Shares of Build-A-Bear Workshop are soaring after the company reported positive earnings results in light of the recent COVID slump.
The company grew pre-tax income to $13.2 million, an improvement of $31.9 million compared to the loss in the prior year’s quarter and $10.8 million compared to the 2019 period. They saw sales growth in both our brick-and-mortar stores and digital channels even with our locations in Europe temporarily closed for the majority of the period due to local COVID restrictions. Build-A-Bear believe the improvement in sales was driven by the strength of the emotional connection that has kept Build-A-Bear a desired and relevant brand, strong merchandise mix and improved digital marketing programs along with the benefit of the stimulus package and pent-up consumer demand.
I’m proud of our organization’s ability to remain agile and successfully pivot to aggressively evolve our digital capabilities, including a drive to enhance our e-commerce experience, increase omnichannel integration, maintain a flexible real estate portfolio with high lease optionality and diversify revenue streams to leverage our powerful brand, putting us in a positive position with favorable momentum. As a testament to the strength of the brand, we recently surpassed over 200 million furry friends sold since the company was established in 1997Ms. John
First Quarter 2021 Results (13 weeks ended May 1, 2021 compared to the 13 weeks ended May 2, 2020):
- Total revenues were $91.7 million, a 96.7% increase compared to $46.6 million in the fiscal 2020 first quarter and an 8.7% increase from $84.4 million in the fiscal 2019 first quarter;
- Net retail sales were $89.2 million, a 95.4% increase compared to $45.6 million in the fiscal 2020 first quarter and a 10.1% increase compared to $81.0 million in the fiscal 2019 first quarter;
- Consolidated e-commerce demand (orders generated online to be fulfilled from either the Company’s warehouse or its stores) rose 87% compared to the fiscal 2020 first quarter and 194% compared to fiscal 2019 first quarter;
- Commercial and international franchise revenues were $2.5 million compared to $1.0 million in the fiscal 2020 first quarter and $3.3 million in the fiscal 2019 first quarter;
- Gross profit margin was 52.8%, the highest rate for a first quarter in the Company’s history, compared to 17.3% in the fiscal 2020 first quarter and 45.3% in the fiscal 2019 first quarter. The gross profit margin expanded by 3,550 basis-points compared to 2020 and 750 basis-points versus 2019 despite continuing impact from the pandemic and temporary stores closures due to local restrictions. The 2021 results reflected leverage on fixed occupancy expense and expansion in merchandise margin;
- Selling, general and administrative (“SG&A”) expenses were $35.2 million, or 38.4% of total revenues, compared to $26.7 million, or 57.3% of total revenues in the fiscal 2020 first quarter. The increase in SG&A expenses, as compared to the fiscal 2020 first quarter, was driven by the inclusion of store labor costs given the re-opening of substantially all of the Company’s North American store base;
- GAAP pre-tax income was $13.2 million compared to pre-tax loss of $18.7 million in the fiscal 2020 first quarter, an improvement of $31.9 million, and pre-tax income of $2.4 million in the fiscal 2019 first quarter, an improvement of $10.8 million;
- Adjusted pre-tax income was $12.3 million compared to adjusted pre-tax loss of $12.4 million in the fiscal 2020 first quarter;
- Income tax expense was $2.8 million with an effective tax rate of 21.3% compared to $2.5 million with an effective rate of (13.6%) in the fiscal 2020 first quarter. The tax rate in the fiscal 2020 first quarter included a $3.3 million non-cash income tax charge, or $0.22 per share, related to a valuation allowance against net deferred tax assets;
- Net income was $10.4 million, or $0.66 per diluted share, compared to net loss of $21.2 million, or ($1.42) per share, in the fiscal 2020 first quarter; and
- Adjusted net income was $9.5 million, or $0.60 per diluted share, compared to adjusted net loss of $12.4 million, or ($0.83) per share in the fiscal 2020 first quarter.