Investors may be wondering what kind of a premium might be offered for Build-a-Bear Workshop
Comps are an important retail metric, because they show sales generated organically, rather than from expansion. Build-a-Bear reported that revenue rose 8.2% in the third quarter, to $109.8 million, but it also opened 16 new stores: 12 here in North America and four abroad. New stores have been cannibalizing sales at existing stores, and comps dropped 10.1% in the quarter. That's on top of a greater-than-9.4% drop in the second quarter, and almost double the 5.8% decline a year ago.
It seems that the drop-off in customers has been ramping up, nearly doubling each quarter from the year before. In fact, it's been two years since Build-a-Bear has seen an uptick in same-store sales.
BBW Same Store Sales, % Chg |
2007 |
2006 |
2005 |
---|---|---|---|
Q4 |
n/a |
(10.40%) |
(0.60%) |
Q3 |
(10.10%) |
(5.80%) |
1.30% |
Q2 |
(9.40%) |
(4.40%) |
(6.90%) |
Q1 |
(6.90%) |
(3.80%) |
5.40% |
Having forked over a premium for a stuffed bear or two at privately held Vermont Teddy Bear Co., I can attest to the novelty wearing thin pretty quickly. What may once have been a cute gimmick to send a stuffed bear to someone as a gift grows old fast. How many bears does someone other than a collector really need? And after a party or two at a Build-a-Bear store, the kids will be clamoring for pizza and Skee-Ball at Chuck E. Cheese
There have been a few names bandied about as candidates to buy the Workshop: toy makers like Mattel
Yet even with the stock enjoying a bit of a boost today, in seemingly misguided joy over the results, it's hard to imagine Build-a-Bear commanding prices anywhere near its 52-week high of $32 a share. Even the mid-$20s ,where it entered the summer, seem a rich value for a company hemorrhaging customers.
There may be a premium in the works, but it'll more than likely be on your next bear purchase.
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