Build-A-Bear Posts Quarterly Loss as “Brexit and Toys ‘R’ Us Hurt Results”

I have never read a news headline that made me roll my eyes so hard.

Are…you…kidding me?

Build-A-Bear, the over priced ‘stuff it yourself toy store’, which are usually only inside of malls, are claiming that their stocks are dropping because of Brexit and Toys R Us.

And yes, I will post the press release with all of these details below. But first some opinions, because something about this is really causing a reaction in this toy journalist.

Now, toy manufacturers jumping on the ‘Toys R Us is gone and now our stocks are tanking’ bandwagon isn’t completely new. Companies like Mattel and Hasbro, who had a large bulk of their product inside Toys R Us are justified in those complaints. Other companies like Funko have admitted they were somewhat affected, but ultimately, their model works because they intentionally don’t give more than 10% of their stock to any singular retailer.

So then, what in the ever-loving schpadoinkel does Build-A-Bear have to do with Toys R Us? I can’t remember ever even seeing a section for them, or a building station the way there was an aisle for FAO Schwartz and their stuffed animals. What in the world is Build-A-Bear talking about?

And as for blaming Brexit? I’m not trying to sound ignorant; I know that the UK’s exit from the EU hurt a lot of things on a financial and business scale. But that was years ago! I even double checked my source to make sure I wasn’t accidentally looking at an expired article– nope. Fresh news.

How about instead of blaming everyone around you, Build-A-Bear, you take a step back and maybe consider the fact that your products just might not be awesome? Let’s look at society’s response to these items; the only time there is a crowd at Build-A-Bear is when they have some sort of crazy promotion (like when they did Free Bear Day that yes, caused lines at many malls and some customers weren’t able to obtain sad free bear because of the crowds). Or when they manage to get some sort of interesting licensed product, like when they got the Ninja Turtles and collectors wanted to go over and get one.

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In my opinion, not only is Build-A-Bear expensive, inside of a mall (which I can’t tell is a good or bad thing), and full of unappealing products, but I feel like they’re running off of a business model that just isn’t very exciting. Their toys may just not be the sort of items that people want. I’ve personally never taken my kids inside of a Build-A-Bear, because it’s simply unappealing. When they want toys, they want franchises they know. If they want the satisfaction of seeing a product come to life from start to finish, we’ll bake cookies or something.

Look– I’m not financial analyst. That’s above my pay grade. But as a toy collector, researcher, and consumer, my knee-jerk reaction to Build-A-Bear blaming Toys R Us for anything, even their impact on the industry as a whole, is reaching just a little.

The official financial reporting for Build-A-Bear are continued below.

Shares of Build-A-Bear Workshop (BBW) were falling Wednesday after the stuffed animal maker reported a fourth-quarter loss and highlighted two key issues. The stock was down 4.76% to $5.60 a share in premarket trading.

The adjusted loss in the fourth quarter was 5 cents a share vs. analysts’ estimates that called for earnings of 35 cents. Revenue was $98.5 million, missing Wall Street estimates of $99.9 million.

The net loss in the quarter was $10.4 million, or 72 cents a share, vs. year-earlier earnings of $7.7 million, or 49 cents.

Management mentioned two issues investors clearly are worried about: Brexit and the Toys ‘R’ Us bankruptcy.

“We believe there were a number of unusual challenges that converged to negatively impact our financial results last year,” said Sharon Price John, president and CEO of Build-A-Bear. “In North America, our largest overall market, we had a low single-digit sales decline and modest profit on an adjusted basis; however, the waning consumer confidence related to Brexit and new privacy laws that inhibited consumer communication in our largest international market, the United Kingdom, resulted in disappointing financial results for the year on a consolidated basis.”

“Other impacts for the year included the full-year closure of our most profitable, multi-million-dollar retail store, the liquidation of Toys ‘R’ Us, the impact of new accounting standards and tax policies, and lower licensed product sales due to the significant reduction in family-centric movie properties,” John added.

The stock has declined 32% in the past year.

 

SOURCE: The Street

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