Q2 2025 Earnings Report for Build-A-Bear Workshop (BBW)
Build-A-Bear Reveals Robust 2025 Pipeline and Strong Financial Performance
Build-A-Bear Workshop, the beloved global brand known for its customizable plush toys, held a conference call on Thursday, August 28, 2025, to discuss its second-quarter financial results and future plans.
The company reported a robust pipeline for the remainder of 2025, with major product launches and promotional events tied to established and new intellectual property partnerships. One of the key growth vectors is the "Mini beans" proprietary line of collectible, small plush products.
The call was led by Sharon Price John, President and CEO, along with Christopher Hurt, Chief Operations Officer, Voin Todorovic, Chief Financial Officer, and an operator.
Financial Highlights
- Total revenue for the second quarter of fiscal 2025 was $124.2 million, representing 11.1% growth.
- Pretax income grew 32.7% to a second-quarter record of $15.3 million.
- Earnings per share (EPS) was $0.94, an increase of 46.9%.
- Commercial revenue, which primarily represents wholesale sales to partner operators, grew by 18.3%.
- Gross margin for the second quarter of fiscal 2025 was 57.6%, an improvement of 340 basis points.
- SG&A expenses were $56.4 million, or 45.4% of total revenues, compared to 44% last year.
Tariff Impact
Tariffs have had a slight impact on the cost of goods sold during the quarter, but last year's strategic decision to pull forward inventory reduced the tariff exposure to about $1 million. For fiscal 2025, the tariff impact is expected to be less than $11 million in tariff-related expenses and approximately $5 million in extra medical and labor costs.
Capital Allocation and Growth
Build-A-Bear returned $6 million in the second quarter of fiscal 2025 and $13.1 million year-to-date through dividends and buybacks. The company finished the quarter with no borrowings under its revolving credit facility.
The company increased its revenue and pretax income guidance for fiscal 2025. Specifically, revenue growth is now expected to be in the range of mid-single to high-single digits. Pretax income is expected to be in the range of $62 to $70 million.
Net new unit growth guidance was upgraded to at least sixty new locations in fiscal 2025. The company is focusing on executing its strategy, expanding its global footprint, accelerating its digital transformation, and investing in high-return capital projects while delivering consistent value to shareholders through disciplined capital allocation.
International Expansion
Build-A-Bear is considering operating stores in countries outside The U.S., but it is still in the early stages and will make case-by-case decisions based on the highest ROI for the company. The company is seeing strong momentum with its partner-operated locations, both from existing partners adding new stores and from new partners in countries like Germany.
The "Partner-operated" format refers to locations run independently by third-party operators under a licensing or partnership agreement, rather than by Build-A-Bear directly.
Omnichannel Strategy
The company's omnichannel strategy integrates sales and marketing across physical (in-store) and digital platforms to deliver a seamless guest experience. Acceleration in e-commerce and omnichannel engagement is being supported by investments in digital marketing, influencer campaigns, and broadening the brand's appeal to adult consumers ("kiddults").
Ecommerce demand increased 15.1% in the second quarter of fiscal 2025. The company is expecting to meet demand and execute its growth strategy for the balance of the year with the current level and composition of its inventory.
Looking Ahead
President and CEO Sharon Price John stated, "We anticipate record results for the fifth consecutive year for fiscal 2025." The company's guests are driving the growth of the brand, with user-generated content being a significant factor in the brand's success.
Build-A-Bear expects to see an additional negative impact of tariffs, with Vietnamese tariffs doubling from 10% to 20%. However, the company's balance sheet remains in great shape, even with the challenges of tariffs and the company's decision to return capital to shareholders through dividends and buybacks.
In conclusion, Build-A-Bear is well-positioned for continued growth and success, with a robust pipeline of products and partnerships, strong financial performance, and a strategic focus on expanding its global footprint and accelerating its digital transformation.
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