UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15 (d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of report (Date of earliest event
reported)
August
6, 2015
Build-A-Bear Workshop, Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware |
001-32320 |
43-1883836 |
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
1954 Innerbelt Business Center Drive |
|
63114 |
|
|
(Address of Principal Executive Offices) |
|
(Zip Code) |
|
(314)
423-8000
(Registrant’s
Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On August 6, 2015, Build-A-Bear Workshop, Inc. (the “Company”) issued a press release setting forth results for the 2015 second quarter and twenty-six weeks ended July 4, 2015. A copy of the Company’s press release is being furnished as Exhibit 99.1 and hereby incorporated by reference.
The information furnished in, contained, or incorporated by reference into this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing. In addition, this report (including Exhibit 99.1) shall not be deemed an admission as to the materiality of any information contained herein that is required to be disclosed solely as a requirement of this Item.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number |
Description of Exhibit |
99.1 |
Press Release dated August 6, 2015 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
BUILD-A-BEAR WORKSHOP, INC. |
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Date: |
August 6, 2015 |
By: |
/s/ Voin Todorovic |
||
|
Name: |
Voin Todorovic |
|||
Title: |
Chief Financial Officer |
EXHIBIT INDEX
Exhibit Number |
Description of Exhibit |
99.1 |
Press Release dated August 6, 2015 |
4
Exhibit 99.1
Build-A-Bear Workshop, Inc. Reports an 8.7% Consolidated Comparable Store Sales Increase and Tenth Consecutive Quarter of Operating Improvement with Second Quarter Fiscal 2015 Results
ST. LOUIS--(BUSINESS WIRE)--August 6, 2015--Build-A-Bear Workshop, Inc. (NYSE:BBW) today reported results for the 2015 second quarter and twenty-six weeks ended July 4, 2015.
Second Quarter Fiscal 2015 Highlights (13 weeks ended July 4, 2015, compared to the 13 weeks ended June 28, 2014):
Sharon Price John, Build-A-Bear Workshop’s Chief Executive Officer commented, “The disciplined management of our business combined with the successful execution of our stated strategy drove strong sales growth and improved profitability for the second quarter, marking our tenth consecutive quarter of enhanced operating performance. We delivered positive comparable store sales across geographies, increased retail gross margin and achieved $6.6 million in pre-tax profit at the halfway point of the year, the highest level since 2007, giving us solid momentum going into the back half. We also opened the first store in our new design as well as our first store in a true outlet concept as we continue to update and evolve our real estate portfolio.
“We remain focused on our goal of sustained profitable growth with the ongoing execution of our initiatives to make continuous improvement throughout the business while establishing the foundation for strategic expansion,” concluded Ms. John.
Additional Second Quarter Fiscal 2015 Highlights (13 weeks ended July 4, 2015, compared to the 13 weeks ended June 28, 2014):
First Six Months Fiscal 2015 Highlights (26 weeks ended July 4, 2015, compared to the 26 weeks ended June 28, 2014):
Store Activity
During the quarter, the Company closed four stores and opened two to end the period with 315 company-owned stores, including 255 in North America and 60 in Europe. The Company’s international franchisees ended the 2015 second quarter with 67 stores in 12 countries.
Balance Sheet
The Company ended the 2015 second quarter with cash and cash equivalents totaling $41.8 million and no borrowings under its revolving credit facility. Total inventory at quarter end was $50.4 million. Inventory per square foot increased 17.5% versus a 6.7% decrease at the end of the second quarter of the prior year.
In 2015, the Company continues to expect capital expenditures to be between $20 million and $25 million to support the refresh and opening of stores, as well as investment in infrastructure. Depreciation and amortization is expected to be between $16 million and $18 million.
Share Repurchase Activity
During the second quarter the Company repurchased approximately 373,000 shares of its common stock for an aggregate amount of $6.2 million, leaving approximately $800,000 available under the $10 million share repurchase program that was adopted by the Company’s Board of Directors in February 2015.
On July 7, 2015, the Board adopted a new repurchase program, which authorizes the Company to repurchase an incremental $10 million of its common stock.
