandise margin and gross profit margin enabling us to narrow the pre-tax loss in this year’s second quarter to $2.6 million, which is a $3.6 million improvement over the prior year. This performance reflects the successful execution of our stated strategy that is focused on transforming our operating model to capitalize on changing consumer shopping patterns while diversifying and growing revenue streams that leverage the power of the Build-A-Bear brand. While we had a marginal decline in consolidated comparable sales, primarily due to continuing retail traffic challenges, this was more than offset through the successful implementation of our diversification strategies. This included the positive impact of the opening of more productive Discovery format stores and a new, innovative concourse shop model, as well as revenue from alternative sources, including experiential wholesale, international franchising and outbound licensing. We expect the continued disciplined execution of our stated strategies to move us toward our long term goal of sustainable profitable growth.”

 

Second Quarter 2017 Highlights (13 weeks ended July 1, 2017, compared to the 13 weeks ended July 2, 2016):

• Total revenues were $77.2 million, an increase of 2.8% compared to $75.1 million in the fiscal 2016 second quarter;
• Consolidated net retail sales were $74.4 million, an increase of 0.7% compared to $73.9 million in the fiscal 2016 second quarter;
• Consolidated comparable sales declined 0.9% and included a 1.5% decrease in North America, and a 2.2% increase in Europe. Consolidated comparable e-commerce sales increased 13.3%, following an 11.7% increase in the fiscal 2016 second quarter;
• Retail gross margin was 43.7%, an increase of 150 basis points compared to the fiscal 2016 second quarter, reflecting a 190 basis-point expansion in merchandise margin partially offset by deleverage of fixed occupancy costs;
• Selling, general and administrative expenses were $35.8 million, or 46.4% of total revenues compared to $37.1 million, or 49.3% of total revenues, in the fiscal 2016 second quarter;
• Pre-tax loss was $2.6 million compared to a pre-tax loss of $6.2 million in the fiscal 2016 second quarter;
• Income tax benefit was $1.1 million with an effective tax rate of 41.4%, compared to an income tax benefit of $1.9 million with an effective tax rate of 31.1% in the fiscal 2016 second quarter;
• Net loss was $1.5 million, or $0.10 per share, compared to a net loss of $4.3 million, or $0.28 per share, in the fiscal 2016 second quarter; and
• Adjusted net loss was $2.3 million, or $0.15 per share, compared to an adjusted net loss of $3.7 million, or $0.24 per share, in the fiscal 2016 second quarter (See Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)).

First Six Months Fiscal 2017 Highlights (26 weeks ended July 1, 2017, compared to the 26 weeks ended July 2, 2016):

• Total revenues were $167.9 million compared to $170.1 million in the first six months of fiscal 2016;
• Consolidated net retail sales were $163.0 million compared to $168.0 million in the first six months of fiscal 2016;
• Consolidated comparable sales decreased 5.0% and included a 5.8% decrease in North America and a 0.8% decrease in Europe. Consolidated comparable e-commerce sales increased 2.8%, following a 5.6% increase in the first six months of fiscal 2016;
• Retail gross margin was 45.5% compared to 45.6% in the first six months of fiscal 2016, as deleverage of fixed occupancy costs was offset by improvements in merchandise margin;
• Selling, general and administrative expense decreased $3.2 million to $73.5 million, or 43.8% of total revenues, compared to 45.1% of total revenues in the first six months of fiscal 2016;
• Pre-tax income was $2.0 million compared to a pre-tax loss of $1.0 million in the first six months of fiscal 2016;
• Tax expense was $0.7 million with a tax rate of 37.7% compared to a tax benefit of $0.2 million with a tax rate of 19.4% in the first six months of fiscal 2016;
• Net income was $1.2 million, or $0.08 per diluted share, compared to a net loss of $0.8 million, or $0.05 per share, in the first six months of fiscal 2016; and
• Adjusted net income was $0.5 million, or $0.03 per diluted share, compared to an adjusted net loss of $0.5 million, or $0.02 per share, in the first six months of fiscal 2016. (See Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)).

