x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 43-1883836 |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) |
1954 Innerbelt Business Center Drive St. Louis, Missouri | 63114 |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer ¨ | Accelerated filer x | |
Non-accelerated filer ¨ | Smaller reporting company ¨ | |
(Do not check if a smaller reporting company) |
Page | ||||
Part I Financial Information | ||||
Item 1. | Financial Statements (Unaudited) | |||
Consolidated Balance Sheets | 3 | |||
Consolidated Statements of Operations and Comprehensive Income | 4 | |||
Consolidated Statements of Cash Flows | 5 | |||
Notes to Consolidated Financial Statements | 6 | |||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |||
Item 4. | Controls and Procedures | |||
Part II Other Information | ||||
Item 1A. | Risk Factors | |||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||
Item 6. | Exhibits | |||
Signatures |
March 31, 2012 | December 31, 2011 | April 2, 2011 | June 30, 2012 | December 31, 2011 | July 2, 2011 | |||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||
ASSETS | ASSETS | |||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 33,501 | $ | 46,367 | $ | 45,124 | $ | 26,450 | $ | 46,367 | $ | 34,742 | ||||||||||||
Inventories | 45,584 | 51,860 | 39,492 | 47,029 | 51,860 | 46,156 | ||||||||||||||||||
Receivables | 4,170 | 7,878 | 3,503 | 4,935 | 7,878 | 4,606 | ||||||||||||||||||
Prepaid expenses and other current assets | 15,926 | 17,854 | 19,128 | 13,604 | 17,854 | 22,580 | ||||||||||||||||||
Deferred tax assets | 480 | 419 | 7,539 | 469 | 419 | 7,585 | ||||||||||||||||||
Total current assets | 99,661 | 124,378 | 114,786 | 92,487 | 124,378 | 115,669 | ||||||||||||||||||
Property and equipment, net of accumulated depreciation of $179,357, $175,018 and $168,978, respectively | 74,771 | 77,445 | 83,461 | |||||||||||||||||||||
Property and equipment, net of accumulated depreciation of $181,892, $175,018 and $173,418, respectively | 73,518 | 77,445 | 81,225 | |||||||||||||||||||||
Goodwill | 33,423 | 32,306 | 33,561 | 32,643 | 32,306 | 33,542 | ||||||||||||||||||
Other intangible assets, net | 728 | 655 | 1,264 | 595 | 655 | 1,043 | ||||||||||||||||||
Other assets, net | 6,929 | 6,787 | 14,462 | 6,704 | 6,787 | 15,070 | ||||||||||||||||||
Total Assets | $ | 215,512 | $ | 241,571 | $ | 247,534 | $ | 205,947 | $ | 241,571 | $ | 246,549 | ||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Accounts payable | $ | 22,741 | $ | 41,032 | $ | 25,103 | $ | 24,253 | $ | 41,032 | $ | 33,280 | ||||||||||||
Accrued expenses | 7,296 | 12,128 | 6,363 | 7,227 | 12,128 | 6,818 | ||||||||||||||||||
Gift cards and customer deposits | 25,221 | 28,323 | 24,291 | 22,848 | 28,323 | 23,487 | ||||||||||||||||||
Deferred revenue | 5,431 | 5,285 | 6,761 | 5,568 | 5,285 | 6,852 | ||||||||||||||||||
Total current liabilities | 60,689 | 86,768 | 62,518 | 59,896 | 86,768 | 70,437 | ||||||||||||||||||
Deferred franchise revenue | 1,368 | 1,436 | 1,639 | 1,301 | 1,436 | 1,571 | ||||||||||||||||||
Deferred rent | 22,728 | 23,867 | 27,387 | 22,075 | 23,867 | 26,606 | ||||||||||||||||||
Other liabilities | 257 | 257 | 344 | 257 | 257 | 375 | ||||||||||||||||||
Stockholders' equity: | ||||||||||||||||||||||||
Preferred stock, par value $0.01, Shares authorized: 15,000,000; No shares issued or outstanding at March 31, 2012, December 31, 2011 and April 2, 2011 | - | - | - | |||||||||||||||||||||
Common stock, par value $0.01, Shares authorized: 50,000,000; Issued and outstanding: 17,394,761, 17,405,270 and 19,600,470 shares, respectively | 174 | 174 | 196 | |||||||||||||||||||||
Preferred stock, par value $0.01, Shares authorized: 15,000,000; No shares issued or outstanding at June 30, 2012, December 31, 2011 and July 2, 2011 | - | - | - | |||||||||||||||||||||
Common stock, par value $0.01, Shares authorized: 50,000,000; Issued and outstanding: 17,386,393, 17,405,270 and 19,198,941 shares, respectively | 174 | 174 | 192 | |||||||||||||||||||||
