UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15 (d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event
reported)
October
25, 2012
Build-A-Bear Workshop, Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware |
001-32320 |
43-1883836 |
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
1954 Innerbelt Business Center Drive |
|
63114 |
|
|
(Address of Principal Executive Offices) |
|
(Zip Code) |
|
(314)
423-8000
(Registrant’s
Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On October 25, 2012, the Company issued a press release announcing, among other things, total revenues, consolidated net retail sales, consolidated comparable store sales, consolidated e-commerce sales, pre-tax loss, tax benefit, and net loss for the third quarter (13 weeks ended September 29, 2012) and the first nine months of fiscal 2012 (39 weeks ended September 29, 2012). The press release also reported the Company’s quarter-end cash and cash equivalents, inventory, and store count. In addition, the press release also reported expected 2012 capital expenditures, depreciation and amortization, and store closures, remodels, and openings. The Company also reported accomplishments toward its objectives for fiscal 2012, including introduction of a new store design, a summary of anticipated store closings, reintroduction of brand TV advertising, global store openings, and achievement of cost savings.
A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated by reference herein. The description of the press release contained herein is qualified in its entirety by the full text of such exhibit.
The information furnished in contained or incorporated by reference into this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing. In addition, this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed an admission as to the materiality of any information contained herein that is required to be disclosed solely as a requirement of this Item.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number |
Description of Exhibit |
99.1 |
Press Release dated October 25, 2012 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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BUILD-A-BEAR WORKSHOP, INC. |
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Date: |
October 25, 2012 |
By: |
/s/ Tina Klocke |
|
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Name: |
Tina Klocke |
||
Title: |
Chief Operations and Financial Bear, |
|||
Secretary and Treasurer |
EXHIBIT INDEX
Exhibit Number |
Description of Exhibit |
99.1 |
Press Release dated October 25, 2012 |
4
Exhibit 99.1
Build-A-Bear Workshop, Inc. Reports Third Quarter Fiscal 2012 Results
ST. LOUIS--(BUSINESS WIRE)--October 25, 2012--Build-A-Bear Workshop, Inc. (NYSE: BBW), an interactive entertainment retailer, today reported results for the third quarter and first nine months ended September 29, 2012.
Third Quarter Fiscal 2012 Highlights:
Maxine Clark, Build-A-Bear Workshop’s Chief Executive Bear commented, “Clearly we are disappointed with the quarter’s results. We were up against a difficult comparison from last year when product tied to the theatrical release of the Smurfs led to incremental traffic and transaction growth throughout the quarter. However, we made progress on our key strategies which build on the foundation for our future.
“Sales in our new store design have exceeded our expectations, and this success allows us to add elements or in some cases fully remodel our most productive stores. At the same time, we expect to improve our profitability by closing an additional 50 to 60 underperforming locations over the next two years to reach our optimal count of 225 to 250 stores. We recently launched our brand building TV advertising which will reinforce our store experience, and we expect the classic theme of our holiday merchandise to lead to a solid performance in the fourth quarter,” Ms. Clark concluded.
Additional Fiscal 2012 Third-Quarter Details (13 weeks ended September 29, 2012):
Fiscal 2012 First Nine-Months (39 weeks ended September 29, 2012):
Balance Sheet
The Company ended the 2012 third quarter with a strong balance sheet and no borrowings under its revolving credit facility. As of September 29, 2012, cash and cash equivalents totaled $22.1 million, the majority of which was domiciled outside of the U.S. Total inventory at quarter end was $54.9 million. Inventory per square foot was flat with the prior year period.
Stores
The Company expects capital expenditures to be approximately $18 million in fiscal 2012 to support the update and repositioning of stores as well as investment in infrastructure. In fiscal 2012, the Company will close nine stores, including certain non-traditional locations, and remodel 14 stores, including five stores in its new design. The Company will open five new stores across geographies including one store in its new design. Depreciation and amortization is expected to be approximately $21 million.
The Company currently plans to close an additional 50 to 60 stores in fiscal 2013 and 2014 to reach its optimal store count of 225 to 250 stores. These select store closures are expected to transfer approximately 20% of sales to other stores in the same markets.
During the quarter, the Company closed three stores across geographies. At quarter end, the Company operated 283 traditional stores and ten non-traditional stores in North America and 58 traditional stores in Europe. (See Company-Owned Store Activity Schedule.) The Company’s international franchisees opened three stores, net of closures, ending the quarter with 87 stores in 14 countries.