2015 Key Strategic Objectives:
To increase shareholder value, the Company expects to continue to execute its “MORE x 4” strategic plan which includes continuous improvement and strategic expansion initiatives in four areas with the progress outlined below:
Expanding into More Places
The Company intends to continue to improve its real estate model by strategically evolving its store portfolio to align with market trends while selectively opening new locations and systematically refreshing its store base. To this end, the Company opened the first store in its new design in Salt Lake City, Utah which was developed to increase productivity, optimize space and update the brand look. In addition, the Company recently opened its first store in an outlet format in Rehoboth Beach, Delaware and plans to add an additional six outlet stores in North America and Europe in the back half of the year. The Company also advanced its strategy to add non-traditional stores with its ongoing partnership with Macy’s and expects to add at least six shop-in-shops for the holiday season.
The Company expects to strategically expand its international presence by leveraging the improving strength in its company-owned stores to restructure and extend its international footprint. Select international franchisees have started to apply the Company’s successful real estate approach including opening pop up stores and adding shop-in-shops with key partners and are expected to open between ten and fifteen non-traditional stores in fiscal 2015.
Targeting More People
The Company intends to have continuous growth in its business with the core three to twelve year-old consumer segment which represents a majority of current revenue. The Company will focus on initiatives that drive trial and increase repeat visits with an evolved segmentation, product development and marketing strategy. The Company successfully reached its older girl segment with the launch of its new proprietary Promise Pets collection, expanded its offering to boys with additional products from Marvel’s Avengers and introduced a line of Minions in conjunction with Universal Studio’s film release which appealed across all consumer segments.
The Company expects to strategically grow sales to consumers over twelve years-old with a focus on key categories including gift-giving, affinity and collectibles. This consumer segment currently represents over 20% of sales and has a tendency to over-index on less price-sensitive “gift-able” and on-line purchases. Therefore, the Company intends to leverage its e-commerce business to efficiently target these consumers. In the quarter, in advance of the introduction of the Company’s Star Wars collection, it offered on-line exclusive pre-sale of select products targeting the over-twelve affinity segment.
Developing More Products
The Company intends to make continuous improvements to its products by developing high impact product stories coupled with integrated marketing programs that tend to garner higher price points, drive add-on purchases and create “play beyond the plush”. In conjunction with the successful launch of its proprietary Promise Pets collection, the Company introduced a mobile app that allows the child to virtually bring their furry friend to life and enhances overall brand engagement. Since its launch, users have engaged in over 350,000 play sessions.
The Company also plans to strategically expand its presence and create new revenue and profit streams by launching an out-bound licensing program to leverage its strong brand equity. Out-bound licensing will enable the Company to extend its brand reach with new offerings in relevant categories and will provide consumers with “products beyond the plush”. To this end, the Company has completed agreements in several categories including confections, snack food, e-cards and premium children’s apparel.
Driving More Profitability
The Company intends to make continuing improvements in its value engineering initiatives to further enhance product margins while implementing new systems that should facilitate sales growth, increase efficiency and improve long term profitability. Through these efforts, the Company delivered pre-tax income of $6.6 million for the first six months of fiscal 2015, an increase of $5.3 million over the prior year, driven by a 360 basis point improvement in retail gross margin and an increase in consolidated comparable store sales of 5.0% for the first half of the year.
The Company expects to strategically expand its profitability by prioritizing incremental growth initiatives, like those discussed above, that leverage existing infrastructure, are primarily royalty-based, and/or allow for discrete pricing and are therefore comparatively margin-accretive.
Today’s Conference Call Webcast
Build-A-Bear Workshop will host a live Internet webcast of its quarterly investor conference call at 9 a.m. ET today. The audio broadcast may be accessed at the Company’s investor relations Web site, http://IR.buildabear.com. The call is expected to conclude by 10 a.m. ET.
A replay of the conference call webcast will be available in the investor relations Web site for one year. A telephone replay will be available beginning at approximately 12 p.m. ET on August 6, 2015, until 12 a.m. ET on August 6, 2016. The telephone replay is available by calling (858) 384-5517. The access code is 13614494.
About Build-A-Bear Workshop, Inc.:
Founded in St. Louis in 1997, Build-A-Bear Workshop, Inc. is the only global company that offers an interactive make-your-own stuffed animal retail-entertainment experience. There are approximately 400 Build-A-Bear Workshop stores worldwide, including company-owned stores in the U.S., Puerto Rico, Canada, the United Kingdom, Ireland and Denmark, and franchise stores in Europe, Asia, Australia, Africa, the Middle East, and Mexico. The Company was named to the FORTUNE 100 Best Companies to Work For list for the seventh year in a row in 2015. Build-A-Bear Workshop (NYSE: BBW) posted total revenue of $392.4 million in fiscal 2014. For more information, call 888.560.BEAR (2327) or visit the Investor Relations section of its Web site at buildabear.com.
