On Thursday, Build-A-Bear Workshop saw a significant surge in its stock, with shares soaring nearly 16%. This impressive rise was primarily due to the company’s robust quarterly performance, making its stock stand out on a day when the S&P 500 index remained relatively flat.
A Double Beat Bolsters Build-A-Bear’s Appeal
In its second quarter, Build-A-Bear surpassed analysts’ expectations for both revenue and earnings. The niche retailer reported revenue just shy of $112 million, marking an increase of slightly over 2% compared to the same period last year. Analysts had anticipated just under $110 million. Similarly, the company exceeded predictions for GAAP net income, which climbed 5% to almost $8.8 million, or $0.64 per share, against the forecast of $0.59.
This revenue growth was largely driven by a nearly 45% rise in commercial and international franchise revenue, though this segment is not yet a major contributor to Build-A-Bear’s income. In the second quarter, it generated $8.3 million, with the bulk of the company’s revenue still coming from its core retail sales.
Management Sees More Growth Ahead
In its earnings announcement, Build-A-Bear reaffirmed its guidance for the full year of 2024. The company projects that both its non-GAAP (adjusted) revenue and pre-tax income will grow at mid-single-digit percentage rates, though it did not provide more detailed figures. Additionally, management anticipates net new unit growth to reach at least 50 new “experience” locations, with capital expenditures expected to be between $18 million and $20 million.
