How Build-A-Bear went from a penny stock to a retail winner
Build a Bear Workshop There hasn’t always been a winner in retail.
The toy store, known for its interactive experience of making and accessorizing stuffed animals, has undergone a significant transformation since CEO Sharon Price John took the helm of the company more than a decade ago.
“When I first arrived in 2013, that assessment of the brand was strong,” he told CNBC. “We don’t have a broken brand, we have a broken business, and when you started doing interviews you really realized how important this brand was to people.”
The company found initial success in shopping malls in the early 2000s, but Build-A-Bear’s shares fell after the 2008 financial crisis and the company reported a $49 million loss in fiscal 2012.
Under Price John, the company began investing in e-commerce, shifting orders to stores instead of distribution centers and diversifying its sales beyond shopping malls to drive returns for the company.
“Overall, our goal was to create sustainable, profitable growth, but profitable was first,” Price John said.
This strategy worked. Nearly all of Build-A-Bear’s stores are now profitable, and the stock enjoyed an Nvidia-like rally earlier this year, reaching an all-time high of $76 in September. The stock has fallen slightly since then, but is still up over 125% over the past two years.
However, tariffs affected the business. Build-A-Bear imports more than 90% of its products from China and Vietnam, and the company said in its third-quarter earnings report in early December that it expects to take a hit of about $11 million from tariffs for fiscal 2025.
Company executives also said on a call with analysts that the company experienced a traffic slowdown in October during the government shutdown.
Small Cap Consumer Research analyst Eric Beder wrote in a note this month that the firm lowered estimates and lowered its price target by $10 due to the company reporting lower-than-expected revenue and “deep implied tariff impacts.”
Still, the company is outperforming most of its retail rivals and expects to reach $500 million in annual revenue for the first time.
“You can buy stuffed animals or plushies just about anywhere, from Target to FAO Schwarz and everywhere in between,” Beder told CNBC. “The difference is that at Build-A-Bear, it’s yours. You helped build it.”
Watch the video to learn more about how Build-A-Bear is making a comeback.