Forward-Looking Statements:
This press release contains forward looking statements that involve risks and uncertainties and the Company’s actual results may differ materially from the results discussed in the forward-looking statements. These risks and uncertainties include, without limitation, those detailed under the caption “Risk Factors” in the Company’s annual report on Form 10-K for the year ended January 3, 2015, as filed with the SEC, and the following:
All other brand names, product names, or trademarks belong to their respective holders.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | |||||||||||||
Unaudited Condensed Consolidated Statements of Operations | |||||||||||||
(dollars in thousands, except share and per share data) | |||||||||||||
13 Weeks | 13 Weeks | ||||||||||||
Ended | Ended | ||||||||||||
July 4, | % of Total | June 28, | % of Total | ||||||||||
2015 | Revenues (1) | 2014 | Revenues (1) | ||||||||||
Revenues: | |||||||||||||
Net retail sales | $ | 80,279 | 99.1 | $ | 75,351 | 98.8 | |||||||
Franchise fees | 548 | 0.7 | 487 | 0.6 | |||||||||
Commercial revenue | 187 | 0.2 | 410 | 0.5 | |||||||||
Total revenues | 81,014 | 100.0 | 76,248 | 100.0 | |||||||||
Costs and expenses: | |||||||||||||
Cost of merchandise sold - retail (1) | 45,378 | 56.5 | 45,938 | 61.0 | |||||||||
Cost of merchandise sold - commercial (1) | 183 | 97.9 | 161 | 39.3 | |||||||||
Selling, general and administrative | 35,933 | 44.4 | 34,044 | 44.6 | |||||||||
Interest (income) expense, net | (42 | ) | (0.1) | 64 | 0.1 | ||||||||
Total costs and expenses | 81,452 | 100.5 | 80,207 | 105.2 | |||||||||
Loss before income taxes | (438 | ) | (0.5) | (3,959 | ) | (5.2) | |||||||
Income tax expense | 190 | 0.2 | 343 | 0.4 | |||||||||
Net loss | $ | (628 | ) | (0.8) | $ | (4,302 | ) | (5.6) | |||||
Loss per common share: | |||||||||||||
Basic | $ | (0.04 | ) | $ | (0.25 | ) | |||||||
Diluted | $ | (0.04 | ) | $ | (0.25 | ) | |||||||
Shares used in computing common per share amounts: | |||||||||||||
Basic | 16,861,458 | 17,024,598 | |||||||||||
Diluted | 16,861,458 | 17,024,598 |
(1) | Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold - retail and cost of merchandise sold - commercial that are expressed as a percentage of net retail sales and commercial revenue, respectively. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales and commercial revenue and immaterial rounding. |
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||||||||
Unaudited Condensed Consolidated Statements of Operations | ||||||||||||
(dollars in thousands, except share and per share data) | ||||||||||||
26 Weeks | 26 Weeks | |||||||||||
Ended | Ended | |||||||||||
July 4, | % of Total | June 28, | % of Total | |||||||||
2015 | Revenues (1) | 2014 | Revenues (1) | |||||||||
Revenues: | ||||||||||||
Net retail sales | $ | 171,943 | 98.6 | $ | 172,191 | 98.9 | ||||||
Franchise fees | 1,099 | 0.6 | 1,156 | 0.7 | ||||||||
Commercial revenue | 1,364 | 0.8 | 842 | 0.5 | ||||||||
Total revenues | 174,406 | 100.0 | 174,189 | 100.0 | ||||||||
Costs and expenses: | ||||||||||||
Cost of merchandise sold - retail (1) | 94,170 | 54.8 | 100,638 | 58.4 | ||||||||
Cost of merchandise sold - commercial (1) | 542 | 39.7 | 359 | 42.6 | ||||||||
Selling, general and administrative | 73,173 | 42.0 | 71,844 | 41.2 | ||||||||
Interest (income) expense, net | (93 | ) | (0.1) | 2 | 0.0 | |||||||
Total costs and expenses | 167,792 | 96.2 | 172,843 | 99.2 | ||||||||
Income before income taxes | 6,614 | 3.8 | 1,346 | 0.8 | ||||||||
Income tax expense | 420 | 0.2 | 624 | 0.4 | ||||||||
Net income | $ | 6,194 | 3.6 | $ | 722 | 0.4 | ||||||
Income per common share: | ||||||||||||
Basic | $ | 0.36 | $ | 0.04 | ||||||||
Diluted | $ | 0.35 | $ | 0.04 | ||||||||
Shares used in computing common per share amounts: | ||||||||||||