 

Impact of Foreign Currency:

The ongoing fluctuation in the British pound sterling relative to the U.S. dollar, as a result of the United Kingdom’s referendum vote in June 2016, continues to affect the Company’s revenues and pre-tax results with the most significant impact in retail cost of merchandise sold as most inventory is purchased in U.S. dollars. In the first half of fiscal 2017, the Company estimates an unfavorable impact on revenues and pre-tax income of approximately $3.5 million and $0.5 million, respectively. In the fiscal 2017 second quarter, the Company estimates an unfavorable impact on revenues and pre-tax income of approximately $1.5 million and $0.2 million, respectively. This is inclusive of the transactional impact of changes in foreign exchange rates on the remeasurement of the Company’s balance sheets included in the Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss).

Store Activity:

During the second quarter, the Company opened 23 new stores, closed 6 locations and remodeled or reformatted 16 stores. As of July 1, 2017, the Company operated 353 company-owned stores, including 93 in a Discovery format, with 293 locations in North America, 59 in Europe and 1 in China. The Company’s international franchisees ended the period with 88 stores in 11 countries.

Balance Sheet:

The Company ended the fiscal 2017 second quarter with cash and cash equivalents totaling $12.6 million and no borrowings under its revolving credit facility. Total inventory at quarter-end was $58.4 million compared to $55.5 million in the prior year second quarter, an increase of 5.3%. In the fiscal 2017 second quarter, capital expenditures were $5.7 million, and depreciation and amortization was $4.0 million.

Review of Strategic Alternatives:

In May 2016, the Company announced that its Board of Directors had authorized an exploration of a full range of strategic alternatives. No timetable has been set for the Company’s review process. The Company does not expect to comment further or update the market with any additional information on the process unless and until the Board of Directors deems disclosure appropriate or necessary. There is no assurance that this exploration will result in any strategic alternatives being announced or executed.

2017 Key Strategic Initiatives:

CHANNEL Evolution

The Company continues to evolve its real estate portfolio by diversifying locations and formats. Building on a successful test in Fall 2016, the Company expanded its new, innovative concourse shop model by adding 17 locations in the second quarter. Concourse shops require less capital, shorter term leases and, at approximately 200 square feet, offer a flexible model for a wide range of venues. Separately, the Company is also announcing its plans to open a new location in New York City this Fall next to the Empire State Building, allowing it to serve both tourists and local shoppers. In addition, the Company plans to redefine its presence within the expansive Southern California market following the closure of the store currently operating in the Downtown Disney District in Anaheim, California, at the end of September.

The Company also continues to leverage its successful Discovery store format as it remodeled or reformatted 16 locations in the second quarter finishing the quarter with 93 locations in a Discovery format including, the aforementioned concourse shops.

The Company remains on track to complete the upgrade of its web platform ahead of the fourth quarter and holiday season. The reinvention of the website platform and e-commerce systems is expected to enable Guests to experience Build-A-Bear online in new ways.

PRODUCT Expansion

The Company is focused on meeting the needs of its core consumer base, boys and girls ages 3 to 12, while systematically building secondary consumer segments, including the teen-plus affinity and gift-giver consumers. Accordingly, the Company plans to balance its offering of core products with a comprehensive program of key licensed properties, including products with tie-ins to major movie releases throughout 2017 while continuing to develop and expand offerings of its successful owned intellectual property stories, such as its Promise Pets, Honey Girls and the holiday-specific Merry Mission collections.

The Company also plans to continue to build outbound licensing programs by leveraging the power of the Build-A-Bear brand, as well as other owned intellectual properties. New license agreements have been added in categories ranging from non-plush toys to slippers and electronics, with updates and launches planned throughout 2017.

