BUILD-A-BEAR WORKSHOP INC (BBW): Results of Operations and Financial Condition
BUILD-A-BEAR WORKSHOP INC (BBW) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 BUILD-A-BEAR WORKSHOP REPORTS FISCAL SECOND QUARTER 2026 RESULTS ST. LOUIS, MO (August 27, 2026) – Build-A-Bear Workshop, Inc. (NYSE: BBW) today announced results for the second quarter of fiscal year 2026 ended August 1, 2026. ● Second-quarter total revenues were $1
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Why it matters
The earnings miss and guidance cut are fresh, material information that can move the stock immediately.
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First‑report earnings release with revised guidance and buyback details; directly relevant for traders targeting BBW.
What to watch
New immersive ICON Park location could drive future traffic and offset short‑term weakness.
Second-quarter total revenues declined 7.2% to $115.3 million, pre-tax income fell to $11.6 million, and the Company lowered fiscal 2026 revenue and pre-tax income outlook.
Second-quarter revenue, retail sales, e-commerce demand, pre-tax income, EPS and EBITDA declined from the prior-year period. Management said results fell short of its expectations and reduced its fiscal 2026 revenue and pre-tax income outlook.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenues, second quarter fiscal 2026GAAP | $115.3 million | – | decreased 7.2% |
| Consolidated gross profit, second quarter fiscal 2026GAAP | $62,489 thousand | – | – |
| Consolidated gross margin, second quarter fiscal 2026GAAP | 54.2% | – | 340-basis-point decrease |
| Selling, general and administrative expense, second quarter fiscal 2026GAAP | $51,410 thousand | – | 80-basis-point decrease in selling, general, and administrative expense |
| Income before income taxes, second quarter fiscal 2026GAAP | $11.6 million | – | – |
| Pre-tax margin, second quarter fiscal 2026GAAP | 10.1% of total revenues | – | 220-basis-point decrease |
| Income tax expense, second quarter fiscal 2026GAAP | $2,871 thousand | – | – |
| Net income, second quarter fiscal 2026GAAP | $8,760 thousand | – | – |
| Diluted earnings per share, second quarter fiscal 2026GAAP | $0.70 | – | – |
| Basic earnings per share, second quarter fiscal 2026GAAP | $0.71 | – | – |
| EBITDA, second quarter fiscal 2026non-GAAP | $15.2 million | – | – |
| EBITDA margin, second quarter fiscal 2026non-GAAP | 13.2% of total revenues | – | – |
| Total revenues, first half fiscal 2026GAAP | $240.6 million | – | decreased 4.8% |
| Consolidated gross profit, first half fiscal 2026GAAP | $142,361 thousand | – | – |
| Consolidated gross margin, first half fiscal 2026GAAP | 59.2% | – | 200-basis-point increase |
| Selling, general and administrative expense, first half fiscal 2026GAAP | $107,536 thousand | – | 120-basis-point increase in SG&A expense |
| Income before income taxes, first half fiscal 2026GAAP | $35.5 million | – | – |
| Adjusted income before income taxes, first half fiscal 2026non-GAAP | $28.5 million | – | – |
| Net income, first half fiscal 2026GAAP | $27,059 thousand | – | – |
| Diluted earnings per share, first half fiscal 2026GAAP | $2.16 | – | – |
| Adjusted diluted earnings per share, first half fiscal 2026non-GAAP | $1.73 | – | – |
| EBITDA, first half fiscal 2026non-GAAP | $42.9 million | – | – |
| Adjusted EBITDA, first half fiscal 2026non-GAAP | $35.9 million | – | – |
| Retail gross margin, second quarter fiscal 2026other | 54.0% | – | – |
| Retail gross margin, first half fiscal 2026other | 59.4% | – | – |
| Capital expenditures, second quarter fiscal 2026other | $8.6 million | – | – |
| Capital expenditures, first half fiscal 2026other | $15.4 million | – | – |
| Depreciation and amortization, second quarter fiscal 2026other | $4,112 thousand | – | – |
| Depreciation and amortization, first half fiscal 2026other | $8,114 thousand | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Net retail sales, second quarter fiscal 2026Not separately stated. | $106,544 thousand | – | decreased 7.1% |
| Commercial revenue, second quarter fiscal 2026Not separately stated. | $8,086 thousand | – | – |
| International franchising, second quarter fiscal 2026Not separately stated. | $661 thousand | – | – |
| Commercial and international franchise revenues, second quarter fiscal 2026Not separately stated. | $8.8 million | – | decreased 9.0% |
| Net retail sales, first half fiscal 2026Not separately stated. | $220,010 thousand | – | decreased 6.1% |
| Commercial revenue, first half fiscal 2026Not separately stated. | $19,034 thousand | – | – |
| International franchising revenue, first half fiscal 2026Not separately stated. | $1,517 thousand | – | – |
| Commercial and international franchise revenues, first half fiscal 2026Not separately stated. | $20.6 million | – | increased 11.6% |
fiscal 2026 outlook
- Revenue$500 million to $525 million
- Tax rateapproximate 24%, excluding discrete items
- NotePre-tax income of $60 million to $68 million
- NoteAdjusted pre-tax income of $53 million to $61 million
- NoteCommercial revenue to be approximately flat compared to fiscal 2025
- NoteCapital expenditures of approximately $25 million
- NoteDepreciation and amortization of approximately $17 million
- NoteNet new unit growth of at least 50 experience locations
- Note$10 million to $11 million of ongoing tariffs and related costs, based on the current 12.5% tariff rate
- Noteapproximately $3 million in longer-term investments
- Noteapproximately $13 million IEEPA tariff refund, including approximately $7 million impact related to prior-year costs
Capital returns
- For the second quarter, the Company utilized $5.6 million in cash to repurchase 155,118 shares of common stock.