Additional paid-in capital | 65,168 | 65,402 | 74,409 | 66,060 | 65,402 | 72,979 | ||||||||||||||||||
Accumulated other comprehensive loss | (7,689 | ) | (10,165 | ) | (7,602 | ) | (9,082 | ) | (10,165 | ) | (7,580 | ) | ||||||||||||
Retained earnings | 72,817 | 73,832 | 88,643 | 65,266 | 73,832 | 81,969 | ||||||||||||||||||
Total stockholders' equity | 130,470 | 129,243 | 155,646 | 122,418 | 129,243 | 147,560 | ||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 215,512 | $ | 241,571 | $ | 247,534 | $ | 205,947 | $ | 241,571 | $ | 246,549 |
Thirteen weeks ended | Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||||||||||
March 31, 2012 | April 2, 2011 | June 30, 2012 | July 2, 2011 | June 30, 2012 | July 2, 2011 | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net retail sales | $ | 95,200 | $ | 94,159 | $ | 78,989 | $ | 80,391 | $ | 174,189 | $ | 174,550 | ||||||||||||
Commercial revenue | 376 | 1,106 | 705 | 736 | 1,081 | 1,841 | ||||||||||||||||||
Franchise fees | 797 | 726 | 716 | 714 | 1,513 | 1,440 | ||||||||||||||||||
Total revenues | 96,373 | 95,991 | 80,410 | 81,841 | 176,783 | 177,831 | ||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||
Cost of merchandise sold | 57,466 | 58,225 | 51,704 | 51,926 | 109,170 | 110,151 | ||||||||||||||||||
Selling, general and administrative | 40,126 | 41,312 | 37,075 | 40,685 | 77,201 | 81,996 | ||||||||||||||||||
Interest expense (income), net | (86 | ) | 103 | (63 | ) | (105 | ) | (149 | ) | (1 | ) | |||||||||||||
Total costs and expenses | 97,506 | 99,640 | 88,716 | 92,506 | 186,222 | 192,146 | ||||||||||||||||||
Loss before income taxes | (1,133 | ) | (3,649 | ) | (8,306 | ) | (10,665 | ) | (9,439 | ) | (14,315 | ) | ||||||||||||
Income tax benefit | (116 | ) | (1,398 | ) | (755 | ) | (3,990 | ) | (871 | ) | (5,388 | ) | ||||||||||||
Net loss | $ | (1,017 | ) | $ | (2,251 | ) | $ | (7,551 | ) | $ | (6,675 | ) | $ | (8,568 | ) | $ | (8,927 | ) | ||||||
Loss per common share: | ||||||||||||||||||||||||
Basic | $ | (0.06 | ) | $ | (0.12 | ) | $ | (0.46 | ) | $ | (0.37 | ) | $ | (0.53 | ) | $ | (0.50 | ) | ||||||
Diluted | $ | (0.06 | ) | $ | (0.12 | ) | $ | (0.46 | ) | $ | (0.37 | ) | $ | (0.53 | ) | $ | (0.50 | ) | ||||||
Shares used in computing common per share amounts: | Shares used in computing common per share amounts: | Shares used in computing common per share amounts: | ||||||||||||||||||||||
Basic | 16,038,880 | 18,090,245 | 16,458,889 | 17,839,349 | 16,248,884 | 17,964,763 | ||||||||||||||||||
Diluted | 16,038,880 | 18,090,245 | 16,458,889 | 17,839,349 | 16,248,884 | 17,964,763 | ||||||||||||||||||
Comprehensive income | $ | 1,459 | $ | 106 | $ | (8,944 | ) | $ | (6,653 | ) | $ | (7,485 | ) | $ | (6,547 | ) |
Twenty-six weeks ended | ||||||||||||||||
Thirteen weeks ended | June 30, 2012 | July 2, 2011 | ||||||||||||||
March 31, 2012 | April 2, 2011 | |||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net loss | $ | (1,017 | ) | $ | (2,251 | ) | $ | (8,568 | ) | $ | (8,927 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
Depreciation and amortization | 5,362 | 6,524 | 10,636 | 12,730 | ||||||||||||
Stock-based compensation | 2,013 | 2,389 | ||||||||||||||
Deferred taxes | (83 | ) | 392 | (740 | ) | 294 | ||||||||||
Loss from investment in affiliate | 475 | - | 475 | - | ||||||||||||
Excess tax benefit from share-based payments | - | (297 | ) | |||||||||||||
Impairment of store assets | 191 | - | ||||||||||||||
Trade credit utilization | 198 | 151 | ||||||||||||||
Loss on disposal of property and equipment | 78 | 119 | 352 | 310 | ||||||||||||
Stock-based compensation | 1,121 | 1,255 | ||||||||||||||
Trade credit utilization | 88 | - | ||||||||||||||
Change in assets and liabilities: | ||||||||||||||||
Inventories | 6,502 | 7,220 | 4,889 | 540 | ||||||||||||
Receivables | 3,732 | 4,465 | 2,959 | 3,350 | ||||||||||||
Prepaid expenses and other assets | 1,926 | (873 | ) | 1,479 | (4,078 | ) | ||||||||||
Accounts payable and accrued expenses | (23,257 | ) | (20,433 | ) | (21,677 | ) | (11,824 | ) | ||||||||
