I'm the first to admit that I have an attachment to stuffed animals. Although I never had a teddy bear as a kid, I had a lot of other animals that in retrospect had rather surreal designs. My favorite was Fluffy, a dog whose stuffing gradually leaked out of a hole in his stomach and whose material disintegrated into ratty old fabric. Fluffy and his compatriots are in my attic, awaiting their unlikely resurrection.
Personal attachment to a stuffed animal is one reason Build-A-BearWorkshop (NYSE:BBW) has had success. By allowing you to be a Dr. Frankenstein to your own cuddly creature, the company ensures that it will remain in your mind for years to come.
Although fellow Fool Seth Jayson saw much to like about Build-A-Bear, our colleague David Meier was not so impressed with its IPO. I'm in David's camp, primarily because I have bad memories of another do-it-yourself store called Color Me Mine. There's nothing wrong with Color Me Mine's product. But the now-bankrupt restaurant chain KooKooRoo, via boneheaded CEO Kenneth Berg, made a diworsification move by buying this unprofitable ceramics business. The chain was subsequently sold off and has since gone private.
While there is a possibility that kids of all ages will enjoy bringing their own bear to life, there is also a good chance that this mascot bioengineering concept could be a fad. The company does have elements of a good strategy -- similar to Gillette's (NYSE:G) -- in that the accessories one can buy with the bear are a big source of profits.
At the end of the day, though, it's a retail business, and people (especially kids) are a notoriously fickle target group. One look at clothing retailers such as Hot Topic (NASDAQ:HOTT) and Wet Seal (NASDAQ:WTSLA) should drive that point home.
I don't mean to knock the chain. I really, really hope it succeeds, actually. We need more huggable things in this world. Investors should be aware, however, that as snuggly as a company might be, its stock may have prickly surprises waiting inside.
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Fool contributor Lawrence Meyers does not own shares of any companies mentioned herein, but he still gives Fluffy the occasional hug.
