Build-A-Bear Workshop Reports 11.9% Revenue Growth and Increased Net Income for Q1 2025

Build-A-Bear Workshop, Inc. reported a notable increase in financial performance for the thirteen weeks ended May 3, 2025, with total revenues reaching $128.4 million, an 11.9% rise from $114.7 million in the same period last year. The growth was primarily driven by a $11.7 million increase in net retail sales, which amounted to $119.6 million, and a $1.6 million increase in commercial revenue, totaling $7.6 million. The company's net income also saw a significant boost, rising to $15.3 million from $11.5 million, resulting in a diluted earnings per share of $1.17, compared to $0.82 in the prior year.

The company's balance sheet as of May 3, 2025, showed total assets of $308.3 million, up from $265.3 million a year earlier. Cash and cash equivalents increased to $44.3 million, compared to $38.2 million in the previous year. Inventory levels also rose to $72.3 million, reflecting a strategic decision to stock up in anticipation of potential cost increases due to tariffs. The increase in cash flow from operating activities was substantial, amounting to $27.8 million, compared to $10.4 million in the prior year, attributed to improved management of accounts receivable and increased accounts payable.

Strategically, Build-A-Bear has continued to expand its retail footprint, opening a net of 15 new locations during the first quarter of fiscal 2025, including both corporately-managed and franchise stores. The company now operates 369 corporately-managed stores, 148 partner-operated locations, and 87 international franchise stores. This expansion is part of a broader strategy to diversify store formats and locations, particularly in non-traditional settings such as tourist destinations. The company is also enhancing its digital transformation efforts, focusing on e-commerce and digital marketing to engage a wider consumer base.

Operationally, the company reported that its direct-to-consumer segment accounted for 93% of total revenues, with a significant contribution from existing stores. The retail gross margin improved to 56.8%, up from 54.2% in the previous year, driven by better merchandise margins. Selling, general, and administrative expenses increased to $53.6 million, reflecting higher wage rates and inflationary pressures. The company remains committed to returning capital to shareholders, having repurchased $4.2 million worth of shares during the quarter, while also declaring a cash dividend of $0.22 per share.

Looking ahead, Build-A-Bear Workshop aims to continue its growth trajectory by expanding its store base and enhancing its digital capabilities. The company anticipates opening at least 50 new locations in fiscal 2025 and is focused on leveraging its brand strength to attract a broader audience, including teens and adults. However, the company acknowledges potential challenges, including inflationary pressures and changing consumer preferences, which could impact future performance.