Lease related liabilities | (1,221 | ) | (1,330 | ) | ||||||||||||
Gift cards and customer deposits | (3,167 | ) | (4,726 | ) | (1,820 | ) | (5,462 | ) | ||||||||
Deferred revenue | 79 | 82 | 149 | 37 | ||||||||||||
Lease related liabilities | (5,506 | ) | (2,100 | ) | ||||||||||||
Net cash used in operating activities | (9,382 | ) | (9,556 | ) | (14,970 | ) | (12,887 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of property and equipment, net | (3,518 | ) | (2,229 | ) | ||||||||||||
Purchases of property and equipment | (8,011 | ) | (5,998 | ) | ||||||||||||
Purchases of other assets and other intangible assets | (261 | ) | (93 | ) | (293 | ) | (139 | ) | ||||||||
Purchases of short term investments | - | (3,115 | ) | |||||||||||||
Proceeds from sale or maturitiy of short term investments | 2,647 | 2,076 | ||||||||||||||
Investment in unconsolidated affiliate | (475 | ) | - | (475 | ) | - | ||||||||||
Net cash used in investing activities | (4,254 | ) | (2,322 | ) | ||||||||||||
Cash used in investing activities | (6,132 | ) | (7,176 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||
Exercise of employee stock options and employee stock purchases | - | 56 | ||||||||||||||
Excess tax benefit from share-based payments | - | 297 | ||||||||||||||
Purchases of Company's common stock | - | (2,464 | ) | - | (5,073 | ) | ||||||||||
Exercise of employee stock options | - | 3 | ||||||||||||||
Net cash used in financing activities | - | (2,461 | ) | |||||||||||||
Cash used in financing activities | - | (4,720 | ) | |||||||||||||
Effect of exchange rates on cash | 770 | 708 | 1,185 | 770 | ||||||||||||
Net decrease in cash and cash equivalents | (12,866 | ) | (13,631 | ) | (19,917 | ) | (24,013 | ) | ||||||||
Cash and cash equivalents, beginning of period | 46,367 | 58,755 | 46,367 | 58,755 | ||||||||||||
Cash and cash equivalents, end of period | $ | 33,501 | $ | 45,124 | $ | 26,450 | $ | 34,742 |
March 31, 2012 | December 31, 2011 | April 2, 2011 | June 30, 2012 | December 31, 2011 | July 2, 2011 | |||||||||||||||||||
Prepaid rent | $ | 8,014 | $ | 7,745 | $ | 7,914 | $ | 8,038 | $ | 7,745 | $ | 8,016 | ||||||||||||
Prepaid income taxes | 282 | 1,970 | 2,908 | 692 | 1,970 | 6,732 | ||||||||||||||||||
Short-term investments | 2,697 | 2,619 | 2,834 | - | 2,619 | 2,901 | ||||||||||||||||||
Other | 4,933 | 5,520 | 5,472 | 4,874 | 5,520 | 4,931 | ||||||||||||||||||
$ | 15,926 | $ | 17,854 | $ | 19,128 | $ | 13,604 | $ | 17,854 | $ | 22,580 |
Balance as of December 31, 2011 | $ | 32,306 | $ | 32,306 | ||||
Effect of foreign currency translation | 1,117 | 337 | ||||||
Balance as of March 31, 2012 | $ | 33,423 | ||||||
Balance as of June 30, 2012 | $ | 32,643 |
Restricted Stock | Options | Restricted Stock | Options | |||||||||||||
Outstanding, December 31, 2011 | 1,438,131 | 1,210,816 | 1,438,131 | 1,210,816 | ||||||||||||
Granted | 253,608 | 228 | 274,088 | 228 | ||||||||||||
Vested | (733,810 | ) | — | (744,672 | ) | — | ||||||||||
Exercised | — | — | — | — | ||||||||||||
Forfeited | (15,582 | ) | (7,440 | ) | (44,164 | ) | (26,855 | ) | ||||||||
Canceled or expired | — | — | — | — | ||||||||||||
Outstanding, March 31, 2012 | 942,347 | 1,203,604 | ||||||||||||||
Outstanding, June 30, 2012 | 923,383 | 1,184,189 |
Thirteen weeks ended | Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||||||||||
March 31, 2012 | April 2, 2011 | June 30, 2012 | July 2, 2011 | June 30, 2012 | July 2, 2011 | |||||||||||||||||||
NUMERATOR: | ||||||||||||||||||||||||
Net loss before allocation of earnings to participating securities | $ | (1,017 | ) | $ | (2,251 | ) | $ | (7,551 | ) | $ | (6,675 | ) | $ | (8,568 | ) | $ | (8,927 | ) | ||||||
Less: Earnings allocated to participating securities | - | - | - | - | - | - | ||||||||||||||||||
Net loss after allocation of earnings to participating securities | $ | (1,017 | ) | $ | (2,251 | ) | $ | (7,551 | ) | $ | (6,675 | ) | $ | (8,568 | ) | $ | (8,927 | ) | ||||||
DENOMINATOR: | ||||||||||||||||||||||||
