Build-A-Bear Workshop, Inc. reported a decline in financial performance for the second quarter of fiscal 2026, with total revenues of $115.3 million, down 7.2% from $124.2 million in the same period last year. The decrease was primarily attributed to a $8.1 million drop in net retail sales, which fell to $106.5 million from $114.6 million, alongside a slight decline in commercial and international franchising revenues. The company noted that lower sales at existing stores and decreased e-commerce demand were significant factors in this downturn, despite some offset from new store openings.
In terms of profitability, net income for the quarter was $8.8 million, a decrease from $12.4 million in the prior year, resulting in a diluted earnings per share of $0.70 compared to $0.94. The gross profit margin also contracted, with retail gross margin dollars decreasing to $57.6 million from $66.1 million, reflecting increased promotional activity and occupancy cost deleverage. Selling, general, and administrative expenses were reduced to $51.4 million, or 44.6% of total revenue, down from 45.4% in the previous year, primarily due to lower incentive compensation.
Operationally, Build-A-Bear continued to expand its footprint, ending the quarter with 674 global locations, including 379 corporately-managed stores and 118 international franchise locations. The company achieved net new unit growth of 12 experience locations year-to-date, with a focus on international expansion through its asset-light partner-operated model. The direct-to-consumer segment accounted for 92% of consolidated revenue, underscoring the importance of retail and e-commerce channels in the company's strategy.
Looking ahead, Build-A-Bear faces challenges from ongoing inflationary pressures and evolving tariffs, which could impact product costs and consumer spending. The company is actively monitoring these conditions and adjusting its pricing strategies accordingly. Management remains optimistic about future growth opportunities, particularly in expanding its experiential retail locations and enhancing its digital transformation efforts to drive engagement and sales across various consumer segments. The company anticipates continued investment in capital projects, with an expected capital expenditure of approximately $25 million for fiscal 2026.
About BUILD-A-BEAR WORKSHOP INC
Build-A-Bear Workshop, Inc. is a specialty retailer offering interactive experiences where customers create personalized stuffed animals through in-store and online channels. Operating nearly 600 global locations via corporate, partner-operated, and franchise models, it serves families with children in stores and collectors and gift-givers online. The company leverages licensed brands, omnichannel retailing, and branded content to deliver personalized products and memorable experiences, supported by a vertically integrated business model.
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