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BW

BUILD-A-BEAR WORKSHOP INC (BBW)·Q2 2026 Earnings Summary

Executive Summary

  • Record Q2 performance: revenue $124.25M (+11.1% YoY), EPS $0.94 (+46.9% YoY), gross margin 57.6% (+340 bps YoY), EBITDA $18.78M (+25.3% YoY) .
  • Material beats vs consensus: revenue beat by ~$8.06M (+6.9%), EPS beat by $0.20, EBITDA beat by ~$3.82M; guidance raised to mid-to-high-single-digit revenue growth and pre-tax income $62–$70M; net new units increased to ≥60 from ≥50 . Estimates from S&P Global.*
  • Strength across channels: stores drove transaction growth with domestic traffic +3% vs national benchmark −3%; e-commerce demand +15.1% on favorable launch timing; Commercial (wholesale) segment +18.3% .
  • Tariffs/Cost headwinds are sizable but mitigated: 30% China tariffs extended to Nov 10 and Vietnam tariff doubled to 20%; expected FY2025 net impact <~$11M (≈$1M in Q2) plus ~$5M medical/labor cost headwind; still raising full-year profitability outlook .
  • Capital returns continue: Q2 repurchased $3.1M (59,083 shares) and paid $2.9M dividend; declared $0.22 dividend payable Oct 9, 2025; $80.3M remains under repurchase authorization .

What Went Well and What Went Wrong

What Went Well

  • Broad-based growth and margin expansion: gross margin +340 bps YoY to 57.6% on reduced promotions, fixed-cost leverage, selective price increases; pre-tax margin +200 bps to 12.3% . “This was the most profitable second quarter and first half in the company’s history” .
  • Omnichannel execution: e-commerce demand +15.1% aided by timing of product launches; stores delivered transaction growth with domestic traffic +3% vs benchmark −3% . “We are telling more comprehensive stories…driving higher ticket price” .
  • Strategic initiatives scaling: partner-operated expansion (14 net new locations in Q2; 86% international) to 32 countries; Mini Beans collection revenue +80% YoY with wholesale placements (Hudson, Applegreen) and first licensed Sanrio launch .

What Went Wrong

  • SG&A deleverage: SG&A up 140 bps YoY to 45.4% of revenue on higher store compensation, corporate costs, inflation (partially offset by marketing timing) .
  • Units per transaction declined despite higher dollars per transaction (AUR) and reduced promos, indicating some mix headwind; Q&A acknowledged selective price increases and strategy to preserve entry pricing for core consumers .
  • Second-half tougher comps and rising tariff headwinds: Vietnam tariffs to 20% and continued China tariffs expected to weigh more in H2; total FY headwind near $16M (≈$11M tariffs + ~$5M medical/labor), driving implied margin moderation vs strong H1 .

Financial Results

Headline Metrics vs Prior Periods

MetricQ2 2025 (YoY base)Q1 2026Q2 2026
Revenue ($USD Millions)$111.80 $128.40 $124.25
Diluted EPS ($USD)$0.64 $1.17 $0.94
Gross Margin (%)54.2% 56.8% 57.6%
EBITDA ($USD Millions)$14.99 $23.13 $18.78
Pre-tax Income ($USD Millions)$11.55 $19.63 $15.32

Segment Breakdown

Segment ($USD Millions)Q2 2025Q1 2026Q2 2026
Net Retail Sales$103.46 $119.59 $114.64
Commercial Revenue$7.29 $7.62 $8.63
International Franchising$1.05 $1.18 $0.98
Total Revenues$111.80 $128.40 $124.25

KPIs

KPIQ2 2025Q2 2026Notes
E-commerce Demand YoY—+15.1% Timing of launches earlier than prior year
Domestic Store Traffic—+3% vs −3% national benchmark Outperformance vs benchmark
Dollars per Transaction—Up YoY AUR higher; reduced promo; fewer units/transaction
Partner-operated Units107 157 25% of total locations
Global Locations589 (FY24 end) 627 (Q2 end) Net +14 in Q2
Cash & Equivalents ($M)—$39.1 +55.4% YoY
Inventory ($M)—$81.8 +22.1% YoY; tariffs and core product buys

