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) June 13, 2006
Build-A-Bear Workshop, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
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Delaware --------------------------- (State or Other Jurisdiction of Incorporation) |
001-32320 ------------------- (Commission File Number) |
43-1883836 --------------------------- (IRS Employer Identification No.) |
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1954 Innerbelt Business Center Drive St. Louis, Missouri ---------------------------------------------------- (Address of Principal Executive Offices) |
63114 ------------------ (Zip Code) |
(314) 423-8000
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(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):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01. Regulation FD Disclosure.
Build-A-Bear Workshop, Inc. (the “Company”) has prepared a slide presentation for use in connection with an investor conference and meetings held on June 13, 2006. The presentation includes, among other things, information regarding Company background, growth strategies, store economic model, strategic initiatives, including the U.K. acquisition and Ohio distribution center, and marketing and brand building programs. A copy of the investor presentation is furnished as Exhibit 99.1 hereto and is incorporated by reference herein. The description of the investor presentation contained herein is qualified in its entirety by the full text of such exhibit.
The investor presentation will also be posted on the Company’s investor relations website located at http://ir.buildabear.com in the Presentations section, although the Company reserves the right to discontinue its availability at any time.
The information in the investor presentation may only be accurate as of the date hereof and is subject to change. The Company does not undertake any plan or obligation to update the presentation, even though its situation may change in the future.
On June 13, 2006, the Company issued a press release announcing its presentation at the investor conference. A copy of the press release is furnished as Exhibit 99.2 hereto and is incorporated by reference herein. This description of the press release contained herein is qualified in its entirety by the full text of such exhibit.
The information contained in this Current Report on Form 8-K and the exhibits attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information or such exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The information set forth in or exhibits to this Form 8-K shall not be deemed an admission as to the materiality of any information in this report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit Number |
Description of Exhibit |
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99.1 |
Investor Presentation dated June 13, 2006 |
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99.2 |
Press Release dated June 13, 2006 |
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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.
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BUILD-A-BEAR WORKSHOP, INC. |
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Date: June 13, 2006 |
By: |
/s/ Tina Klocke |
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Name: Tina Klocke |
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EXHIBIT INDEX
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Exhibit Number |
Description of Exhibit |
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99.1 |
Investor Presentation dated June 13, 2006 |
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99.2 |
Press Release dated June 13, 2006 |
4
Credit Suisse
Consumer and Retail Conference
June 13, 2006
New York City
NOTE: Earnings guidance was reaffirmed as of April 27, 2006 and is not
being updated or re-affirmed in this presentation.
Maxine Clark Barry Erdos
Chairman & Chief
President & Chief
Executive Bear Operating Officer Bear
The Bear Facts
Bearemy®, our huggable mascot
Page 2
This presentation contains "forward-looking statements" (within the meaning of the federal securities
laws) which represent the Build-A-Bear Workshop’s expectations or beliefs with respect
to future events.
These forward-looking statements are subject to certain risks and uncertainties that could cause actual
results to differ materially from those anticipated. Those factors include, without limitation: we may not
realize some of
the expected benefits of the acquisition of Amsbra and The Bear Factory; we may be
unable to construct and/or effectively run our own warehouse and distribution center; we may be unable
to generate comparable store sales growth; our marketing initiatives
may not generate sufficient brand
awareness and sales; we may be unable to effectively manage our international franchises or comply
with changing laws relating thereto; we may be unable to generate demand for our retail experience, or
to respond
to consumer preferences; customer mall traffic may decrease, as a result of various factors,
including a reduction of consumer confidence because of terrorism or war; general economic conditions
may worsen; our market share could be adversely affected
by competitors; we may lose key personnel,
or be unable to hire qualified additional personnel; vendor deliveries may be disrupted; the availability
and costs of our products could be impacted
by international manufacturing and trade issues; our
warehousing and distribution vendors may perform poorly; we may fail to protect our intellectual property
and may have infringement, misappropriation or other disputes or litigation with third parties;
we may be
unable to open new stores, renew or replace our store leases, enter into leases for new stores on
favorable terms, or continue to comply with our current leases; we may experience communications or
information systems failures; we may
suffer negative publicity or be sued due to alleged violations of
labor laws, employee regulations or unethical practices, either by the Company or its merchandise
manufacturers; and we may violate or be accused of violating privacy or security laws
by reason of
improperly obtaining or failing to adequately protect Guest information. These and other applicable risks,
cautionary statements and factors that could cause actual results to differ from the Company's forward-
looking statements are
included in the Company's filings with the SEC, including as described in the
Company's annual report on Form 10-K for the fiscal year ended December 31, 2005. The Company
undertakes no obligation to update or revise any forward- looking
statements to reflect subsequent
events or circumstances even if experience or future changes make it clear that any projected results
expressed or implied therein will not be realized.