Weighted average number of common shares outstanding - basic | 16,038,880 | 18,090,245 | 16,458,889 | 17,839,349 | 16,248,884 | 17,964,763 | ||||||||||||||||||
Dilutive effect of share-based awards: | - | - | - | - | - | - | ||||||||||||||||||
Weighted average number of common shares outstanding - dilutive | 16,038,880 | 18,090,245 | 16,458,889 | 17,839,349 | 16,248,884 | 17,964,763 | ||||||||||||||||||
Basic loss per common share attributable to Build-A-Bear Workshop, Inc. stockholders: | $ | (0.06 | ) | $ | (0.12 | ) | $ | (0.46 | ) | $ | (0.37 | ) | $ | (0.53 | ) | $ | (0.50 | ) | ||||||
Diluted loss per common share attributable to Build-A-Bear Workshop, Inc. stockholders | $ | (0.06 | ) | $ | (0.12 | ) | $ | (0.46 | ) | $ | (0.37 | ) | $ | (0.53 | ) | $ | (0.50 | ) |
Retail | Commercial | International Franchising | Total | Retail | Commercial | International Franchising | Total | |||||||||||||||||||||||||
Thirteen weeks ended March 31, 2012 | ||||||||||||||||||||||||||||||||
Thirteen weeks ended June 30, 2012 | ||||||||||||||||||||||||||||||||
Net sales to external customers | $ | 95,200 | $ | 376 | $ | 797 | $ | 96,373 | $ | 78,989 | $ | 705 | $ | 716 | $ | 80,410 | ||||||||||||||||
Income (loss) before income taxes | (1,465 | ) | (79 | ) | 411 | (1,133 | ) | (8,973 | ) | 314 | 353 | (8,306 | ) | |||||||||||||||||||
Capital expenditures, net | 3,764 | - | 15 | 3,779 | 4,492 | - | 33 | 4,525 | ||||||||||||||||||||||||
Depreciation and amortization | 5,319 | - | 43 | 5,362 | 5,228 | - | 45 | 5,273 | ||||||||||||||||||||||||
Thirteen weeks ended April 2, 2011 | ||||||||||||||||||||||||||||||||
Thirteen weeks ended July 2, 2011 | ||||||||||||||||||||||||||||||||
Net sales to external customers | $ | 80,391 | $ | 736 | $ | 714 | $ | 81,841 | ||||||||||||||||||||||||
Income (loss) before income taxes | (11,435 | ) | 401 | 369 | (10,665 | ) | ||||||||||||||||||||||||||
Capital expenditures, net | 3,786 | - | 29 | 3,815 | ||||||||||||||||||||||||||||
Depreciation and amortization | 6,136 | - | 70 | 6,206 | ||||||||||||||||||||||||||||
Twenty-six weeks ended June 30, 2012 | ||||||||||||||||||||||||||||||||
Net sales to external customers | $ | 174,189 | $ | 1,081 | $ | 1,513 | $ | 176,783 | ||||||||||||||||||||||||
Income (loss) before income taxes | (10,438 | ) | 235 | 764 | (9,439 | ) | ||||||||||||||||||||||||||
Capital expenditures, net | 8,257 | - | 47 | 8,304 | ||||||||||||||||||||||||||||
Depreciation and amortization | 10,547 | - | 89 | 10,636 | ||||||||||||||||||||||||||||
Twenty-six weeks ended July 2, 2011 | ||||||||||||||||||||||||||||||||
Net sales to external customers | $ | 94,159 | $ | 1,106 | $ | 726 | $ | 95,991 | $ | 174,550 | $ | 1,841 | $ | 1,440 | $ | 177,831 | ||||||||||||||||
Income (loss) before income taxes | (4,384 | ) | 410 | 325 | (3,649 | ) | (15,820 | ) | 811 | 694 | (14,315 | ) | ||||||||||||||||||||
Capital expenditures, net | 2,288 | - | 34 | 2,322 | 6,074 | - | 63 | 6,137 | ||||||||||||||||||||||||
Depreciation and amortization | 6,468 | - | 56 | 6,524 | 12,604 | - | 126 | 12,730 | ||||||||||||||||||||||||
Total Assets as of: | ||||||||||||||||||||||||||||||||
March 31, 2012 | $ | 203,491 | $ | 9,522 | $ | 2,499 | $ | 215,512 | ||||||||||||||||||||||||
April 2, 2011 | $ | 234,636 | $ | 10,153 | $ | 2,745 | $ | 247,534 | ||||||||||||||||||||||||
June 30, 2012 | $ | 193,660 | $ | 9,609 | $ | 2,678 | $ | 205,947 | ||||||||||||||||||||||||
July 2, 2011 | $ | 234,125 | $ | 9,566 | $ | 2,858 | $ | 246,549 |
North America (1) | Europe (2) | Other (3) | Total | North America (1) | Europe (2) | Other (3) | Total | |||||||||||||||||||||||||
Thirteen weeks ended March 31, 2012 | ||||||||||||||||||||||||||||||||
Thirteen weeks ended June 30, 2012 | ||||||||||||||||||||||||||||||||
Net sales to external customers | $ | 80,200 | $ | 15,710 | $ | 463 | $ | 96,373 | $ | 65,411 | $ | 14,575 | $ | 424 | $ | 80,410 | ||||||||||||||||
Property and equipment, net | 63,364 | 11,407 | - | 74,771 | 62,672 | 10,846 | - | 73,518 | ||||||||||||||||||||||||