BRAND and EXPERIENCE Amplification

In addition to creating sharable, emotional content that more authentically communicates the heart of the brand, the Company is making adjustments to marketing programs that create synergy across channels. To that end, in the second quarter, the company continued to adjust its media to better reach moms and kids while leveraging the competitive advantage of its entertainment retail experience by adding in-store events such as story readings, movie release celebrations and appearances by its iconic mascots. The Company plans to continue to develop entertainment content, including mobile apps, music videos and other opportunities that increase engagement, and are designed to improve efficiency, drive traffic and lead to profitable sales growth.

LONG-TERM PROFITABILITY Improvement

The Company is focused on improving profitability by driving revenue growth through the execution of its stated strategies, as well as disciplined expense management and ongoing efforts in process and systems upgrades, including the expected launch of its new web platform. In the second quarter, the Company improved both merchandise margin and gross profit margin reflecting the successful execution of its profitability improvement initiatives.

As Build-A-Bear celebrates its 20th year in business and continues to evolve into a multi-generational, multi-dimensional branded company, the plans and actions that have been implemented since the start of the turnaround in 2013 are expected to provide the foundation to execute the Company’s strategies and achieve its goal of sustained profitable growth.

 

Today’s Conference Call Webcast:

Build-A-Bear Workshop will host a live internet webcast of its quarterly investor conference call at 9 a.m. ET today. The audio broadcast may be accessed at the Company’s investor relations website, http://IR.buildabear.com. The call is expected to conclude by 10 a.m. ET.

A replay of the conference call webcast will be available in the investor relations website for one year. A telephone replay will be available beginning at approximately noon ET today until midnight ET on August 3, 2017. The telephone replay is available by calling (844)-512-2921. The access code is 13665245.

About Build-A-Bear

Celebrating 20 years of business in 2017, Build-A-Bear is a global brand kids love and parents trust that seeks to add a little more heart to life. Build-A-Bear Workshop has approximately 400 stores worldwide where guests can create customizable furry friends, including company-owned stores in the United States, Canada, Denmark, Ireland, Puerto Rico, the United Kingdom and China, and franchise stores in Africa, Asia, Australia, Europe, Mexico and the Middle East. The company was named to the FORTUNE 100 Best Companies to Work For^® list for the eighth year in a row in 2016. Build-A-Bear Workshop, Inc. (NYSE:BBW) posted a total revenue of $364.2 million in fiscal 2016. For more information, visit the Investor Relations section of buildabear.com.

Forward-Looking Statements

This press release contains certain statements that are, or may be considered to be, “forward-looking statements” for the purpose of federal securities laws, including, but not limited to, statements that reflect our current views with respect to future events and financial performance. We generally identify these statements by words or phrases such as “may,” “might,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “future,” “potential” or “continue,” the negative or any derivative of these terms and other comparable terminology. All of the information concerning the potential outcome of exploring strategic alternatives, our future liquidity, future revenues, margins and other future financial performance and results, achievement of operating of financial plans or forecasts for future periods, sources and availability of credit and liquidity, future cash flows and cash needs, success and results of strategic initiatives and other future financial performance or financial position, as well as our assumptions underlying such information, constitute forward-looking information.

These statements are based only on our current expectations and projections about future events. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by these forward-looking statements, including those factors discussed under the caption entitled “Risks Related to Our Business” and “Forward-Looking Statements” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 16, 2017 and other periodic reports filed with the SEC which are incorporated herein.

All of our forward-looking statements are as of the date of this Press Release only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or other risks and uncertainties referred to in this Press Release or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the SEC could materially and adversely affect our continuing operations and our future financial results, cash flows, available credit, prospects and liquidity. Except as required by law, the Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

All other brand names, product names, or trademarks belong to their respective holders.

 

 

* Non-GAAP Financial Measures

In this press release, the Company’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures. In particular, the Company provides historic income and income per diluted share adjusted to exclude certain costs and accounting adjustments, which are non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying trends in the Company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the Company’s core operating results. These measures should not be considered a substitute for or superior to GAAP results.

CONTACT:
Build-A-Bear Workshop
Investors:
Voin Todorovic, 314-423-8000 x5221
or
Media:
Beth Kerley
bethk@buildabear.com