- For the second quarter, the Company paid shareholders a $2.9 million quarterly cash dividend.
- For the first half of fiscal 2026, the Company utilized $17.1 million in cash to repurchase 403,236 shares of its common stock.
- For the first half of fiscal 2026, the Company paid $5.8 million in quarterly cash dividends to shareholders.
- For the first half of fiscal 2026, the Company returned $22.7 million to shareholders through share repurchases and quarterly dividends.
- Since the end of the second quarter through August 26, the Company utilized $1.5 million in cash to repurchase an additional 39,122 shares of its common stock.
- The Company has $43.2 million remaining under the board-authorized $100.0 million stock repurchase program adopted on September 11, 2024.
- The Company returned $49 million to shareholders over the past 12 months through share repurchases and quarterly dividends.
What drove it
- Second-quarter gross-margin pressure reflected occupancy cost deleverage and increased promotional activity.
- The second-quarter decrease in SG&A was driven mainly by lower incentive compensation expense.
- First-half gross margin included a 330-basis-point benefit from the $7 million IEEPA tariff refund related to prior fiscal year costs.
- First-half SG&A expense reflected higher store-level compensation expense, general inflationary pressures and longer-term investments, partially offset by lower incentive compensation expense.
- The Company delivered net new unit growth of five global experience locations during the quarter, reflecting three corporately-managed locations and six franchise locations, partially offset by a net decline of four partner-operated locations.
- Management plans an acceleration in experience location openings during the remainder of the year.
Concerns
- Management said second-quarter results fell short of its expectations.
- Consolidated e-commerce demand decreased 15.6% in the second quarter and decreased 21.2% in the first half.
- Management said certain wholesale opportunities may take longer to realize than previously anticipated.
- The outlook reflects $10 million to $11 million of ongoing tariffs and related costs, based on the current 12.5% tariff rate.
- The outlook considers tariffs, labor costs, changes in freight expense and ongoing inflationary challenges.
- Second-quarter pre-tax margin decreased 220 basis points to 10.1% of total revenues.
What to watch
- Progress toward fiscal 2026 total revenues of $500 million to $525 million and pre-tax income of $60 million to $68 million.
- The pace at which commercial revenue becomes approximately flat compared to fiscal 2025 and whether wholesale opportunities are realized.
- E-commerce demand following the second-quarter 15.6% decrease.
- Execution of at least 50 net new experience locations in fiscal 2026.
- Capital expenditures, expected to be approximately $25 million, and their timing through the remainder of the year.
- The impact of ongoing tariffs and related costs of $10 million to $11 million.
Balance sheet and cash flow
- Cash, cash equivalents and restricted cash were $14,004 thousand at August 1, 2026, compared to $26,755 thousand at January 31, 2026 and $39,108 thousand at August 2, 2025.
- Cash and cash equivalents totaled $14.0 million at the end of the second quarter, a decrease of $25.1 million, or 64.2%, from $39.1 million at the end of the second quarter last year.
- The Company finished the quarter with no borrowings under its revolving credit facility.
- Inventories, net were $81,130 thousand at August 1, 2026, compared to $82,203 thousand at January 31, 2026 and $81,758 thousand at August 2, 2025.
- Inventory at quarter end was $81.1 million, a decrease of $0.6 million, or 0.8%.
- Property and equipment, net were $79,058 thousand at August 1, 2026, compared to $70,926 thousand at January 31, 2026 and $58,804 thousand at August 2, 2025.
