After Build-A-Bear Workshop
The company posted what was mostly a healthy fourth quarter, and it's sticking to its forecast that calls for the company to earn between $1.29 and $1.35 a share this year. But this is the same company that back in December figured it was good enough for only $0.26 to $0.29 a share in earnings for Q4 of fiscal 2004. Yesterday, we learned that it produced net income of $0.32 a share, a number that includes stock-based compensation expenses and the common lease accounting corrections -- oh, and it also happened to come during a quarter that was one week shorter than the previous year's Q4.
Here we have a freshly minted company that already knows how to play the game of underpromising and overdelivering. Besides, what's so shabby about the worst-case scenario of $1.29 a share? That would still represent a 31% spurt in earnings growth, even if it would be just a bit better than 20% on a per-share basis, given its greenback-fortifying IPO late last year. Are you trying to tell me that 24 times those earnings would be too steep a price for Build-A-Bear?
Fad? Did you say fad? I heard someone say it. It may very well have been you. Yes, where comps rose by 18% last year, the company is looking for same-store sales to climb by just 3% in 2005, and that's caused a lot of fuss. So a 21% growth in comps over the course of two years -- a feat that would make even a master like Starbucks
The company will also be tacking another 30 stores to its chain of 170, and international franchisees will open as many as 20 locations overseas to give the company some welcome, and relatively passive, royalties.
I first stepped into a Build-A-Bear this past summer at Disney's
Some may think that buying a customized teddy bear is a one-time deal. Well, you wouldn't believe the people I saw simply buying up clothing and accessories for their existing bears. The retailer is crafty enough to host birthday parties that sustain and even spread the plushy epidemic in brilliantly viral ways.
But will it all be simply a passing fancy? Barbie was born in 1959, inspiring the same kind of buying binges on collectible clothing and accessories that you see today on a smaller -- yet equally fanatical -- scale at Build-A-Bear. Barbie only recently failed to deliver for Mattel
To that end, Build-A-Bear is already rolling out a new concept, "friends 2B made," that focuses on smaller, soft custom dolls other than teddy bears, with accessories (and plush cars) galore.
So maybe I'll go ahead and open my own Build-A-Bull knockoff concept, where folks can stuff a stock that they deem overvalued as much as they want but walk away feeling quite bullish.
Fools have fallen on both sides of the Build-A-Bear Workshop fence:
- Lawrence Meyers still needs to be convinced.
- David Meier figures that the growth can't last.
- Seth Jayson thinks that more growth may be on the horizon.
Longtime Fool contributor Rick Munarriz wants to be "beary" clear that he really has no intention to roll with his Build-A-Bull concept. For starters, kids would get poked with the horns. At least that's what happened with the prototypes. He owns shares in Disney. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.