Build-A-Bear Workshop Q2 Earnings Call Highlights

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Thu, August 27, 2026 at 6:04 PM GMT+3 6 min read

Key Points

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Second-quarter performance weakened: Revenue fell 7.2% year over year to $115.3 million, while pre-tax income declined 24.1% to $11.6 million, pressured by lower store traffic, softer e-commerce demand and weaker summer merchandise.
Management cut fiscal 2026 guidance: Revenue is now expected at $500 million–$525 million, versus the prior $530 million–$550 million range, while pre-tax income guidance fell to $60 million–$68 million. The commercial segment is now expected to be roughly flat, partly because a prior Walmart program will not repeat.
Core products and Halloween helped stabilize trends: Management said more customizable, dressable offerings such as Chummy Shark performed well, and the Halloween launch produced a record non-fourth-quarter sales week. The company continues expanding its store base and targets at least 50 net new locations this year.

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Build-A-Bear Workshop (NYSE:BBW) reported lower second-quarter revenue and profit as weaker store traffic and an underperforming summer trend assortment weighed on results, prompting the retailer to reduce its full-year revenue and pre-tax income outlook.

Chief Executive Officer Chris Hurt said the company had expected fiscal 2026 to have a more difficult first half followed by improving comparisons and performance in the second half. While management still expects the back half to be stronger than the first half, Hurt said second-quarter results came in below projections because summer products did not resonate as expected and macroeconomic conditions continued to pressure traffic.

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"We have moderated our direct-to-consumer expectations for the balance of the year," Hurt said. The company also reduced its outlook for its commercial segment, which includes wholesale and partner-related operations.

Second-Quarter Results Decline From Prior-Year Levels

Second-quarter revenue totaled $115.3 million, down 7.2% from the prior year, primarily reflecting lower direct-to-consumer sales. Pre-tax income fell 24.1% to $11.6 million from $15.3 million a year earlier.

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For the first half of fiscal 2026, Build-A-Bear reported revenue of $240.6 million and pre-tax income of $35.5 million. Adjusted pre-tax income was $28.5 million excluding a $7 million refund tied to IEEPA tariffs related to 2025 costs.

Chief Financial Officer and Chief Administrative Officer Voin Todorovic said direct-to-consumer transactions declined mainly because of lower store traffic. Average unit retail also declined, though that was partly offset by an increase in units per transaction. Domestic store traffic lagged broader U.S. traffic trends, he said.

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E-commerce demand declined 15.6% year over year as web traffic remained soft, although demand improved sequentially from the first quarter. Total direct-to-consumer revenue remained 3% above its 2024 level, according to the company.

Gross margin declined 340 basis points to 54.2%, reflecting occupancy-cost deleverage and increased promotional activity. SG&A expense was $51.4 million, or 44.6% of revenue, compared with 45.4% a year earlier, aided primarily by lower incentive compensation expense.

Summer Assortment Missed Expectations

Hurt said the company faced difficult comparisons following a strong summer 2025, when direct-to-consumer revenue rose 11% and web demand increased 15%. That prior-year performance was aided by Build-A-Bear's Fruit Stand collection, Sanrio Sweet Shop offerings and movie-related products including a How to Train Your Dragon launch.

This year, Build-A-Bear increased product experimentation with concepts such as Slushie Plushie, Beary Goods and Mashimals. Hurt said those products were less customizable and did not generate the consumer response the company expected.

"The reality is, we pushed it too far," Hurt said during the question-and-answer session. He said the products were not as dressable and did not support the full customization experience that customers seek from the brand.

Management said the quarter reinforced the importance of Build-A-Bear's core customization offerings. The dressable Chummy Shark sold out during the quarter, while the company's Promise Pets intellectual property continued to generate above-average dollar-per-transaction results due to clothing and accessory attachment rates.

The company used promotions to move through underperforming summer trend inventory, Todorovic said, contributing to the lower gross margin and average unit retail. He added that discount levels nevertheless remained low and dollar per transaction increased.

Halloween Launch Supports Early Third-Quarter Improvement

Build-A-Bear said its Halloween launch generated its highest non-fourth-quarter sales week in company history and its third-highest U.S. e-commerce sales week, behind only Black Friday weeks in 2020 and 2025.

Hurt said early third-quarter trends have improved versus the first half, with sequential gains in traffic and sales. However, he cautioned that performance remained slightly below the company's earlier expectations and that August is still part of a difficult comparison period.

The Halloween collection included the return of the Posable Bat, a new Jumping Spider and Mini Beans versions of the products. Hurt said the collection's more core, dressable and customizable merchandise has supported customer engagement.

The company also highlighted upcoming licensed and brand-building initiatives, including a Sanrio Halloween collection featuring the Lloromannic characters Berry and Cherry. Build-A-Bear said it will be the first retailer in the U.S., Canada and the U.K. to offer Lloromannic in plush form. Later this year, McDonald's is expected to begin rolling out Build-A-Bear-themed Happy Meals in the U.K.

Guidance Reduced; Store Expansion Continues

Build-A-Bear lowered its fiscal 2026 revenue forecast to $500 million to $525 million from a prior range of $530 million to $550 million. The company now expects pre-tax income of $60 million to $68 million, down from prior guidance of $72 million to $78 million. Adjusted pre-tax income, excluding the approximately $7 million prior-year tariff refund, is expected to range from $53 million to $61 million.

The outlook includes an estimated $10 million to $11 million of ongoing tariff and related costs based on a 12.5% tariff rate, as well as about $3 million in longer-term investments.

Management said it no longer expects to repeat a multimillion-dollar Walmart program from the prior year. Todorovic said the commercial segment is now expected to be roughly flat for the year rather than grow at least 20%, with the change largely tied to traditional wholesale performance.

Build-A-Bear ended the quarter with 674 locations in 37 countries after adding five net new locations during the quarter and 12 during the first half. The company continues to target at least 50 net new experience locations for the full year, mostly operated by international partners.

Cash at quarter-end was $14 million, down $25.1 million year over year, which Todorovic attributed primarily to increased stock repurchases and earlier capital spending. The company returned $8.5 million to shareholders during the quarter, reduced its share count by more than 5% over the past 12 months, and had $43.2 million remaining under its $100 million share repurchase authorization.

About Build-A-Bear Workshop (NYSE:BBW)

Build-A-Bear Workshop, Inc operates a specialty retail business focused on interactive "workshop" experiences that allow customers to create customized stuffed animals. Through its in-store and online platforms, the company offers a wide range of plush toys, apparel, accessories and sound modules, enabling guests to personalize each creation. In addition to its core bear products, Build-A-Bear has expanded its portfolio to include licensed characters from leading entertainment and media franchises.

Founded in 1997 by Maxine Clark and headquartered in St.

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