Basic | 16,917,272 | 16,863,160 | ||||||||||
Diluted | 17,162,024 | 17,097,263 |
(1) | Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold - retail and cost of merchandise sold - commercial that are expressed as a percentage of net retail sales and commercial revenue, respectively. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales and commercial revenue and immaterial rounding. |
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||||||||||||||
Unaudited Condensed Consolidated Balance Sheets | ||||||||||||||||||
(dollars in thousands, except share and per share data) | ||||||||||||||||||
July 4, | January 3, | June 28, | ||||||||||||||||
2015 | 2015 | 2014 | ||||||||||||||||
ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 41,813 | $ | 65,389 | $ | 41,762 | ||||||||||||
Inventories | 50,359 | 51,939 | 43,463 | |||||||||||||||
Receivables | 7,693 | 11,461 | 9,307 | |||||||||||||||
Prepaid expenses and other current assets | 14,173 | 15,611 | 10,394 | |||||||||||||||
Deferred tax assets | 1,706 | 1,378 | 1,193 | |||||||||||||||
Total current assets | 115,744 | 145,778 | 106,119 | |||||||||||||||
Property and equipment, net | 58,439 | 62,766 | 63,185 | |||||||||||||||
Other intangible assets, net | 382 | 304 | 397 | |||||||||||||||
Other assets, net | 3,019 | 3,206 | 3,630 | |||||||||||||||
Total Assets | $ | 177,584 | $ | 212,054 | $ | 173,331 | ||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 23,140 | $ | 38,107 | $ | 25,447 | ||||||||||||
Accrued expenses | 13,269 | 24,058 | 11,961 | |||||||||||||||
Gift cards and customer deposits | 29,746 | 34,268 | 27,547 | |||||||||||||||
Deferred revenue | 2,596 | 2,654 | 4,243 | |||||||||||||||
Deferred tax liability | - | - | 856 | |||||||||||||||
Total current liabilities | 68,751 | 99,087 | 70,054 | |||||||||||||||
Deferred franchise revenue | 836 | 945 | 1,064 | |||||||||||||||
Deferred rent | 11,700 | 13,353 | 14,073 | |||||||||||||||
Other liabilities | 1,113 | 1,044 | 602 | |||||||||||||||
Stockholders' equity: | ||||||||||||||||||
Common stock, par value $0.01 per share | 170 | 174 | 176 | |||||||||||||||
Additional paid-in capital | 60,536 | 69,362 | 70,730 | |||||||||||||||
Accumulated other comprehensive loss | (8,503 | ) | (8,698 | ) | (6,515 | ) | ||||||||||||
Retained earnings | 42,981 | 36,787 | 23,147 | |||||||||||||||
Total stockholders' equity | 95,184 | 97,625 | 87,538 | |||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 177,584 | $ | 212,054 | $ | 173,331 |
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||||||||||
Unaudited Selected Financial and Store Data | ||||||||||||||
(dollars in thousands, except square foot data) | ||||||||||||||
13 Weeks | 13 Weeks | 26 Weeks | 26 Weeks | |||||||||||
Ended | Ended | Ended | Ended | |||||||||||
July 4, | June 28, | July 4, | June 28, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||
Other financial data: | ||||||||||||||
Retail gross margin ($) (1) | $ | 34,901 | $ | 29,413 | $ | 77,773 | $ | 71,553 | ||||||
Retail gross margin (%) (1) | 43.5% | 39.0% | 45.2% | 41.6% | ||||||||||
E-commerce sales | $ | 2,412 | $ | 2,233 | $ | 5,660 | $ | 5,304 | ||||||
Capital expenditures, net (2) | $ | 3,202 | $ | 2,066 | $ | 6,080 | $ | 3,171 | ||||||
Depreciation and amortization | $ | 4,015 | $ | 4,469 | $ | 8,233 | $ | 8,977 | ||||||
Store data (3): | ||||||||||||||
Number of company-owned retail locations at end of period | ||||||||||||||
North America | 255 | 254 | ||||||||||||
Europe | 60 | 59 | ||||||||||||
Total company-owned retail locations | 315 | 313 | ||||||||||||
Number of franchised stores at end of period | 67 | 75 | ||||||||||||
Company-owned store square footage at end of period (4) | ||||||||||||||
North America | 693,384 | 708,545 | ||||||||||||