Thirteen weeks ended April 2, 2011 | ||||||||||||||||||||||||||||||||
Thirteen weeks ended July 2, 2011 | ||||||||||||||||||||||||||||||||
Net sales to external customers | $ | 79,274 | $ | 16,247 | $ | 470 | $ | 95,991 | $ | 67,406 | $ | 13,976 | $ | 459 | $ | 81,841 | ||||||||||||||||
Property and equipment, net | 72,241 | 11,220 | - | 83,461 | 69,879 | 11,346 | - | 81,225 | ||||||||||||||||||||||||
Twenty-six weeks ended June 30, 2012 | ||||||||||||||||||||||||||||||||
Net sales to external customers | $ | 145,611 | $ | 30,285 | $ | 887 | $ | 176,783 | ||||||||||||||||||||||||
Property and equipment, net | 62,672 | 10,846 | - | 73,518 | ||||||||||||||||||||||||||||
Twenty-six weeks ended July 2, 2011 | ||||||||||||||||||||||||||||||||
Net sales to external customers | $ | 146,679 | $ | 30,224 | $ | 929 | $ | 177,831 | ||||||||||||||||||||||||
Property and equipment, net | 69,879 | 11,346 | - | 81,225 |
● | general global economic conditions may continue to deteriorate, which could lead to disproportionately reduced consumer demand for our products, which represent relatively discretionary spending; |
● | customer traffic may decrease in the shopping malls where we are located, on which we depend to attract guests to our stores; |
● | we may be unable to generate interest in and demand for our interactive retail experience, or to identify and respond to consumer preferences in a timely fashion; |
● | our marketing and on-line initiatives may not be effective in generating sufficient levels of brand awareness and guest traffic; we may be unable to generate comparable store sales growth; |
● | we may be unable to effectively operate or manage the overall portfolio of our company-owned stores; |
● | we may be unable to renew or replace our store leases, or enter into leases for new stores on favorable terms or in favorable locations, or may violate the terms of our current leases; |
● | the availability and costs of our products could be adversely affected by risks associated with international manufacturing and trade, including foreign currency fluctuation; |
● | our products could become subject to recalls or product liability claims that could adversely impact our financial performance and harm our reputation among consumers; |
● | we are susceptible to disruption in our inventory flow due to our reliance on a few vendors; |
● | high petroleum products prices could increase our inventory transportation costs and adversely affect our profitability; |
● | we may not be able to operate our company-owned stores in the United Kingdom and Ireland profitably; |
● | we may be unable to effectively manage our international franchises or laws relating to those franchises may change; |
● | we may improperly obtain or be unable to adequately protect customer information in violation of privacy or security laws or customer expectations; |
● | we may suffer negative publicity or be sued due to violations of labor laws or unethical practices by manufacturers of our merchandise; |
● | we may suffer negative publicity or negative sales if the non-proprietary toy products we sell in our stores do not meet our quality or sales expectations; |
● | we may lose key personnel, be unable to hire qualified additional personnel, or experience turnover of our management team; |
● | we may be unable to operate our company-owned distribution center efficiently or our third-party distribution center providers may perform poorly; |
● | our market share could be adversely affected by a significant, or increased, number of competitors; |
● | we may fail to renew, register or otherwise protect our trademarks or other intellectual property; |
● | poor global economic conditions could have a material adverse effect on our liquidity and capital resources; |
● | we may have disputes with, or be sued by, third parties for infringement or misappropriation of their proprietary rights; |
● | fluctuations in our quarterly results of operations could cause the price of our common stock to substantially decline; and |