Build-A-Bear Workshop®
, Bearemy®, Where Best Friends are Made® and other trademarks, services
marks, and trade names used in our business are owned by Build-A-Bear
Workshop Inc. and/or its
affiliated companies. This document also refers to certain trademarks and trade names of our licensors
and third parties, which other trademarks and trade names are the property of their respective owners.
See Corporate Disclosure Policy for additional guidelines on disclosure practices.
Agenda
Build-A-Bear Workshop background
Growth strategies
Strategic initiatives
UK acquisition
Ohio distribution center
Marketing and brand building
Page 3
UK Acquisition -- The Bear Factory and Amsbra, Ltd.
Acquisition complete on April 3, 2006 -- Integration on
schedule
Conversion of Bear Factory stores to Build-A-Bear Workshop
stores underway – fifth store converted and reopened in
Grosvenor Centre, Chester, England
Convert Bear Factory stores to BBW stores by holiday 2006;
open 3 to 5 new stores in the U.K. each year, 70 to 75 store
market potential
Acquisition and integration will reduce F06 earnings by
approximately $0.10 to $0.13
Bulk of dilution will take place in the second and third
quarters, with accretion expected in the fourth quarter
Leveraging merchandising, marketing, store operations and
information systems expertise
Page 4
Highly Profitable and Growing
Retail-Entertainment Brand
Creative Merchandise
AND ‘Hands-On’
Experience
Numerous Growth
Opportunities
Powerful
Marketing
Loyal and Connected
Customers
Experienced and
Talented
Management Team
Broad Demographic
Appeal
Highly Productive
and Profitable Store
Model
Page 5
Proven and Scaleable
Technology
Infrastructure
Build-A-Bear Workshop Overview
Global leader in interactive retail
First store opened 1997
Over 240 stores in North
America, Canada and UK
Stores opened or scheduled to
open in 15 international countries
Nearly 39 million furry friends sold
More than a toy store – building a
powerful entertainment brand with
numerous growth opportunities
Broad demographic appeal to loyal
Guests
Page 6
A Unique Retail-Entertainment Experience
Conventional Retail
Merchandise driven – sell
the brand, item, or price
Traditional display
techniques
Appeals to a particular
demographic
Sales driven through
markdowns and promotion
Build-A-Bear Workshop
Sells the brand experience
Highly interactive theme
park techniques
Appeals to a broad
demographic
Marketing builds the brand
and drives sales
VS
Page 7
Our Associates ARE the Experience
Approximately
80% of returning
Guests plan their
visit to our store in
advance
92% of Guests
rated their overall
experience the
highest or second
highest rating
Page 8
Our Products are the Other Half of the Formula
Offer a well-coordinated fashion
merchandise selection of less than 450
SKUs per store
Talented in-house product development
team
Tracks cultural and fashion trends
Disciplined test and reorder
methodology
Cub Advisory Board regularly gives
input on new products
Relationships with strategic brands
Beary LimitedTM edition animals
encourage
collectibility
The Latest Trends and Partnerships with
Powerful Brands
Fashion
Sports
Entertainment
Page 9
NEW Friends Joining Us This Summer!
Primary target is families with
children typically age 3 to 12
Other Guest segments include:
Grandparents, aunts and
uncles shopping for kids
Teen girls 13-17 who bring
along boyfriends
Child-centric organizations
Leisure travelers
Special interest collectors
75% girls/25% boys. Avg age
of bear owners is 10 years old.
Destination Location With Broad Appeal
Page 11
Our Guests Come Back
% of All Transactions
No Bear:
Clothing &
Accessories
Only
Transactions
with Stuffed
Animals
% of Transactions to
Repeat Guests
No Bear:
Clothing &
Accessories
Only
Animals
Registered
to Repeat
Guests
Over 60% of
all
transactions
are with a
Returning
Guest
Repeat Guest Factor
Page 12
Still Growing Strong
Page 13
Numerous growth opportunities
Long-Term Growth Strategy
Powerful Store
Financial Model
Expense
Leverage/ Comp
Stores
New Stores
New
Initiatives
UK/Ireland
Page 14
A Highly Productive Store Model
Mean = $366
Source of other retailers data: Citigroup
Build-A-Bear Workshop®:
$602 sales per gross SF in 2004,
$615
sales per gross SF in 2005
Page 15
Superior Store Economic Model
Stores are profitable in first 12 months
Retail sales per gross square foot of $615 in 2005.
Strong gross profit margins
Store SG&A expense includes approx. 7.5% to 8% marketing expense and
14% to 15% store payroll expense (% of total revenues)
Investment per store averaged approx. $0.6 million in 2005
Note: This store economic model description excludes the pending impact of The Bear Factory and
Amsbra, Ltd. acquisition.