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue GrowthFY2025Mid-single-digit growth Mid-to-high-single-digit growth Raised
Pre-tax Income ($M)FY2025$61–$67 $62–$70 Raised
Net New Unit Growth (# locations)FY2025≥50 ≥60 Raised
Capital Expenditures ($M)FY2025$20–$25 $20–$25 Maintained
Depreciation & Amortization ($M)FY2025~$16 ~$16 Maintained
Tax Rate (%)FY202522–24 (excl. discrete) 22–24 (excl. discrete) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2025 and Q1 2026)Current Period (Q2 2026)Trend
Tariffs/MacroFY2025 guide contemplated >$10M added costs; ~half tariffs; mid-single-digit rev growth; low-single-digit pre-tax change China 30% tariff extended to Nov 10; Vietnam tariff to 20%; FY net tariff impact <~$11M (≈$1M in Q2); total headwind ~$16M incl. medical/labor Headwinds rising in H2; mitigation via sourcing, pricing
Partner-Operated Expansion64 net new in FY2024; majority partner-operated; global footprint >25 countries +14 net new Q2; 86% international; 32 countries; guidance raised to ≥60 units Accelerating openings; asset-light scale
Digital/Omnichannel & AIQ1 reiterated omnichannel focus and dynamic environment mgmt Social listening, AI, influencer/algorithm investments; e-comm +15.1%; site drives store planning and last-mile fulfillment Strengthening digital flywheel
Product PipelineQ4 noted brand appeal and strategic evolution Fruit Stand campaign; Mini Beans +80% YoY; Halloween performance positive; licensed Mini Beans Sanrio Strong trend-led assortments
Capital ReturnsFY2024 returned $42M via buybacks/dividends; dividend to $0.22 Q2 buybacks $3.1M; dividend $2.9M; $0.22 dividend declared for Oct 9 Ongoing shareholder returns

Management Commentary

  • “Best second quarter and first half results in Build-A-Bear’s history…record revenue while simultaneously expanding pretax margin and EPS” — Sharon Price John, CEO .
  • “Our first half EBITDA margin rate of nearly 17% more than tripled versus 2019…driven by annual store contribution margins of over 25% combined with the growth of our higher margin commercial segment” .
  • “Gross margin was 57.6%, an improvement of 340 basis points…Retail gross margin expansion was driven by reduced promotional activity and selective price increases…leveraging fixed costs” — Voin Todorovic, CFO .
  • “We have increased our guidance for revenue growth to be in the range of mid-single to high-single digits…pre-tax income $62M–$70M” — CFO .
  • “We see continued investment in social listening tools, super fan research, AI, influencers, algorithms…to create comprehensive product stories” — CEO .

Q&A Highlights

  • Pricing/tariffs: Selective, strategic price increases with preserved entry pricing (birthday program); no observed negative impact on transactions; conversion slightly up; focus on storytelling to drive higher ticket .
  • Partner-operated maturity: Significant runway via shop-in-shops and toy store integrations globally; partners comp and add locations; Germany re-entry via Intersource in Q3 .
  • Mini Beans: +80% YoY revenue; ~$10 price point; expanding wholesale (Hudson airports, Applegreen convenience) and first licensed Sanrio launch .
  • E-commerce momentum: +15% demand; lower discounts; talent investments; omnichannel role in store planning/fulfillment; expect some near-term choppiness but longer-term optimism .
  • H2 margins: Tough comps (record Halloween last year) and higher Vietnam tariff drive implied moderation; still aiming to overcome ~$16M headwind and be close/slightly above last year profitability at mid-to-high-end guide .

Estimates Context

MetricQ2 2026 ConsensusQ2 2026 ActualBeat/(Miss)
Revenue ($USD)$116.19M*$124.25M +$8.06M; +6.9%*
Diluted EPS ($USD)$0.74*$0.94 +$0.20*
EBITDA ($USD)$14.96M*$18.78M +$3.82M*
# of Estimates (Revenue/EPS)3 / 2*——

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Clear beat-and-raise quarter: broad-based upside vs consensus and guidance raise should support positive estimate revisions and sentiment .*
  • Quality of earnings improving: gross margin expansion on lower promos and pricing, with traffic and conversion up; indicates healthy demand elasticity .
  • Asset-light global scaling: partner-operated unit growth accelerating; 32 countries and guidance to ≥60 new units de-risk capital needs and expand TAM .
  • Tariff risk managed but persistent: net FY tariff impact <~$11M and Vietnam rates doubled; price/mix, sourcing flexibility, and inventory pull-forward mitigate but H2 margins will face pressure .
  • Product/IP flywheel: Mini Beans momentum and licensed expansion (Sanrio), trend-led collections (Fruit Stand, Halloween), and social-led marketing drive omnichannel growth .
  • Capital returns ongoing: dividend continuity ($0.22) and buybacks with $80.3M remaining authorization provide downside support .
  • Near-term trading: catalysts include consensus beats, guidance raise, international expansion headlines, and Halloween/holiday pipeline; watch tariff headlines and H2 comp cadence .