● | we may be unable to repurchase shares of our common stock at the times or in the amounts we currently anticipate or the results of the share repurchase program may not be as beneficial as we currently anticipate. |
● | Company-owned retail stores located in the United States, Canada, Puerto Rico, the United Kingdom, and Ireland, all non-traditional store locations and e-commerce websites or “webstores”; |
● | Transactions with other business partners, mainly comprised of licensing our intellectual property, including entertainment properties, for third-party use and wholesale product sales; and |
● | International stores operated under franchise agreements. |
Thirteen Weeks Ended | Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||
March 31, 2012 | April 2, 2011 | June 30, 2012 | July 2, 2011 | June 30, 2012 | July 2, 2011 | |||||||||||||||||
North America | 3.6% | (9.3)% | (1.8 | )% | 8.3 | % | 1.1 | % | (2.0 | )% | ||||||||||||
Europe | (10.1)% | (4.1)% | (1.3 | )% | 1.3 | % | (6.0 | )% | (1.7 | )% | ||||||||||||
Consolidated | 1.2% | (8.5)% | (1.7 | )% | 7.1 | % | (0.1 | )% | (2.0 | )% |
● | In North America, we believe that an earlier Easter and the corresponding shift in school breaks had a negative impact on the 2012 second quarter; |
● | For the first twenty-six weeks of fiscal 2012, we increased average transaction value through higher redemption rates of our holiday gift cards and through a promotion in the United States with McDonald’s Happy Meals® in North America that drove awareness of our brand and brought traffic to our stores; and |
● | In the United Kingdom, we believe the negative economic conditions contributed to a continued decline in consumer sentiment and a corresponding decline in spending that negatively impacted our comparable store sales. |
Thirteen Weeks Ended | ||||||||
March 31, 2012 | April 2, 2011 | |||||||
Beginning of period | 346 | 344 | ||||||
Opened | 2 | - | ||||||
Closed | - | (2 | ) | |||||
End of period | 348 | 342 |
● | We are aggressively working to increase store traffic and the destination appeal of our stores by enhancing our experience with a new store design and we are working to increase productivity and profitability of our existing stores through strategic closures, primarily in multi-store markets where we expect to transfer a portion of the closed stores sales to remaining stores in the market, and relocation of select other stores with a reduction in square footage thereby increasing their performance; |
● | We intend to increase shopping frequency by increasing new guest traffic to our stores by rebalancing our marketing message to include both product and brand, and by refreshing our loyalty program to increase retention; and |
● | We are reinforcing Build-A-Bear Workshop as a top destination for gifts, including the gift of experience with our gift cards. |
2012 | ||||||||||||||||||||||||||||||||
Twenty-Six Weeks Ended June 30, 2012 | Fifty-two Weeks ended December 29, 2012 - Projected | |||||||||||||||||||||||||||||||
December 31, 2011 | Opened | Closed | June 30, 2012 | December 31, 2011 | Opened | Closed | December 29, 2012 | |||||||||||||||||||||||||
North America | ||||||||||||||||||||||||||||||||
Traditional | 287 | 1 | (3 | ) | 285 | 287 | 2 | (6 | ) | 283 | ||||||||||||||||||||||
Non-traditional | 11 | 1 | (1 | ) | 11 | 11 | 1 | (4 | ) | 8 | ||||||||||||||||||||||
298 | 2 | (4 | ) | 296 | 298 | 3 | (10 | ) | 291 | |||||||||||||||||||||||
Europe | 58 | - | - | 58 | 58 | 2 | - | 60 | ||||||||||||||||||||||||
Total | 356 | 2 | (4 | ) | 354 | 356 | 5 | (10 | ) | 351 |
2011 | ||||||||||||||||||||||||||||||||
Twenty-Six Weeks Ended July 2, 2011 | Fifty-two Weeks Ended December 31, 2011 | |||||||||||||||||||||||||||||||
January 1, 2011 | Opened | Closed | July 2, 2011 | January 1, 2011 | Opened | Closed | December 31, 2011 | |||||||||||||||||||||||||
North America | ||||||||||||||||||||||||||||||||
Traditional | 290 | - | (2 | ) | 288 | 290 | 2 | (5 | ) | 287 | ||||||||||||||||||||||