Page 16
New Store Growth
Approx. 30 new stores in 2006; about 80% in
new markets and 20% in existing markets
New stores open with very strong sales, typically
above the chain-wide average of $615 per
square foot.
Expansion plans include both new and existing
markets
Flexible store model works in a variety of
locations and geographies
New site criteria based on forecasting model
and demographic variables
Estimated market potential of approx. 350 Build-
A-Bear Workshop
stores in the U.S. and Canada
Page 17
Number of Stores - U.S. and Canada
2000
2001
2002
2003
2004
2005
39
71
108
150
170
200
Our stores in Manhattan and the Mall of America are
building the Build-A-Bear Workshop brand
Bigger and Better Than Ever…
Page 18
Grow International Franchises
Page 19
Currently have master franchise
agreements in 15 countries
19 stores at year end 2005 (Ex. UK)
Plan to open up to 20 stores in 2006
Potential of approx. 300 stores
Strict control of franchisee format and
operations
Goal is to have well-capitalized
franchisees with retail and/or real estate
expertise
Licensed Product Growth
Page 20
In 2006, focus on approximately
20 core licensing partners
Agreements with leading
manufacturers to use our brand
to develop products for retailers
including:
Kids’ footwear from Elan-
Polo
Baskets and treats from
Houston Harvest
Gift books from Hylas
Publishing
Craft books from Silver
Dolphin Publishing
Greeting cards and
stationery from Peaceable
Kingdom Press
Develop New Experiential Retail Concepts
2004 Chain Store Age design competition:
Retail Store of the Year: Exterior (Mall)
The Mall at Robinson, Pittsburgh, PA
Page 21
Leverage core competencies in entertainment and family-oriented retailing
Expect to open approx. 5 friends 2B made® stores in 2006
Build-A-Dino™ located within the T-Rex™ Cafe at The Legends at Village West,
Kansas City to open this summer
Where Best Friendosaurs Are Made™
Sales/Expense Leverage
Powerful Store
Financial Model
Expense
Leverage/ Comp
Stores
New Stores
New
Initiatives
UK/Ireland
Page 22
Leverage Corporate and
Operating Expenses Over
Larger Store Base; Grow
comp store sales
(1)Stores are considered comparable beginning in their thirteenth full month of
operations. Comparable store sales
percentage changes are based on net retail
sales at comparable stores, which exclude the web store and seasonal and event-
based locations.
STATEGIC INITIATIVES
--UK acquisition integration
--Ohio distribution center
Page 23
UK Acquisition
Expect to rebrand and convert approximately 25
Bear Factory stores.
Five stores converted so far; store conversion
process began in May; expect to complete in time
for 2006 holiday season
During conversion process, stores being converted
are closed for approx. 22 days
Bulk of store conversions in second and third
quarters
Dilution to earnings primarily weighted in the
second and third quarters due to expenses and
loss of revenue from store closures primarily in
these periods
Page 24
The Bear Factory Before…
And Now….The Oracle, Reading, England
Leveraging Merchandise Development
and Marketing
Expertise
Ohio Distribution Center
Operational in September 2006 – construction, systems development
remain on schedule
Key personnel in place – warehouse manager and warehouse systems
administrator
Benefits include – increased speed to market,
improved inventory control
and enhanced operating efficiencies
Building block for future growth of Build-A-Bear Workshop®
and friends 2B
made®
Page 28
Marketing
Page 29
Marketing
Improved Sales, Brand Awareness,
and Profits
Web
Marketing
Strategy
TV
Advertising
Direct
Mail &
E mail
Page 30
Partners
Store
Events
PR
Mobile
Tourism
Highly Profitable and Growing
Retail-Entertainment Brand
Creative Merchandise
AND ‘Hands-On’
Experience
Numerous Growth
Opportunities
Powerful
Marketing
Loyal and Connected
Customers
Experienced and
Talented
Management Team
Broad Demographic
Appeal
Highly Productive
and Profitable Store
Model
Page 33
Proven and Scaleable
Technology
Infrastructure
Questions
Exhibit 99.2
FOR IMMEDIATE RELEASE
Contact:
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Investors: |
Molly Salky, 314.423.8000 x5353 |
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Media: |
Jill Saunders, 314.423.8000 x5293 | ||
BUILD-A-BEAR WORKSHOP, INC. PRESENTS
AT CREDIT SUISSE CONSUMER AND RETAIL CONFERENCE
ST. LOUIS – June 13, 2006 – Build-A-Bear Workshop, Inc. (NYSE: BBW), an interactive, entertainment retailer of customized stuffed animals, today participated in the Credit Suisse Consumer and Retail investor conference. Maxine Clark, the company’s chairman and chief executive bear, Barry Erdos, president and chief operating officer bear, and Tina Klocke, chief financial bear attended the conference.
During the company’s prepared remarks management provided an update regarding the Company’s U.K. acquisition integration.