- Total assets were $334,101 thousand at August 1, 2026, compared to $345,453 thousand at January 31, 2026 and $318,238 thousand at August 2, 2025.
- Total stockholders' equity was $158,997 thousand at August 1, 2026, compared to $155,028 thousand at January 31, 2026 and $155,395 thousand at August 2, 2025.
Analysis
Build-A-Bear reported a weaker second quarter, with total revenues of $115.3 million, down 7.2%, and net retail sales of $106.5 million, down 7.1%. Consolidated e-commerce demand declined 15.6%, while combined commercial and international franchise revenues declined 9.0% to $8.8 million. Management stated that second-quarter results fell short of its expectations and that certain wholesale opportunities may take longer to realize than previously anticipated.
Profitability weakened in the quarter. Pre-tax income was $11.6 million, or 10.1% of total revenues, versus $15.3 million, or 12.3% of total revenues. Consolidated gross margin was 54.2%, compared with 57.6%, and management attributed the 340-basis-point gross-margin decrease to occupancy cost deleverage and increased promotional activity. The 220-basis-point decline in pre-tax margin was partly offset by an 80-basis-point reduction in SG&A expense, mainly from lower incentive compensation expense, as well as higher interest income. Diluted EPS declined to $0.70 from $0.94, and EBITDA declined to $15.2 million from $18.8 million.
First-half reported profitability benefited from the $7 million IEEPA tariff refund related to prior fiscal year costs. First-half total revenues decreased 4.8% to $240.6 million, while reported pre-tax income increased to $35.5 million from $34.9 million and reported diluted EPS increased to $2.16 from $2.11. Excluding the refund, adjusted pre-tax income was $28.5 million, adjusted EPS was $1.73, and adjusted EBITDA was $35.9 million. The filing also identifies higher store-level compensation expense, general inflationary pressures and longer-term investments as contributors to higher first-half SG&A expense.
Capital allocation remained active despite lower cash. The Company returned $22.7 million to shareholders in the first half through repurchases and dividends, including $17.1 million used to repurchase 403,236 shares and $5.8 million of quarterly cash dividends. Cash and cash equivalents totaled $14.0 million at quarter end, down $25.1 million from the end of the second quarter last year, primarily due to repurchases and the timing of capital expenditures. The Company had no borrowings under its revolving credit facility, while first-half capital expenditures increased to $15.4 million from $6.3 million.
The Company lowered fiscal 2026 expectations to total revenues of $500 million to $525 million and pre-tax income of $60 million to $68 million. The outlook includes an approximately $13 million IEEPA tariff refund and $10 million to $11 million of ongoing tariffs and related costs. Management continues to expect at least 50 net new experience locations and approximately $25 million of capital expenditures, with planned acceleration in experience location openings during the remainder of the year. The key operating issues are retail and e-commerce demand, the timing of commercial opportunities, promotion and occupancy-driven margin pressure, and the ongoing tariff and cost environment.
Management, verbatim
While we expected fiscal 2026 to be back-half weighted, second-quarter results fell short of our expectations, and certain wholesale opportunities may take longer to realize than previously anticipated. Accordingly, we have moderated our outlook for the balance of the year.
Chris Hurt, Chief Executive Officer of Build-A-Bear Workshop
Looking ahead, we expect cash generation to increase through the remainder of the year, supported by continued profitability, prudent expense management, and the timing of capital expenditures.
Voin Todorovic, Chief Financial Officer and Chief Administrative Officer of Build-A-Bear Workshop
Not in the filing
stated, not guessed- Operating income
- Operating margin
- Operating cash flow
- Free cash flow
- Total debt
- Dividend per share
- Prior-quarter comparisons for reported metrics
- Previous-release outlook for comparison against actual results
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
The filing is Build‑Bear Workshop's quarterly 8‑K, the first public disclosure of its Q2 2026 performance and revised FY outlook.
Ticker impact
Build‑Bear Workshop reported Q2 2026 results, lowered FY revenue guidance to $500‑$525 M and disclosed a $5.6 M share repurchase.
Potential short‑term downside of 4‑6% pending market reaction.
Revenue fell 7.2% YoY and guidance was cut, a material negative catalyst; however, continued repurchases and dividend may limit the drop.
Market effects
Retail‑entertainment sector may see broader pressure as consumer spending softens.
U.S. consumer discretionary stocks could face slight weakness.
Limited to U.S. markets; no immediate global ripple.
Counterpoint
Buyback continuation and dividend may make BBW a relative value play if price overreacts.
Key entities
- ExecutiveChris Hurt
CEO of Build‑Bear Workshop, provided commentary on results and upcoming store openings.
- ExecutiveVoin Todorovic
CFO, highlighted cash generation and shareholder returns.
