ST. LOUIS - Build-A-Bear Workshop, Inc. (NYSE: BBW) reported a decline in its first-quarter financial performance, missing analyst estimates for both earnings per share (EPS) and revenue.
The company's stock fell sharply by 17% following the announcement, indicating a negative market response to the earnings news.
For the first quarter ended May 4, 2024, Build-A-Bear announced revenues of $114.7 million, a 4.4% decrease from the same quarter last year and below the analyst consensus of $120.36 million. Adjusted EPS came in at $0.82, which was $0.14 short of the consensus estimate of $0.96. The revenue decline and EPS miss were the primary drivers of the stock's significant drop.
Despite the lower-than-expected results, Build-A-Bear's management reiterated their confidence in the company's annual guidance, expecting growth in total revenues and pre-tax income.
Sharon Price John, President and CEO, noted that while the first quarter results were slightly below internal expectations, due to web demand challenges and a weaker spending environment, the company anticipates positive momentum throughout the year. This is expected to be driven by strategic initiatives, including omni-channel integration and the opening of new global experience locations.
Voin Todorovic, CFO of Build-A-Bear, commented on the company's profitability, stating that the first quarter was still more profitable than any pre-Covid first quarter since the company's IPO. He highlighted the sustainability of the transformed business model and the company's strong cash flow generation, which allowed for the return of nearly $30 million to shareholders over the past twelve months through share repurchases and dividends.
In terms of store activity, Build-A-Bear saw a net increase of six global experience locations during the quarter. The company ended the quarter with 531 global locations, consisting of 357 corporately-managed stores, 97 partner-operated stores, and 77 franchise stores.
Looking ahead, Build-A-Bear reaffirmed its fiscal 2024 outlook, expecting total revenue growth on a mid-single-digit percentage basis and pre-tax income growth on a similar scale. The company's guidance also includes the opening of at least 50 new experience locations and capital expenditures ranging from $18 million to $20 million.
Despite the reaffirmed guidance, the market's reaction to the first-quarter performance was decidedly negative, with the stock experiencing a significant downturn.
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