Non-traditional | 15 | 1 | (3 | ) | 13 | 15 | 2 | (6 | ) | 11 | ||||||||||||||||||||||
305 | 1 | (5 | ) | 301 | 305 | 4 | (11 | ) | 298 | |||||||||||||||||||||||
Europe | 54 | - | (1 | ) | 53 | 54 | 5 | (1 | ) | 58 | ||||||||||||||||||||||
Total | 359 | 1 | (6 | ) | 354 | 359 | 9 | (12 | ) | 356 |
Twenty-Six Weeks Ended | ||||||||
June 30, 2012 | July 2, 2011 | |||||||
Beginning of period | 79 | 63 | ||||||
Opened | 6 | 10 | ||||||
Closed | (1 | ) | (3 | ) | ||||
End of period | 84 | 70 |
Thirteen Weeks Ended | ||||||||
March 31, 2012 | April 2, 2011 | |||||||
Beginning of period | 79 | 63 | ||||||
Opened | 4 | 2 | ||||||
Closed | (1 | ) | (2 | ) | ||||
End of period | 82 | 63 |
Thirteen weeks ended | Twenty-six weeks ended | |||||||||||||||
June 30, 2012 | July 2, 2011 | June 30, 2012 | July 2, 2011 | |||||||||||||
Revenues: | ||||||||||||||||
Net retail sales | 98.2 | % | 98.2 | % | 98.5 | % | 98.2 | % | ||||||||
Commercial revenue | 0.9 | 0.9 | 0.6 | 1.0 | ||||||||||||
Franchise fees | 0.9 | 0.9 | 0.9 | 0.8 | ||||||||||||
Total revenues | 100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of merchandise sold (1) | 64.9 | 64.0 | 62.3 | 62.4 | ||||||||||||
Selling, general and administrative | 46.1 | 49.7 | 43.7 | 46.1 | ||||||||||||
Interest expense (income), net | (0.1 | ) | (0.1 | ) | (0.1 | ) | (0.0 | ) | ||||||||
Total costs and expenses | 110.3 | 113.0 | 105.3 | 108.0 | ||||||||||||
Income (loss) before income taxes | (10.3 | ) | (13.0 | ) | (5.3 | ) | (8.0 | ) | ||||||||
Income tax (benefit) expense | (0.9 | ) | (4.9 | ) | (0.5 | ) | (3.0 | ) | ||||||||
Net income (loss) | (9.4 | )% | (8.2 | )% | (4.8 | )% | (5.0 | )% | ||||||||
Retail Gross Margin % (2) | 35.0 | % | 35.8 | % | 37.7 | % | 37.4 | % |
Thirteen weeks ended | |||
March 31, 2012 | April 2, 2011 | ||
Revenues: | |||
Net retail sales | 98.8% | 98.1% | |
Commercial revenue | 0.4 | 1.2 | |
Franchise fees | 0.8 | 0.8 | |
Total revenues | 100.0 | 100.0 | |
Costs and expenses: | |||
Cost of merchandise sold (1) | 60.1 | 61.1 | |
Selling, general and administrative | 41.6 | 43.0 | |
Interest expense (income), net | (0.1) | 0.1 | |
Total costs and expenses | 101.2 | 103.8 | |
Loss before income taxes | (1.2) | (3.8) | |
Income tax benefit | (0.1) | (1.5) | |
Net loss | (1.1) | (2.3) | |
Retail gross margin % (2) | 39.9% | 38.8% |
(1) | Cost of merchandise sold is expressed as a percentage of net retail sales and commercial revenue. |
(2) | Retail gross margin represents net retail sales less cost of retail merchandise sold, which excludes cost of wholesale merchandise sold. Retail gross margin was |
● | In North America, we believe that an earlier Easter and the corresponding shift in school breaks had a negative impact on the 2012 second quarter; |
● | In the 2012 second quarter, we increased average transaction value through higher redemption rates of our holiday gift cards and through a promotion in the United States with McDonald’s Happy Meals® in North America that drove awareness of our brand and brought traffic to our stores; and |
● | In the United Kingdom, we believe the negative economic conditions contributed to a continued decline in consumer sentiment and a corresponding decline in spending that negatively impacted our comparable store sales. |
● | For the first twenty-six weeks of fiscal 2012, we increased average transaction value through higher redemption rates of our holiday gift cards and through a promotion in the United States with McDonald’s Happy Meals® in North America that drove awareness of our brand and brought traffic to our stores; and |
● | In the United Kingdom, we believe the negative economic conditions contributed to a continued decline in consumer sentiment and a corresponding decline in spending that negatively impacted our comparable store sales. |
(a) | (b) | (c) | (d) | |||||||||||||
Period | Total Number of Shares (or Units) Purchased (1) | Average Price Paid Per Share (or Unit) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
