The following is a summary of the Build-A-Bear Workshop, Inc. (BBW) Q1 2024 Earnings Call Transcript:

Financial Performance:

• Build-A-Bear reported Q1 2024 revenue of $114.7 million, a decrease of 4.4% year-over-year, driven by lower web demand.

• Pretax income was reported at more than $15 million, with a pretax margin of $13.1 million.

• The company observed a gross margin of 54.2%, slightly up from last year due to commercial margin improvements. However, increased SG&A expenses from higher wages and inflationary pressures impacted profitability.

• Earnings per share for the quarter was $0.82, a 16.3% decrease compared to the previous year.

Business Progress:

• Build-A-Bear opened five new locations in Q1 as part of its strategic expansion. This includes stores in international locations with partners and franchising.

• The company is focusing on a comprehensive digital transformation, involving system upgrades, website integration, and content creation.

• Build-A-Bear continues to leverage its brand through strategic initiatives, including a collaboration for the movie 'IF' and a new multifaceted campaign, 'The Stuff You Love'. With the goal of enhancing brand perception and sales.

Opportunities:

• The planned opening of at least 50 new stores through partner-operated and franchise models, along with continued international expansion, provides significant growth potential.

• Ongoing digital transformation efforts aimed at creating a seamless omnichannel experience could enhance customer engagement and sales.

Risks:

• Web demand remains a significant challenge that contributed to the overall revenue decline. Ongoing disruptions from digital transformation could further affect short-term performance.

• SG&A expenses could continue to weigh on profitability if not managed, given the higher wages and general inflationary pressures.

More details: Build-A-Bear Workshop IR

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