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):   May 31, 2019

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

     Delaware     

     001-32320     

     43-1883836     

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

1954 Innerbelt Business Center Drive
St. Louis, Missouri

 

63114

 

(Address of Principal Executive Offices)

 

(Zip Code)

 

         (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 May 31, 2019, Build-A-Bear Workshop, Inc. (the “Company”) issued a press release setting forth results for the Company’s 2019 fiscal first quarter.  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.

2

Item 9.01           Financial Statements and Exhibits.

(d)  Exhibits

Exhibit Number

Description of Exhibit

 
99.1 Press Release dated May 31, 2019


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.

 

BUILD-A-BEAR WORKSHOP, INC.

 
 
 
Date:

May 31, 2019

By:

/s/ Voin Todorovic

 

 

Name:

Voin Todorovic

 

 

Title:   Chief Financial Officer

3

EXHIBIT INDEX

Exhibit Number

Description of Exhibit

 

99.1

Press Release dated May 31, 2019


4

Exhibit 99.1

Build-A-Bear Workshop, Inc. Reports Increases in Total Revenues and Pre-Tax Income in First Quarter Fiscal 2019 and Reaffirms Annual Total Revenues and Pre-Tax Income Guidance

For the first quarter of fiscal 2019:

ST. LOUIS--(BUSINESS WIRE)--May 31, 2019--Build-A-Bear Workshop, Inc. (NYSE: BBW) today reported results for the first quarter, 13-weeks ended May 4, 2019.

Sharon Price John, Build-A-Bear Workshop President and Chief Executive Officer, commented, “We have had a solid start to the year with growth in total revenues, expansion in gross margin and disciplined expense management resulting in a $1.8 million increase in first quarter pre-tax income compared to the same period in the prior fiscal year. Other highlights in this year’s first quarter include a significant increase in commercial revenue as strategies to diversify revenue streams by leveraging the power of our brand continued to gain traction. We also delivered our sixth consecutive quarter of double-digit e-commerce growth as initiatives in both gifting and affinity programs gained momentum. In addition, we continue to focus on our Count Your Candles birthday program which has consistently driven new guest acquisition and Bonus Club membership. As we expected, a stronger slate of family-centric movies had a positive impact on sales of products tied to the films, and we saw traffic levels at Build-A-Bear Workshop stores outpace national trends although still slightly negative versus the prior year. Sales growth in North America was partially offset by ongoing double-digit sales declines in our largest international market, the United Kingdom, which is expected to have uncertainty throughout the year.

“Although we will be up against heavy promotional activity that occurred last year, we are encouraged by the positive trends thus far in the second quarter and expect to benefit from additional movie releases slated throughout the year. Furthermore, we are actively working to expand a number of key relationships that are expected to positively impact the business. Overall, we remain confident that the ongoing implementation of our strategy to leverage the power of the Build-A-Bear brand will result in long-term profitable growth and enhanced value for our shareholders,” concluded Ms. John.


First Quarter 2019 Highlights (13 weeks ended May 4, 2019 compared to the 13 weeks ended May 5, 2018):

Store Activity:

In the first quarter of fiscal 2019, the Company did not open any new stores, reformatted two stores and closed 5 locations. As of May 4, 2019, the Company operated 366 corporately-managed locations, including 307 in North America and 59 outside of North America. In addition, the Company ended the first quarter of fiscal 2019 with four seasonal locations compared to two seasonal locations at the end of the first quarter of fiscal 2018. The Company’s international franchisees ended the quarter with 90 stores in 12 countries.

Balance Sheet:

At quarter end, the Company had cash and cash equivalents of $20.2 million, an increase of $1.4 million compared to the prior year quarter end and had no borrowings under its revolving credit facility. Total inventory at quarter-end was $56.0 million compared to $49.4 million at the end of the fiscal 2018 first quarter due to an increase in inventory related to the timing of new movie launches as well as in-transit inventory to support new product introductions. In the first quarter of fiscal 2019, capital expenditures totaled $2.7 million and depreciation and amortization totaled $3.5 million.

On February 3, 2019, the Company recorded lease liabilities of $177.5 million upon adoption of the new lease accounting standard, also referred to as ASC Topic 842, based on the present value of remaining lease payments. A corresponding right-to-use asset of $150.8 million was recorded on the balance sheet which was net of accrued and prepaid rent, deferred lease incentives and impairment charges. Impairment charges of $7.4 million (net of tax) were recorded as a reduction to retained earnings in adopting the new standard. The recognition of rent expense and payments associated with these lease assets and liabilities will not result in material differences to operating income or cash flows compared to the previous accounting rules, nor does it impact the Company’s bank agreement covenants.


Fiscal 2019 (52 weeks ended February 1, 2020 compared to the 52 weeks ended February 2, 2019) GAAP Expectations for the Company currently include:

The Company notes that the above guidance assumes that there are no material changes to current tariff rates or policies.

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 June 7, 2019. The telephone replay is available by calling (844) 512-2921. The access code is 13691030.

About Build-A-Bear:

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 more than 450 stores worldwide where Guests can create customizable furry friends, including corporately-managed stores in the United States, Canada, China, Denmark, Ireland, Puerto Rico, and the United Kingdom, and franchise stores in Africa, Asia, Australia, Europe, Mexico and the Middle East. Build-A-Bear Workshop, Inc. (NYSE:BBW) posted total revenue of $336.6 million in fiscal 2018. 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 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 April 18, 2019 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.


       
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
 
13 Weeks 13 Weeks
Ended Ended
May 4, % of Total May 5,

% of Total

2019 Revenues (1) 2018 Revenues (1)
Revenues:
Net retail sales $ 81,048 96.0 $ 81,425 97.9
Commercial revenue 2,754 3.3 1,019 1.2
International franchising 560 0.7     740 0.9
Total revenues 84,362 100.0     83,184 100.0
Cost of merchandise sold:
Cost of merchandise sold - retail (1) 44,421 54.8 45,385 55.7
Cost of merchandise sold - commercial (1) 1,264 45.9 479 47.0
Cost of merchandise sold - international franchising (1) 439 78.4     332 44.9
Total cost of merchandise sold 46,124 54.7     46,196 55.5
Consolidated gross profit 38,238 45.3 36,988 44.5
 
Selling, general and administrative expense 35,808 42.4 36,337 43.7
Interest expense, net 20 0.0     5 0.0
Income (loss) before income taxes 2,410 2.9 646 0.8
Income tax expense 1,213 1.4  

 

292 0.4
Net income (loss) $ 1,197 1.4 $ 354 0.4
 
Income (loss) per common share:
Basic $ 0.08 $ 0.02
Diluted $ 0.08 $ 0.02
Shares used in computing common per share amounts:
Basic 14,612,575 14,582,573
Diluted 14,738,240 14,722,989
 
(1)   Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold - retail, cost of merchandise sold - commercial and cost of merchandise sold - international franchising that are expressed as a percentage of net retail sales, commercial revenue and international franchising, respectively. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales, commercial revenue or international franchising and immaterial rounding.
 

 
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(dollars in thousands, except per share data)
   
May 4, February 2, May 5,
2019 2019 2018
ASSETS
Current assets:
Cash and cash equivalents $ 20,238 $ 17,894 $ 18,881
Inventories, net 56,004 58,356 49,423
Receivables, net 8,836 10,588 8,968
Prepaid expenses and other current assets   8,587     12,960     11,493  
Total current assets 93,665 99,798 88,765
 
Operating lease right-of-use asset 145,025 - -
Property and equipment, net 65,357 66,368 76,410
Deferred tax assets 3,241 3,099 4,102
Other intangible assets, net 607 731 950
Other assets, net   2,224     2,050     2,427  
Total Assets $ 310,119   $ 172,046   $ 172,654  
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,996 $ 22,551 $ 12,965
Accrued expenses 7,608 10,047 8,739
Operating lease liability short term 29,769 - -
Gift cards and customer deposits 19,026 21,643 17,007
Deferred revenue and other   2,006     1,936     1,893  
Total current liabilities   79,405     56,177     40,604  
 
Operating lease liability long term 139,407 - -
Deferred rent liability long term - 18,440 17,697
Deferred franchise revenue 1,580 1,625 1,142
Other liabilities 1,287 1,490 1,794
 
 
Stockholders' equity:
Common stock, par value $0.01 per share 149 150 151
Additional paid-in capital 69,550 69,088 66,908
Accumulated other comprehensive loss (12,120 ) (12,018 ) (11,546 )
Retained earnings   30,861     37,094     55,904  
Total stockholders' equity   88,440     94,314     111,417  
Total Liabilities and Stockholders' Equity $ 310,119   $ 172,046   $ 172,654  
 

 
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Selected Financial and Store Data
(dollars in thousands)
   
13 Weeks 13 Weeks
Ended Ended
May 4, May 5,
2019 2018
 
Other financial data:
 
Retail gross margin ($) (1) $ 36,627 $ 36,040
Retail gross margin (%) (1) 45.2 % 44.3 %
Capital expenditures (2) $ 2,733 $ 3,030
Depreciation and amortization $ 3,512 $ 4,115
 
Store data (3):
Number of corporately-managed retail locations at end of period
North America 307 292
Europe 58 57
Asia 1   1  
Total corporately-managed retail locations 366   350  
 
Number of franchised stores at end of period 90 96
 
Corporately-managed store square footage at end of period (4)
North America 712,782 715,197
Europe 83,344 79,236
Asia 1,750   1,750  
Total square footage 797,876   796,183  
 
(1)   Retail gross margin represents net retail sales less cost of merchandise sold - retail. Retail gross margin percentage represents retail gross margin divided by net retail sales. Store impairment is excluded from retail gross margin.
(2) Capital expenditures represents cash paid for property, equipment, other assets and other intangible assets.
(3) Excludes e-commerce. North American stores are located in the United States, Canada and Puerto Rico. In Europe, stores are located in the United Kingdom, Ireland and Denmark. In Asia, the store is located in China. Seasonal locations not included in store count.
(4) Square footage for stores located in North America is leased square footage. Square footage for stores located in Europe is estimated selling square footage. Seasonal locations not included in the store count.
 

CONTACT:
Investors:
Voin Todorovic
Build-A-Bear Workshop
(314) 423-8000 x5221

Media:
PR@buildabear.com