Jan. 1, 2012 – Jan. 28, 2012 | 186 | $ | 8.01 | — | $ | 8,711,999 | ||||||||||
Jan. 29, 2012 – Feb. 25, 2012 | 221 | $ | 8.58 | — | $ | 8,711,999 | ||||||||||
Feb. 26, 2012 – Mar. 31, 2012 | 248,128 | $ | 5.42 | — | $ | 8,711,999 | ||||||||||
Total | 248,535 | $ | 5.42 | — |
Period | (a) Total Number of Shares (or Units) Purchased (1) | (b) Average Price Paid Per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) the May Yet Be Purchased Under the Plans or Programs | ||||||||||||
Apr. 1, 2012 – Apr. 28, 2012 | 60 | $ | 5.27 | - | $ | 8,711,999 | ||||||||||
Apr. 29, 2012 – May 26, 2012 | 206 | $ | 4.89 | - | $ | 8,711,999 | ||||||||||
May 28, 2012 – Jun. 30, 2012 | - | $ | - | - | $ | 8,711,999 | ||||||||||
Total | 266 | $ | 4.98 | - |
(1) | Includes shares of our common stock delivered to us in satisfaction of the tax withholding obligation of holders of restricted shares which vested during the applicable period. Our equity incentive plans provide that the value of shares delivered to us to pay the withheld to cover tax obligations is calculated |
(2) | On February 23, 2012, we announced the further extension of our $50 million share repurchase program of our outstanding common stock until March 31, 2013. The program was authorized by our board of directors. Purchases may be made in the open market or in privately negotiated transactions, with the level and timing of activity depending on market conditions, applicable regulatory requirements, and other factors. Purchase activity may be increased, decreased or discontinued at any time without notice. Shares purchased under the program are subsequently retired. |
Exhibit No. | Description | |
2.1 | Agreement and Plan of Merger dated April 3, 2000 between Build-A-Bear Workshop, L.L.C. and the Registrant (incorporated by reference from Exhibit 2.1 to our Registration Statement on Form S-1, filed on August 12, 2004, Registration No. 333-118142) | |
3.1 | Third Amended and Restated Certificate of Incorporation (incorporated by reference from Exhibit 3.1 of our Current Report on Form 8-K, filed on November 11, 2004) | |
3.2 | Amended and Restated Bylaws (incorporated by reference from Exhibit 3.4 to our Registration Statement on Form S-1, filed on August 12, 2004, Registration No. 333-118142) | |
4.1 | Specimen Stock Certificate (incorporated by reference from Exhibit 4.1 to Amendment No. 3 to our Registration Statement on Form S-1, filed on October 1, 2004, Registration No. 333-118142) | |
10.1 | Tenth Amendment to Loan Documents between Build-A-Bear Workshop, Inc., Build-A-Bear Workshop Franchise Holdings, Inc., Build-A-Bear Entertainment, LLC, Build-A-Bear Retail Management, Inc., as Borrowers and U.S. Bank National Association, as Lender, entered into effective as of June 30, 2012 (incorporated by reference from Exhibit 10.1 to our Current Report on Form 8-K, filed on July 26, 2012) | |
31.1 | Rule 13a-14(a)/15d-14(a) certification (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the Chief Executive Bear) | |
31.2 | Rule 13a-14(a)/15d-14(a) certification (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the Chief Operations and Financial Bear) | |
32.1 | Section 1350 Certification (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Chief Executive Bear) | |
32.2 | Section 1350 Certification (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Chief Operations and Financial Bear) | |
101.INS | XBRL Instance | |
101.SCH | XBRL Extension Schema | |
101.CAL | XBRL Extension Calculation | |
101.DEF | XBRL Extension Definition | |
101.LAB | XBRL Extension Label | |
101.PRE | XBRL Extension Presentation |
BUILD-A-BEAR WORKSHOP, INC. | ||||
(Registrant) | ||||
By: | /s/ Maxine Clark | |||
Maxine Clark | ||||
Chief Executive Bear | ||||
(on behalf of the registrant and as principal executive officer) | ||||
By: | /s/ Tina Klocke | |||
Tina Klocke | ||||
Chief Operations and Financial Bear, Treasurer and Secretary (on behalf of the registrant and as principal financial officer) |