Europe | 86,188 | 84,789 | ||||||||||||
Total square footage | 779,572 | 793,334 | ||||||||||||
Comparable store sales change (5) | ||||||||||||||
North America | 6.5% | (4.0)% | 2.7% | (2.8)% | ||||||||||
Europe | 18.2% | (8.1)% | 15.7% | (5.5)% | ||||||||||
Consolidated | 8.7% | (4.9)% | 5.0% | (3.4)% |
(1) | Retail gross margin represents net retail sales less retail cost of merchandise sold. Retail gross margin percentage represents retail gross margin divided by net retail sales. | ||
(2) | Capital expenditures represents cash paid for property, equipment, other assets and other intangible assets. | ||
(3) | Excludes our webstores. North American stores are located in the United States, Canada and Puerto Rico. In Europe, stores are located in the United Kingdom and Ireland and, beginning in 2015, Denmark. | ||
(4) | Square footage for stores located in North America is leased square footage. Square footage for stores located in Europe is estimated selling square footage. | ||
(5) | Comparable store sales percentage changes are based on net retail sales and exclude the impact of foreign exchange. Stores are considered comparable beginning in their thirteenth full month of operation. Comparable store sales percentage changes for 2015 are based on net retail sales as compared to the thirteen and twenty-six-week periods ended July 5, 2014. |
* Non-GAAP Financial Measures | ||
In this press release, the Company’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures. In particular, the Company provides historic income (loss) and income (loss) per diluted share adjusted to exclude certain costs and accounting adjustments, which are non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying trends in the Company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the Company’s core operating results. These measures should not be considered a substitute for or superior to GAAP results. |
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | |||||||||||||||||||||
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) | |||||||||||||||||||||
(dollars in thousands, except per share data) | |||||||||||||||||||||
13 Weeks | 13 Weeks | 26 Weeks | 26 Weeks | ||||||||||||||||||
Ended | Ended | Ended | Ended | ||||||||||||||||||
July 4, | June 28, | July 4, | June 28, | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Net income (loss) | $ | (628 | ) | $ | (4,302 | ) | $ | 6,194 | $ | 722 | |||||||||||
Foreign exchange (gains) losses (1) | (509 | ) | 35 | 551 | (164 | ) | |||||||||||||||
Management transition costs(2) | 224 | 213 | 378 | 454 | |||||||||||||||||
Adjusted net income (loss) | $ | (913 | ) | $ | (4,054 | ) | $ | 7,123 | $ | 1,012 | |||||||||||
13 Weeks | 13 Weeks | 26 Weeks | 26 Weeks | ||||||||||||||||||
Ended | Ended | Ended | Ended | ||||||||||||||||||
July 4, | June 28, | July 4, | June 28, | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Net income (loss) per share | $ | (0.04 | ) | $ | (0.25 | ) | $ | 0.35 | $ | 0.04 | |||||||||||
Foreign exchange (gains) losses (1) | (0.02 | ) | 0.00 | 0.03 | (0.01 | ) | |||||||||||||||
Management transition costs(2) | 0.01 | 0.01 | 0.03 | 0.03 | |||||||||||||||||
Adjusted net income (loss) per share | $ | (0.05 | ) | $ | (0.24 | ) | $ | 0.41 | $ | 0.06 |
(1) | Represents the impact of foreign exchange rates on the re-measurement of balance sheet items not denominated in functional currency. Amounts are presented net of applicable income tax. | ||||
(2) | Represents transition costs related to changes in executive management. Costs include severance, along with benefits and related taxes, relocation, executive search fees, signing bonus and professional fees. Amounts are presented net of applicable income tax. | ||||
CONTACT:
Investors:
Build-A-Bear Workshop
Voin Todorovic,
314-423-8000 x5221