Build-A-Bear Workshop, Inc. (BBW) | Investment Case

1. Company Snapshot

1.a. Company Description

Build-A-Bear Workshop, Inc.operates as a multi-channel retailer of plush animals and related products.The company operates through three segments: Direct-to-Consumer, Commercial, and International Franchising.

Its merchandise comprises various styles of plush products to be stuffed, pre-stuffed plush products, and sounds and scents that can be added to the stuffed animals, as well as range of clothing, shoes, accessories, and other toy and novelty items.The company operates its stores under the Build-A-Bear Workshop brand name; and sells its products through its e-commerce sites.As of January 29, 2022, it operated 346 stores, including 305 stores in the United States and Canada; and 41 stores in the United Kingdom and Ireland, as well as 72 franchised stores internationally.

The company was founded in 1997 and is headquartered in St. Louis, Missouri.

Show Full description

1.b. Last Insights on BBW

Here is a 90-word analysis of the positive drivers behind Build-A-Bear Workshop's recent performance: Build-A-Bear Workshop's strong Q3 2024 results, with revenue growth of 10.19% year-over-year and 6.25% quarter-over-quarter, drove operating margins and net margins higher to 10.92% and 8.40%, respectively. The company's asset-light shift, new partner stores, and international expansion are key growth drivers. Its debt-free balance sheet and aggressive share buybacks also support its attractiveness as a long-term dividend stock. With a focus on evolving its business, accelerating digital transformation, and returning capital to shareholders, Build-A-Bear Workshop is well-positioned for continued revenue expansion and growth.

1.c. Company Highlights

Last Price	48.48
Change Percentage	-15.54%
Open	50.28
Previous Close	57.4
Market Cap ( Millions)	640
Volume	1491692
Year High	75.85
Year Low	32.55
M A 50	55.84
M A 200	49.74

FCF Yield	7.30%
Dividend Yield	1.82%
ROE	38.73%
Debt / Equity	78.49%
Net Debt / EBIDTA	108.02%
Price To Book	4.19
Price Earnings Ratio	10.97
Price To FCF	13.7
Price To sales	1.22
EV / EBITDA	8.73

2. Build-A-Bear Workshop Beats Earnings Estimates

Build-A-Bear Workshop reported Q2 EPS of $0.94, exceeded estimates of $0.67. Revenue increased 11% to $124.2 million, driven by retail expansion and digital EBITDA margin reached 17%, up from 19 levels. Gross margin was 57.6%, with SG&A at 45.4% of revenue. The company returned $13 million over $13 million million to shareholders.

Publication Date: Sep -05

                                    📋 Highlights
                                    Record Financial Performance::
                                                Q2 revenue rose 11% to $124.2M, pretax income up 33% to $15.3M, EPS increased 47% to $0.94; first-half revenue $252M (+11%), pretax income $35M (+31%), EPS $2.11 (+45%).
Strategic Retail Expansion::
                                                Opened 14 new stores (86% international), entering Georgia, Uzbekistan, and others; guidance raised to 60 new units in 2025, with 25% partner-operated locations now.
Brand & Digital Growth::
                                                Triple-digit growth in fruit stand collection, 80% YoY revenue surge for mini beans; Halloween 2025 sales led by Pumpkin Kitty and zombie axolotl, with plans for Wicked sequel and holiday releases.
Margin & Guidance::
                                                Gross margin hit 57.6% (+340 bps), EBITDA margin at 17%; 2025 guidance updated to mid-single-digit revenue growth and $62–$70M pretax income, with tariffs projected to cost <$11M net.
Strong Balance Sheet::
                                                $39.1M cash, $81.8M inventory, $80M remaining share repurchase authorization, and no debt amid $1M tariff impact in Q2.

                                

Valuation Metrics

With a P/E ratio of 14.3 and an ROE of 4141.44%, the stock appears reasonably valued. The P/B ratio stands at 5.45, and the EV/EBITDA is 10.25. ROIC is 22.23%, indicating efficient capital allocation.

Strategic Pillars</h6 Build-A-Bear Workshop is focused on retail expansion, digital transformation, and brand investments. The company company's 14 new locations were opened, with 86% in international markets. partner-operated stores now comprise 25% of total locations. The company raised guidance for new unit growth to 60 from 50. Digital initiatives drove triple-digit growth for the fruit stand collection Digital initiatives drove growth, including a 80% YoY surge for mini beans. <h6>Financial Tariff Impact

Tariffs are expected to cost under $11 million in 2025, with $1 million impacting Q2. The company maintains a strong balance sheet with $39.1 million cash and no debt. Guidance was raised for 2025, with revenue growth expected in the mid-single digits and pretax income between $62 million and $70 million.

3. NewsRoom

Why Build-A-Bear Stock Dropped Today

00:30

Source: fool.com

Build-A-Bear Workshop, Inc. (BBW) Q3 2026 Earnings Call Transcript

Dec -04

Source: seekingalpha.com

Jobless Claims Puzzlingly Light, Lowest in 3 Years

Dec -04

Source: zacks.com

Build-A-Bear x Hello Kitty and Friends Workshop Expands Nationally with New Locations at American Dream and Mall of America

Dec -04

Source: prnewswire.com

Build-A-Bear (BBW) Q3 Earnings Surpass Estimates

Dec -04

Source: zacks.com

Build-A-Bear Workshop Reports Third Quarter Fiscal 2025 Results and Reaffirms Annual Guidance

Dec -04

Source: businesswire.com

Build-A-Bear Workshop: A Niche Retail Play Worth Buying

Dec -01

Source: seekingalpha.com

Build-A-Bear Workshop: Why I Want To Build-A-Position In It

Dec -01

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.89%)

6. Segments

Direct-to-Consumer

Expected Growth: 5%

Build-A-Bear Workshop's Direct-to-Consumer segment growth is driven by e-commerce expansion, personalized and interactive online experiences, strategic partnerships, and targeted marketing efforts. Additionally, the company's focus on digital transformation, improved user experience, and omnichannel integration have contributed to the 5% growth.