Accomplishments Toward 2012 Objectives:
Today’s Conference Call Webcast
Build-A-Bear Workshop will host a live Internet webcast of its quarterly investor conference call at 9 a.m. ET today. The audio broadcast may be accessed at the Company’s investor relations Web site, http://IR.buildabear.com. The call is expected to conclude by 10 a.m.
A replay of the conference call webcast will be available in the investor relations Web site for one year. A telephone replay will be available beginning at approximately noon ET today until midnight ET on November 1, 2012. The telephone replay is available by calling (858) 384-5517. The access code is 401557.
About Build-A-Bear Workshop, Inc.
Build-A-Bear Workshop, Inc. is the only global company that offers an interactive make-your-own stuffed animal retail-entertainment experience. There are more than 400 Build-A-Bear Workshop stores worldwide, including company-owned stores in the U.S., Puerto Rico, Canada, the United Kingdom and Ireland, and franchise stores in Europe, Asia, Australia, Africa, the Middle East, Mexico and South America. Founded in St. Louis in 1997, Build-A-Bear Workshop is the leader in interactive retail. Brands include make-your-own Major League Baseball® mascot in-stadium locations, and Build-A-Dino® stores. Build-A-Bear Workshop extends its in-store interactive experience online with its award winning virtual world Web site at bearville.com®. The company was named to the FORTUNE 100 Best Companies to Work For® list for the fourth year in a row in 2012. Build-A-Bear Workshop (NYSE: BBW) posted total revenue of $394.4 million in fiscal 2011. For more information, call 888.560.BEAR (2327) or visit the company's award-winning Web site at buildabear.com®.
Forward-Looking Statements
This press release contains "forward-looking statements" (within the meaning of the federal securities laws) which represent Build-A-Bear Workshop expectations or beliefs with respect to future events. Our actual results may differ materially from the results discussed in the forward-looking statements. These risks and uncertainties include, without limitation, those detailed under the caption “Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2011, as filed with the SEC, and the following: general global economic conditions may continue to deteriorate, which could lead to disproportionately reduced consumer demand for our products, which represent relatively discretionary spending; customer traffic may decrease in the shopping malls where we are located, on which we depend to attract guests to our stores; we may be unable to generate interest in and demand for our interactive retail experience, or to identify and respond to consumer preferences in a timely fashion; our marketing and on-line initiatives may not be effective in generating sufficient levels of brand awareness and guest traffic; we may be unable to generate comparable store sales growth; we may be unable to effectively operate or manage the overall portfolio of our company-owned stores; we may be unable to renew or replace our store leases, or enter into leases for new stores on favorable terms or in favorable locations, or may violate the terms of our current leases; the availability and costs of our products could be adversely affected by risks associated with international manufacturing and trade, including foreign currency fluctuation; our products could become subject to recalls or product liability claims that could adversely impact our financial performance and harm our reputation among consumers; we are susceptible to disruption in our inventory flow due to our reliance on a few vendors; high petroleum products prices could increase our inventory transportation costs and adversely affect our profitability; we may not be able to operate our company-owned stores in the United Kingdom and Ireland profitably; we may be unable to effectively manage our international franchises or laws relating to those franchises may change; we may improperly obtain or be unable to protect information from our guests in violation of privacy or security laws or expectations; we may suffer negative publicity or be sued due to violations of labor laws or unethical practices by manufacturers of our merchandise; we may suffer negative publicity or negative sales if the non-proprietary toy products we sell in our stores do not meet our quality or sales expectations; we may lose key personnel, be unable to hire qualified additional personnel, or experience turnover of our management team; we may be unable to operate our company-owned distribution center efficiently or our third-party distribution center providers may perform poorly; our market share could be adversely affected by a significant, or increased, number of competitors; we may fail to renew, register or otherwise protect our trademarks or other intellectual property; poor global economic conditions could have a material adverse effect on our liquidity and capital resources; we may have disputes with, or be sued by, third parties for infringement or misappropriation of their proprietary rights; fluctuations in our quarterly results of operations could cause the price of our common stock to substantially decline; and we may be unable to repurchase shares of our common stock at the times or in the amounts we currently anticipate or the results of the share repurchase program may not be as beneficial as we currently anticipate. These risks, uncertainties and other factors may adversely affect our business, growth, financial condition or profitability, or subject us to potential liability, and cause our actual results, performance or achievements to be materially different from those expressed or implied by our forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
All other brand names, product names, or trademarks belong to their respective holders.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||||||||||||||||
Unaudited Condensed Consolidated Statements of Operations | ||||||||||||||||||||
(dollars in thousands, except share and per share data) | ||||||||||||||||||||
13 Weeks | 13 Weeks | |||||||||||||||||||
Ended | Ended | |||||||||||||||||||
September 29, | % of Total | October 1, | % of Total | |||||||||||||||||
2012 | Revenues (1) | 2011 | Revenues (1) | |||||||||||||||||
Revenues: | ||||||||||||||||||||
Net retail sales | $ | 84,263 | 98.0 | $ | 95,378 | 97.9 | ||||||||||||||
Commercial revenue | 908 | 1.1 | 1,160 | 1.2 | ||||||||||||||||
Franchise fees | 800 | 0.9 | 872 | 0.9 | ||||||||||||||||
Total revenues | 85,971 | 100.0 | 97,410 | 100.0 | ||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of merchandise sold | 53,887 | 63.3 | 57,572 | 59.6 | ||||||||||||||||
Selling, general and administrative | 36,573 | 42.5 | 38,013 | 39.0 | ||||||||||||||||
Interest expense (income), net | (36 | ) | (0.0 | ) | (40 | ) | (0.0 | ) | ||||||||||||
Total costs and expenses | 90,424 | 105.2 | 95,545 | 98.1 | ||||||||||||||||
Income (loss) before income taxes | (4,453 | ) | (5.2 | ) | 1,865 | 1.9 | ||||||||||||||
Income tax expense (benefit) | (201 | ) | (0.2 | ) | 1,011 | 1.0 | ||||||||||||||
Net income (loss) | $ | (4,252 | ) | (4.9 | ) | $ | 854 | 0.9 | ||||||||||||
Earnings (loss) per common share: | ||||||||||||||||||||
Basic | $ | (0.26 | ) | $ | 0.05 | |||||||||||||||
Diluted | $ | (0.26 | ) | $ | 0.05 | |||||||||||||||
Shares used in computing common per share amounts: | ||||||||||||||||||||
Basic | 16,473,114 | 17,378,486 | ||||||||||||||||||
Diluted | 16,473,114 | 17,396,144 | ||||||||||||||||||
(1) |
|
Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold which is expressed as a percentage of net retail sales and commercial revenue. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales and commercial revenue and immaterial rounding. | ||||||||||||||||||
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||||||||||||||||
Unaudited Condensed Consolidated Statements of Operations | ||||||||||||||||||||
(dollars in thousands, except share and per share data) | ||||||||||||||||||||
39 Weeks | 39 Weeks | |||||||||||||||||||
Ended | Ended | |||||||||||||||||||
September 29, | % of Total | October 1, | % of Total | |||||||||||||||||
2012 | Revenues (1) | 2011 | Revenues (1) | |||||||||||||||||
Revenues: | ||||||||||||||||||||
Net retail sales | $ | 258,452 | 98.4 | $ | 269,929 | 98.1 | ||||||||||||||
Commercial revenue | 1,989 | 0.8 | 3,002 | 1.1 | ||||||||||||||||
Franchise fees | 2,313 | 0.9 | 2,312 | 0.8 | ||||||||||||||||
Total revenues | 262,754 | 100.0 | 275,243 | 100.0 | ||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of merchandise sold | 163,057 | 62.6 | 167,723 | 61.5 | ||||||||||||||||
Selling, general and administrative | 113,774 | 43.3 | 120,011 | 43.6 | ||||||||||||||||
Interest expense (income), net | (185 | ) | (0.1 | ) | (41 | ) | (0.0 | ) | ||||||||||||
Total costs and expenses | 276,646 | 105.3 | 287,693 | 104.5 | ||||||||||||||||
Loss before income taxes | (13,892 | ) | (5.3 | ) | (12,450 | ) | (4.5 | ) | ||||||||||||
Income tax benefit | (1,072 | ) | (0.4 | ) | (4,377 | ) | (1.6 | ) | ||||||||||||
Net loss | $ | (12,820 | ) | (4.9 | ) | $ | (8,073 | ) | (2.9 | ) | ||||||||||
Loss per common share: | ||||||||||||||||||||
Basic | $ | (0.79 | ) | $ | (0.45 | ) | ||||||||||||||
Diluted | $ | (0.79 | ) | $ | (0.45 | ) | ||||||||||||||
Shares used in computing common per share amounts: | ||||||||||||||||||||
Basic | 16,323,630 | 17,781,943 | ||||||||||||||||||
Diluted | 16,323,630 | 17,781,943 | ||||||||||||||||||
(1) |
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Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold which is expressed as a percentage of net retail sales and commercial revenue. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales and commercial revenue and immaterial rounding. | ||||||||||||||||||
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||||||||||||
Unaudited Condensed Consolidated Balance Sheets | ||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||
September 29, | December 31, | October 1, | ||||||||||||||
2012 | 2011 | 2011 | ||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 22,145 | $ | 46,367 | $ | 25,106 | ||||||||||
Inventories | 54,885 | 51,860 | 56,258 | |||||||||||||
Receivables | 4,721 | 7,878 | 4,889 | |||||||||||||
Prepaid expenses and other current assets | 13,569 | 17,854 | 20,646 | |||||||||||||
Deferred tax assets | 487 | 419 | 7,624 | |||||||||||||
Total current assets | 95,807 | 124,378 | 114,523 | |||||||||||||
Property and equipment, net | 73,754 | 77,445 | 78,965 | |||||||||||||
Goodwill | 33,876 | 32,306 | 32,614 | |||||||||||||
Other intangible assets, net | 510 | 655 | 836 | |||||||||||||
Other assets, net | 7,218 | 6,787 | 15,625 | |||||||||||||
Total Assets | $ | 211,165 | $ | 241,571 | $ | 242,563 | ||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 35,151 | $ | 41,032 | $ | 38,544 | ||||||||||
Accrued expenses | 5,981 | 12,128 | 6,039 | |||||||||||||
Gift cards and customer deposits | 21,180 | 28,323 | 21,670 | |||||||||||||
Deferred revenue | 5,455 | 5,285 | 6,803 | |||||||||||||
Total current liabilities | 67,767 | 86,768 | 73,056 | |||||||||||||
Deferred franchise revenue | 1,238 | 1,436 | 1,504 | |||||||||||||
Deferred rent | 20,955 | 23,867 | 25,139 | |||||||||||||
Other liabilities | 257 | 257 | 366 | |||||||||||||
Stockholders' equity: | ||||||||||||||||
Common stock, par value $0.01 per share | 174 | 174 | 182 | |||||||||||||
Additional paid-in capital | 66,782 | 65,402 | 68,999 | |||||||||||||
Accumulated other comprehensive loss | (7,020 | ) | (10,165 | ) | (9,506 | ) | ||||||||||
Retained earnings | 61,012 | 73,832 | 82,823 | |||||||||||||
Total stockholders' equity | 120,948 | 129,243 | 142,498 | |||||||||||||
Total Liabilities and Stockholders' Equity | $ | 211,165 | $ | 241,571 | $ | 242,563 | ||||||||||
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||||||||||||||
Unaudited Selected Financial and Store Data | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||
13 Weeks | 13 Weeks | 39 Weeks | 39 Weeks | |||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||
September 29, | October 1, | September 29, | October 1, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||||
Other financial data: | ||||||||||||||||||
Retail gross margin ($) (1) | $ | 30,771 | $ | 38,381 | $ | 96,448 | $ | 103,732 | ||||||||||
Retail gross margin (%) (1) | 36.5 | % | 40.2 | % | 37.3 | % | 38.4 | % | ||||||||||
E-commerce sales | $ | 2,256 | $ | 2,452 | $ | 7,572 | $ | 7,416 | ||||||||||
Capital expenditures, net (2) | $ | 5,103 | $ | 3,759 | $ | 13,407 | $ | 9,896 | ||||||||||
Depreciation and amortization | $ | 5,196 | $ | 5,884 | $ | 15,832 | $ | 18,614 | ||||||||||
Store data (3): | ||||||||||||||||||
Number of company-owned stores at end of period | ||||||||||||||||||
North America - Traditional | 283 | 287 | ||||||||||||||||
North America - Non-traditional | 10 | 12 | ||||||||||||||||
Total North America | 293 | 299 | ||||||||||||||||
Europe | 58 | 56 | ||||||||||||||||
Total stores | 351 | 355 | ||||||||||||||||
Number of franchised stores at end of period | 87 | 76 | ||||||||||||||||
Company-owned store square footage at end of period | ||||||||||||||||||
North America - Traditional | 808,925 | 831,531 | ||||||||||||||||
North America - Non-traditional | 14,160 | 21,046 | ||||||||||||||||
Total North America | 823,085 | 852,577 | ||||||||||||||||
Europe (4) | 83,631 | 81,661 | ||||||||||||||||
Total square footage | 906,716 | 934,238 | ||||||||||||||||
Comparable store sales change (%) (5) | ||||||||||||||||||
North America | (11.8 | )% | 0.7 | % | (3.4 | )% | (1.1 | )% | ||||||||||
Europe | (7.9 | )% | 3.0 | % | (6.7 | )% | 0.0 | % | ||||||||||
Consolidated | (11.1 | )% | 1.1 | % | (4.0 | )% | (0.9 | )% | ||||||||||
(1) |
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Retail gross margin represents net retail sales less retail cost of merchandise sold. Retail gross margin percentage represents retail gross margin divided by net retail sales. | ||||||||||||||||
(2) |
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Capital expenditures, net represents cash paid for property, equipment, other assets and other intangible assets. | ||||||||||||||||
(3) |
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North American stores are located in the United States, Canada and Puerto Rico. In Europe, stores are located in the United Kingdom and Ireland. Non-traditional stores include ballpark, zoo, hospital, airport and temporary locations. Excludes our webstores. |
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(4) |
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Square footage for stores located in Europe is estimated selling square footage. | ||||||||||||||||
(5) |
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Comparable store sales percentage changes are based on net retail sales and stores are considered comparable beginning in their thirteenth full month of operation. | ||||||||||||||||
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | ||||||||||||||||||
Company-Owned Store Activity |
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2012 | ||||||||||||||||||
Thirty-nine Weeks Ended September 29, 2012 | Fifty-two Weeks Ended December 29, 2012 - Projected | |||||||||||||||||
December 31, | September 29, | December 31, | December 29, | |||||||||||||||
2011 | Opened | Closed | 2012 | 2011 | Opened | Closed | 2012 | |||||||||||
North America | ||||||||||||||||||
Traditional | 287 | 1 | (5 | ) | 283 | 287 | 2 | (6 | ) | 283 | ||||||||
Non-traditional | 11 | 1 | (2 | ) | 10 | 11 | 1 | (3 | ) | 9 | ||||||||
298 | 2 | (7 | ) | 293 | 298 | 3 | (9 | ) | 292 | |||||||||
Europe | 58 | - | - | 58 | 58 | 2 | - | 60 | ||||||||||
Total | 356 | 2 | (7 | ) | 351 | 356 | 5 | (9 | ) | 352 | ||||||||
2011 | ||||||||||||||||||
Thirty-nine Weeks Ended October 1, 2011 | Fifty-two Weeks Ended December 31, 2011 | |||||||||||||||||
January 1, | October 1, | January 1, | December 31, | |||||||||||||||
2011 | Opened | Closed | 2011 | 2011 | Opened | Closed | 2011 | |||||||||||
North America | ||||||||||||||||||
Traditional | 290 | - | (3 | ) | 287 | 290 | 2 | (5 | ) | 287 | ||||||||
Non-traditional | 15 | 1 | (4 | ) | 12 | 15 | 2 | (6 | ) | 11 | ||||||||
305 | 1 | (7 | ) | 299 | 305 | 4 | (11 | ) | 298 | |||||||||
Europe | 54 | 3 | (1 | ) | 56 | 54 | 5 | (1 | ) | 58 | ||||||||
Total | 359 | 4 | (8 | ) | 355 | 359 | 9 | (12 | ) | 356 | ||||||||
Our long term store real estate goal is to bring our stores back to best in class productivity and profitability. Today we believe that the optimal number of Build-A-Bear Workshop stores in North America is between 225 to 250 and approximately 70 in the United Kingdom and Ireland for a total of 295 to 320 stores. We expect to reach this level within the next two years with the closure of 50 to 60 stores. | ||||||||||||||||||
CONTACT:
Build-A-Bear Workshop
Investors:
Tina Klocke,
314-423-8000 x5210
or
Media:
Jill Saunders, 314-423-8000 x5293