So, here's the thing about running a business that makes adorable, customizable stuffed animals: sometimes you get hit with tariffs that are decidedly not cute. Build-A-Bear Workshop Inc. (BBW) just reported its quarterly and annual results, and the story is one of record revenue but also some significant, government-shaped speed bumps on the road ahead.
The company's fourth quarter was a bit of a mixed bag. They earned $1.26 per share on a GAAP basis, which beat analyst estimates of $1.22. That's the good news. The less-good news is that it's down from $1.62 a year ago. Revenue hit a record $154.5 million, up 2.7% year-over-year, but it still came in just shy of the $155.7 million analysts were expecting.
Why the squeeze? Build-A-Bear pointed directly to about $6 million in tariffs and related costs during the quarter. On top of that, they had over $1.2 million in higher medical and labor expenses, thanks to minimum wage increases. When you're paying more for both the materials to make the bears and the people who help you sell them, it's going to show up in the margins. Pre-tax income was $21.5 million, or 13.9% of revenue, compared to a healthier 18.3% in the prior year.
Looking at the full fiscal year 2025, the picture is similar but bigger. Total revenue climbed 6.7% to a record $529.8 million. Earnings per share rose to $3.99 from $3.80. But again, tariffs were a major theme, with about $11 million in related costs for the year, plus another $5 million from those higher medical and labor expenses. Pre-tax income was essentially flat at $67.2 million.
The business breakdown shows where the growth is and isn't. Retail sales, their largest segment, brought in $139.5 million in Q4, nearly unchanged. For the full year, retail net sales grew 5.6% to $486.0 million. Their commercial and international franchising business is a bright spot, with revenue jumping 37.5% to $15.1 million in the quarter and 21.6% for the year. The not-so-bright spot? Consolidated e-commerce demand, which fell 13.6% in Q4 and 5.5% for the year.
On the financial health front, Build-A-Bear ended the year with $26.8 million in cash and no borrowings on its credit line. They spent $25.5 million on capital expenditures for the year. One notable line item is inventory, which rose to $82.2 million from $69.8 million. The company says this reflects both tariff-related costs and stock built up to support expected sales.
Shareholders did well, with the company returning $39.0 million to them through share repurchases and dividends in fiscal 2025. They also raised the quarterly dividend by 4.5% to 23 cents per share, payable in April 2026. "This consistent performance, together with solid cash flow generation, has enabled us to return more than $170 million to shareholders through stock repurchases and dividends over the past five years," commented Voin Todorovic, Chief Financial Officer of Build-A-Bear Workshop. The company also expanded its physical footprint, adding 64 global experience locations for a total of 662 worldwide.
Now, let's talk about the future, because that's where the real tariff story kicks in. For fiscal 2026, Build-A-Bear expects revenue to grow at a mid-single-digit rate. However, pre-tax income is projected to range from a mid-single-digit percentage decline to low-single-digit growth. Why the potential decline in a growing business? They're baking in about $16 million in tariff-related costs and another $3 million in long-term investments. They also plan to open at least 50 new experience locations and grow commercial revenue by at least 20%.
In a separate but major announcement, the company is preparing for a change at the top. As part of a long-term succession plan, President and CEO Sharon Price John plans to retire on June 11, 2026. The board has appointed Chief Operations and Experience Officer Chris Hurt as the next CEO, and he will join the board when he takes over. Price John will stay on the board during the transition to help ensure a smooth handover.
Investors seemed to be focusing on the costs and the outlook. Build-A-Bear Workshop shares were down 4.76% at $41.42 at the time of publication on Thursday.