Commercial

Expected Growth: 3%

Build-A-Bear Workshop's 3% growth is driven by increasing brand awareness, strategic partnerships, and omnichannel expansion. The company's focus on experiential retail, loyalty programs, and personalized products also contributes to growth. Additionally, the company's efforts to optimize store operations, improve supply chain efficiency, and invest in digital marketing have helped to drive sales and revenue.

International Franchising

Expected Growth: 4%

Build-A-Bear Workshop's international franchising growth is driven by increasing demand for personalized retail experiences, expansion into underserved markets, strategic partnerships, and a strong brand reputation. Additionally, the company's flexible business model, which allows for easy adaptation to local markets, contributes to its success.

7. Detailed Products

Build-Your-Own Stuffed Animals

Customizable stuffed animals that can be personalized with various outfits, accessories, and sounds

Licensed Characters

Stuffed animals and accessories featuring popular licensed characters from franchises like Disney, Pixar, and more

Fashion and Accessories

Outfits, shoes, hats, and other accessories for stuffed animals

Sound Chips and Record Your Voice

Sound chips that can be inserted into stuffed animals, allowing children to record and play back their own voices

Gift Cards and Packages

Gift cards and packages that include a stuffed animal, outfit, and accessories

Parties and Events

In-store parties and events where children can build and customize their own stuffed animals

8. Build-A-Bear Workshop, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes is low for Build-A-Bear Workshop, Inc. because the company offers a unique and personalized experience that is difficult to replicate. While there are other toy retailers, the ability to build and customize a stuffed animal is a distinctive feature that sets Build-A-Bear apart.

Bargaining Power Of Customers

The bargaining power of customers is medium for Build-A-Bear Workshop, Inc. because while customers have some flexibility to negotiate prices, the company's unique products and experiences limit the ability to switch to competitors.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low for Build-A-Bear Workshop, Inc. because the company has a diverse supplier base and is not heavily reliant on a single supplier. This reduces the negotiating power of suppliers.

Threat Of New Entrants

The threat of new entrants is medium for Build-A-Bear Workshop, Inc. because while there are barriers to entry, such as the need for significant capital investment, the company's business model is not highly complex and could be replicated by a new entrant.

Intensity Of Rivalry

The intensity of rivalry is high for Build-A-Bear Workshop, Inc. because the company operates in a competitive retail environment with many established players. The company must continually innovate and differentiate itself to maintain market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	39.19%
Debt Cost	3.95%
Equity Weight	60.81%
Equity Cost	12.35%
WACC	9.05%
Leverage	64.45%

11. Quality Control: Build-A-Bear Workshop, Inc. passed 6 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Winmark

A-Score: 6.3/10

Value: 2.8

Growth: 5.0

Quality: 8.4

Yield: 6.0

Momentum: 9.0

Volatility: 6.3

1-Year Total Return ->

Build-A-Bear Workshop

A-Score: 6.1/10

Value: 5.1

Growth: 6.9

Quality: 7.0

Yield: 5.0

Momentum: 10.0

Volatility: 2.7

1-Year Total Return ->

Tandy Leather Factory

A-Score: 5.1/10

Value: 9.3

Growth: 3.8

Quality: 6.8

Yield: 5.0

Momentum: 0.5

Volatility: 5.3

1-Year Total Return ->

Liquidity Services

A-Score: 4.9/10

Value: 3.8

Growth: 6.1

Quality: 6.8

Yield: 0.0

Momentum: 7.5

Volatility: 5.0

1-Year Total Return ->

1stdibs

A-Score: 3.9/10

Value: 8.4

Growth: 4.7

Quality: 5.2

Yield: 0.0

Momentum: 1.0

Volatility: 4.0

1-Year Total Return ->

A.K.A. Brands

A-Score: 2.3/10

Value: 7.2

Growth: 3.4

Quality: 2.2

Yield: 0.0

Momentum: 0.5

Volatility: 0.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

5.10%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.05%

Build-A-Bear Workshop, Inc. - US1200761047

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on BBW

1.c. Company Highlights

Better Quality

Higher Growth

Strong Momentum

Earnings Beats

Earnings Miss

Higher Yield

Revenues Miss

Average Yield

Revenues Beats

Average Growth

2. Build-A-Bear Workshop Beats Earnings Estimates

Valuation Metrics

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.89%)

6. Segments

Direct-to-Consumer

Expected Growth: 5%

Commercial

Expected Growth: 3%

International Franchising

Expected Growth: 4%

7. Detailed Products

Build-Your-Own Stuffed Animals

Licensed Characters

Fashion and Accessories

Sound Chips and Record Your Voice

Gift Cards and Packages

Parties and Events

8. Build-A-Bear Workshop, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Build-A-Bear Workshop, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

48.48$

Current Price

48.48$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA