Build-A-Bear Workshop, Inc. (NYSE:BBW) shares jumped after the company reported record second-quarter fiscal 2025 results that beat analyst expectations.
Earnings per share were 94 cents, topping the consensus estimate of 67 cents, while revenue rose 11.1% year over year to $124.2 million, ahead of the $116.2 million estimate.
Net retail sales increased 10.8% to $114.635 million, consolidated e-commerce demand rose 15.1%, and commercial and international franchise revenue grew 15.2% to $9.6 million.
Also Read: Insights into Build-A-Bear Workshop’s Upcoming Earnings
Pre-tax income advanced 32.7% to $15.3 million, representing 12.3% of revenue, while EBITDA climbed 25.3% to $18.8 million, or 15.1% of revenue.
For the first half of fiscal 2025, revenue increased 11.5% to $252.6 million, with net retail sales of $234.2 million, up 10.8%. E-commerce demand rose 6.8%. Commercial and international franchise revenue grew 21.1% to $18.4 million.
Pre-tax income reached $34.9 million, up 31.5%, while diluted EPS increased 44.5% to $2.11. EBITDA was $41.9 million, up 26%, or 16.6% of revenue.
Gross margin improved 340 basis points in the quarter and 300 basis points in the first half, driven by reduced promotional activity, fixed-cost leverage, and selective price increases. This was partially offset by higher SG&A expenses from store compensation, corporate costs, and inflationary pressures.
The company ended the quarter with 627 global locations, including 368 corporately managed stores, 157 partner-operated stores, and 102 franchises. Net new unit growth totaled 14 in the quarter.
Cash and cash equivalents stood at $39.1 million, up 55.4% from last year, and there were no borrowings under the company’s revolving credit facility.
Inventory rose 22.1% to $81.8 million, reflecting tariffs and accelerated product purchases. Capital expenditures were $3.4 million for the quarter and $6.3 million year to date.
Build-A-Bear returned $13.1 million to shareholders in the first half through repurchases and dividends. During the quarter, it repurchased 59,083 shares for $3.1 million and paid $2.9 million in dividends.
After quarter-end through August 27, it repurchased another 30,585 shares for $1.6 million, leaving $80.3 million under its $100 million program.
Outlook
The company raised full-year guidance and now expects mid-to-high single-digit revenue growth, pre-tax income of $62 million to $70 million, and at least 60 net new unit openings.
President and CEO Sharon Price John said, “We are pleased with our record first-half results, driven by continued strong store performance and contribution margins in our Direct-to-Consumer segment, and double-digit revenue growth for our Commercial segment, leading us to raise our revenue and profit guidance for the year.”
CFO Voin Todorovic added, “The company’s most profitable second quarter and first half in our history underscore the durability of our evolved business model.”
Price Action: BBW shares are trading higher by 12.91% to $66.12 at last check Thursday.
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