Global Expansion Fuels Build-A-Bear’s Record-Breaking Year

Build-A-Bear Workshop capped off its fourth consecutive year of record financial performance, announcing robust fiscal 2024 results alongside a 10% increase in its quarterly dividend. The company’s strategic focus on global expansion, asset-light growth, and shareholder returns drove sustained momentum despite inflationary pressures and tariff uncertainties.

Fourth Quarter and Fiscal 2024 Highlights

• Revenue Growth:
  • Q4 revenue rose 5.7% year-over-year (adjusted for 2023’s extra week) to $150.4 million.
  • Full-year revenue reached $496.4 million, up 3.6% adjusted, marking the fourth straight year of record sales.
• Profitability:
  • Q4 pre-tax income surged 15.8% adjusted to $27.5 million, with EBITDA climbing 13.5% to $31.1 million.
  • Full-year pre-tax income hit $67.1 million (up 5.1% adjusted), driven by retail gross margin improvements and cost management.
• Shareholder Returns:
  • Repurchased 1.02 million shares ($31 million) in 2024, reducing shares outstanding by 7%.
  • Returned $42 million to shareholders via dividends and buybacks, with an additional $85.3 million remaining under its $100 million repurchase program.

Strategic Expansion and Operational Efficiency

Build-A-Bear’s asset-light model fueled global growth, with 64 net new experience locations added in 2024—primarily partner-operated stores. The brand now operates 589 locations across 25+ countries, including 138 partner-operated and 83 franchised stores. Notably, international franchise revenue jumped 20.5% in Q4, reflecting strong demand in Europe and emerging markets.

Sharon Price John, President and CEO, emphasized:

“Our record results underscore Build-A-Bear’s enduring appeal and the success of our global diversification strategy. By prioritizing scalable, partner-driven growth, we’ve expanded our reach while maintaining profitability.”

Balance Sheet and Capital Allocation

• Cash Reserves: Ended the year with $27.8 million in cash, down from $44.3 million in 2023 due to strategic inventory investments and share repurchases.
• Inventory Management: Stockpiled core products ahead of anticipated tariff impacts, with year-end inventory at $69.8 million (up 9.9% YoY).
• Dividend Hike: The increased dividend reflects confidence in sustained cash flow, with a 3.6% yield at current share prices.

Voin Todorovic, CFO, noted:

“Our disciplined capital allocation—balancing growth investments with direct shareholder returns—positions us to navigate macroeconomic headwinds while scaling profitably.”

2025 Outlook: Cautious Optimism Amid Cost Pressures

For fiscal 2025, Build-A-Bear projects:

• Mid-single-digit revenue growth, targeting at least 50 new global locations.
• Pre-tax income ranging from a low-single-digit decline to low growth due to $10+ million in added costs (tariffs, labor, healthcare).
• Capital expenditures of $20–25 million, focusing on store refreshes and technology upgrades.

Build-A-Bear’s performance defies broader retail challenges, showcasing the power of experiential retail and brand loyalty. By leveraging partner-operated stores and franchise models, the company minimizes capital risk while scaling internationally. However, rising tariffs and wage pressures—flagged in its 2025 guidance—highlight vulnerabilities in an uncertain economic climate.

As discretionary spending tightens, Build-A-Bear’s ability to balance growth with shareholder returns will test the resilience of its “heartfelt” business model.