A strong quarter at Build-A-Bear Workshop in a bounce back year for the retailer was overshadowed by the growing weight of tariffs in an ongoing trade war waged by President Donald Trump.
TL;DR
- Build-A-Bear Workshop had a strong quarter, but tariffs impacted results.
- Proactive measures helped offset tariffs initially, but they caught up in the latest period.
- Tariff impacts are expected to continue through 2026, affecting Build-A-Bear's results.
- The retailer saw sales climb nearly 3% and expects fiscal year 2025 earnings growth.
The retail fixture managed to outpace the effects of tariffs in the initial six months of the year by taking proactive measures, stated Chief Financial Officer Voin Todorovic on Thursday, though the duties did catch up with the business in its latest fiscal period and are expected to keep impacting its results through 2026.
“We expect this elevated level of impact to continue through the fourth quarter and into the next fiscal year,” Todorovic said. “Nevertheless, we remain confident in our guidance, which accounts for tariff impacts and our focus on disciplined expense management.”
Build-A-Bear shares tumbled 15% Thursday.
In April, Trump conceded that his imposed tariffs might lead to a reduction in product availability and an increase in prices within the U.S., remarking then that American children could potentially “have two dolls instead of 30 dolls.”
Numerous American businesses have managed to sidestep cost increases by employing strategies such as proactively purchasing inventory prior to tariffs becoming effective. Several have shouldered a portion of the expenses and reduced hiring rather than passing on higher costs to consumers.
Both importers and economists, however, said that those tactics have an expiration date.
During the quarter concluding on November 1st, Build-A-Bear reported earnings of $8.1 million, equating to 62 cents per share. In the corresponding period of the prior year, the St. Louis-based firm posted profits of $9.9 million, or 73 cents per share.
The performance topped the 59 cents per share that analysts polled by FactSet were looking for.
Sales climbed almost 3% to $122.7 million, yet fell short of the $124 million anticipated by Wall Street analysts.
Build-A-Bear continues to expect its fiscal year 2025 earnings to increase by a mid-to-high single-digit percentage.
Part of the reason for the retailer’s rebound is growing popularity on social media, particularly among what are referred to as “kidults,” those who may have had a Build-A-Bear growing who are buying them again. Those buyers tend to spend more on the products.
Todorovic stated that these have been the most lucrative initial nine months in the firm's existence. Investors, too, have been enjoying substantial returns. The stock finished trading at $57.40 on Wednesday, representing considerable appreciation from five years prior, when the merchant's stock was valued below $3.