“We continue to be pleased with our U.K. acquisition integration progress, which is moving ahead on schedule. Thanks to a great team of associates in the U.K., we completed the conversion of our fifth store yesterday, at Grosvenor Centre in Chester, England, and expect to complete all store conversions in time for the 2006 holiday season,” said Maxine Clark. “We also continue to believe that our previously announced target of a $0.10 to $0.13 per share dilution from costs associated with the acquisition and integration remains on track. Because of the progress we are making, and because we are expensing our costs as they are incurred, the bulk of the dilution will take place in the second and third quarters, with accretion expected in our fourth quarter.”
Barry Erdos added, “The U.K. acquisition impacts primarily reflect costs associated with rebranding, store conversion, and integration of The Bear Factory stores, as well as, a reduction in franchise fee revenue and lower interest income. The Company expects to rebrand and convert approximately 25 Bear Factory stores. The store conversion process began in May; during the conversion process, stores being converted are closed for approximately 22 days. The dilution to earnings is primarily weighted in the second and third quarter due to the expenses and loss of revenue of store closures and conversions occurring in these quarters.”
On April 3, 2006, the company announced that it had completed the acquisition of The Bear Factory Limited, a United Kingdom-based stuffed animal retailer, and the acquisition of Amsbra, Ltd., its franchisee in the U.K.
The acquisition includes 29 Bear Factory stores, 28 in the U.K. and one in Ireland, and 11 Amsbra stores. The Company expects to close approximately four of these stores – two which are overlapping store locations in the Amsbra and Bear Factory portfolios and two which are
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Build-A-Bear Workshop® Presentation at Credit Suisse Conference |
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concessions within department stores. The Company anticipates opening three to five new Build-A-Bear Workshop stores in the U.K. in 2006. The Company further expects the acquisition to be accretive to earnings per share in fiscal 2007.
Company Presentation Webcast at the Credit Suisse Consumer and Retail Conference
The Build-A-Bear Workshop presentation on June 13 at 11:30 a.m. EDT is available via live webcast at http://ir.buildabear.com. Following the live discussion, a replay of the webcast will be available for three months.
About Build-A-Bear Workshop, Inc.
Build-A-Bear Workshop, Inc. is the only global company that offers an interactive make-your-own stuffed animal retail-entertainment experience. Founded in St. Louis in 1997, the company currently operates more than 240 stores in the United States, Canada and the United Kingdom. The addition of franchise stores in Europe, Asia and Australia make Build-A-Bear Workshop the leader in interactive retail. In November 2004, the company expanded the make-your-own concept from stuffed animals to dolls with the opening of its first friends 2B made® stores, where Guests can make their own doll friends. In April 2006, Build-A-Bear Workshop acquired The Bear Factory Limited and Amsbra, Ltd. adding company-owned stores in the United Kingdom and Ireland. Build-A-Bear Workshop (NYSE: BBW) posted total revenue of $362 million in fiscal 2005. For more information, call 888.560.BEAR (2327) or visit the company’s award-winning Web sites at www.buildabear.com and www.friends2bmade.com.
Forward-Looking Statements
This press release contains "forward-looking statements" (within the meaning of the federal securities laws) which represent the Build-A-Bear Workshop’s expectations or beliefs with respect to future events. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Those factors include, without limitation: we may not realize some of the expected benefits of the acquisition of Amsbra and The Bear Factory; we may be unable to generate comparable store sales growth; our marketing initiatives may not generate sufficient brand awareness and sales; we may be unable to effectively manage our international franchises or comply with changing laws relating thereto; we may be unable to generate demand for our retail experience, or to respond to consumer preferences; customer mall traffic may decrease, as a result of various factors, including a reduction of consumer confidence because of terrorism or war; general economic conditions may worsen; our market share could be adversely affected by competitors; we may lose key personnel, or be unable to hire qualified additional personnel; vendor deliveries may be disrupted; the availability and costs of our products could be impacted by international manufacturing and trade issues; our warehousing and distribution vendors may perform poorly; we may fail to protect our intellectual property and may have infringement, misappropriation or other disputes or litigation with third parties; we may be unable to open new stores, renew or replace our store leases, enter into leases for new stores on favorable terms, or continue to comply with our current leases; we may experience communications or information systems failures; we may suffer negative publicity or be sued due to alleged violations of labor laws, employee regulations or unethical practices, either by the Company or its merchandise manufacturers; and we may violate or be accused of violating privacy or security laws by reason of improperly obtaining or failing to adequately protect Guest information. These and other applicable risks, cautionary statements and factors that could cause actual results to differ from
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Build-A-Bear Workshop® Presentation at Credit Suisse Conference |
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the Company's forward-looking statements are included in the Company's filings with the SEC, including as described in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2005. The Company undertakes no obligation to update or revise any forward- looking statements to reflect subsequent events or circumstances even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
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